Structured programmes and written agreements can help firms reduce the risks of taking on unpaid staff 

Internships are on the rise. This should not come as any surprise to us: an experienced intern can be a fantastic and cost-effective resource for any organisation. Law firms and professional service providers offering this form of on-the-job training will stand a good chance of attracting high-quality candidates. 

For this reason, we have found more and more employers incorporating internship programmes into their workforce planning and recruitment processes over the past few years. And not just for the traditional 'intern season' over the summer: increasingly, firms are taking them on throughout the year.

The relative ease, however, with which organisations can attract interns has only come about because of the potential benefits for the intern. At the heart of every internship is the unwritten understanding that it could lead to a permanent job.

At the very least, the intern will expect to gain insight on their chosen profession and make their all-important curriculum vitae stand out from the crowd. 

It seems that with the job market set to remain highly competitive over the coming years, there will be no shortage of candidates vying for internships in the legal sector.

But let's pause for a moment and consider what exactly an 'intern' is, because this is an extremely important consideration for employing firms, and one that is easily overlooked. As fast developing as employment law is, the term 'intern' still has no legal definition and it seems the nature of internships varies widely from one organisation to another.

Status checking

Before engaging an intern, it is critical that you understand their 'status' and the rights and obligations this carries. In employment law terms, interns can fall under three broad categories of individual that enjoy protections. These are:

• employees – who have certain important statutory rights, such as the right to claim unfair dismissal or a statutory redundancy payment;

• workers – who have more limited statutory rights than employees, but still enjoy certain important protections such as the right to unpaid annual leave and the right to receive national minimum wage; and 

• a wider class of individuals carrying out work; for example, volunteers – who have only limited rights, such as the right not to be discriminated against or placed in an unsafe working environment. 

So in effect, interns can be anywhere on a spectrum where employees (with all their rights and benefits) are at one end and unpaid work experience students at the other. Identifying in practice where an intern falls within this range can be a difficult proposition. When organisations get it wrong, they run the risk of breaching legal rights and obligations.

Exploitation fears

We have all seen reports of interns working such excessively long hours that they suffer serious harm or even death. Such instances are thankfully rare, but, aside from the personal tragedy, the reputational damage this can cause an organisation is hard to overstate. So too is the impact on staff morale.

A more common issue for organisations arises from unpaid internships, which raise important ethical and moral questions. Many interns are prepared to work on an unpaid basis in the hope that this will lead them to permanent work. If this does not materialise, however, some look to a claim under national minimum wage legislation as a way of compensating their efforts. 

Such claims are usually of low value, but the reputational damage they can cause is of greater concern. Employers in breach of national minimum wage legislation can also face fines and criminal sanctions.

This situation could get worse if the Labour party came to power – it is saying it would increase the level of fine from the current £5,000 to a maximum of £50,000!

When engaging interns, law firms must also have in mind the Solicitors Regulation Authority's (SRA) code of conduct rules, in particular those relating to equality and diversity, and the Bribery Act 2010. The wealthy client requesting an internship for a favourite nephew will be a scenario familiar to many.

So what should firms be doing to avoid these pitfalls? The best way to manage the risk is to have a clear and well-structured internship programme and a written internship agreement. Structuring a programme will involve considering:

• your recruitment process;

• the management of the intern's expectations;

• the duration of the internship; 

• whether it will be paid or unpaid and cover expenses; 

• which insurers will need to be notified; 

• how to ensure the health and safety of the intern; 

• what level of supervision and mentoring will be provided; and

• how to protect confidential information.

A firm that properly structures its internship programme is far more likely to realise the benefits of interns and mitigate the associated risks. Aligning an internship scheme with broader strategic aims such as workforce planning and talent development will also reap rewards.

The road ahead

Under the law as it stands, uncertainty will prevail over internships. The use and misuse of interns will continue to arouse strong public feeling and divide opinion along political lines. 

But in this economic climate, the growth of internships can only be expected to continue and the voices calling for legislative reform will become all the louder – even though 'good' legislation in this area has been frustratingly rare. 

As such, law firms need to be extremely careful when planning their intern intake if they want to avoid becoming embroiled in future outcries.

Christopher Tutton is an associate in the employment department at Irwin Mitchell.