COMPLIANCE
Danny Done, Managing Director, Portfolio Payroll, discusses the relationship between various types of unpaid work and the national minimum wage (NMW)
U npaid internships and other related roles continue to be a problem despite minimum wage legislation. Whether offered with the promise of progression to paid employment or the chance to gain new skills and experience, there’s a risk of exploitation and a failure to adhere to the law in these types of relationships. By law, all workers must be paid at the relevant NMW rate, unless a specific exemption applies. One such exemption applies to UK and international students at a higher or further education institution in the UK who are required to undertake a mandatory work experience placement of up to one year as part of their course. However, this doesn’t apply in the case of many internships. It’s recognised that internships and other similar types of roles, set out below, can act as stepping stones to future opportunities. However, they can also result in an imbalance in power and fairness where there’s an expectation for individuals to simply work for free. Internships The term ‘internship’ isn’t currently defined in law. Typically, it refers to an individual carrying out tasks, often like those in paid employment of the organisation, to gain relevant skills and contacts. Internships can last anywhere from a few weeks to months at a time. To determine whether NMW is owed, it’s necessary to look at the internship agreement, along with the work the intern will be doing and how it’s organised. Where the intern is required to work for a particular period, for set hours, performing work that’s of value to the organisation, it’s likely they’ll be classed as a worker who’s owed NMW. Employers who don’t observe this are at risk of enforcement against them for their breach of the law. Unpaid work trials Again, these aren’t currently recognised in law but are covered in Government guidance. They occur during recruitment, when an individual is asked by a prospective employer to carry out tasks, without payment, to help the employer decide whether to offer them the role. This
can be a legitimate practice but there’s a risk of the work trial slipping into work or services for which NMW is required.
contract or contract to perform work. Instead, they: l provide their time and effort freely l come and go as they please l are under no obligations to provide services l cannot be made to perform specific duties l shouldn’t suffer sanctions for not performing their duties. They should be able to choose what they do and how and when they do it. Volunteer agreements usually set out the expectations on the nature of the duties a volunteer is expected to perform, along with the location and hours of volunteering. However, this isn’t compulsory and isn’t legally enforceable. Volunteer status is difficult to establish and, instead, worker status and entitlement to NMW is more likely.
Under Government guidance, ‘ Calculating the minimum wage ’ (https:// ow.ly/ojt350XfsPN), where an employer asks an individual to carry out a ‘trial’, ‘test’ or ‘recruitment exercise’, they may be classed as a ‘worker’ and therefore be entitled to the NMW, depending on the circumstances. An Employment Tribunal is likely to consider various factors when assessing this, including the authenticity, length and nature of the tasks of the trial. Voluntary work and volunteers The term ‘voluntary worker’ has a specific meaning under NMW legislation. Voluntary workers are exempt from NMW if they work for: l a charity l a voluntary organisation l an associated fundraising body l a statutory body l a community amateur sports club registered with HM Revenue and Customs. For the exemption to apply, the voluntary worker cannot be paid more than a reimbursement of expenses incurred or expected to be incurred, and they must not receive any benefit in kind other than reasonable subsistence or accommodation. Volunteers aren’t workers and don’t qualify for NMW. There’s no employment “Whether offered with the promise of progression to paid employment or the chance to gain new skills and experience, there’s a risk of exploitation and a failure to adhere to the law in these types of relationships”
Work shadowing and work experience
Again, these concepts aren’t defined in legislation. Where the individual isn’t doing any work, entitlement to NMW doesn’t arise. Work shadowing involves observing others carry out work or other duties. The individual shadowing shouldn’t perform any work, rather, the purpose of work shadowing is to provide a valuable, informal learning experience. However, it can stray beyond that and where it does, there’s the potential for worker status and the right to NMW. For that reason, this has been included in the call for evidence. The future of unpaid work In July, the Government published its ‘ Making Work Pay: call for evidence on unpaid internships ’ (https://ow.ly/ j7w050XftbA), as part of its commitment to making 'work more secure and supporting working people to thrive'. A response is expected in January / February 2026. In the future, we could see the strengthening of NMW protections which specifically deal with the types of unpaid work set out above. This could be by the formal introduction of terms such as ‘intern’ and ‘work shadowing’ into law, along with clear rules as to when they’re permitted and guidance on the circumstances in which NMW would be owed during them. n
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| Professional in Payroll, Pensions and Reward |
Issue 115 | November 2025
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