Partner Article

What would the Internship Bill mean for business?

Rob Young, co-founder of Instant Impact, comments on developments in the unpaid internships story.

Last week, Parliament heard the first reading of a bill that proposes to ban the advertisement of unpaid internships in Britain and will help promote the idea that young people deserve to be paid at least National Minimum Wage. This 10 minute rule bill is clearly one step on the road to clearer regulation of young people’s employment.

The Bill will be debated in February, and although it has cross-party support, its success is not yet certain. The rule bill does set the scene for change and raise the questions what prospective implication would this bill have for businesses.

Graduates willing to work for free to develop CV content that is vital in today’s tough climate obviously offer a useful source of free labour for employers that many businesses use to their advantage.

What many employers probably do not realise is that this practice is illegal according to both employment and NMW laws. They state that a ‘worker’ is anyone who has a contract, either written, verbal or even only implied, and therefore a member of staff who is doing more than just watching, as work experience would be, and taking on responsibility, should be paid.

From an employer’s point of view, especially in this struggling economy, when you can get an intern for free it’s easy to see why some choose not to pay. The problem is, however, that only a small proportion of the country can afford to work without renumeration so perpetuates a culture where the wealthy have the best chances of success.

This bill will go little in the way of stamping out the practise of unpaid internships. For well-connected businesses word of mouth and good old fashioned networking will legitimately continue to provide a supply of graduates willing to work for free.

However, for smaller businesses this Internships Bill, holds some potentially significant ramifications that might force companies to make some shifts in their own business culture.

Most obviously, revenue will have to be made to provide payment for interns. This necessary restructuring of budgets will have implications for all levels of companies. Sadly, many businesses are so reliant on a source of unpaid labour that moving around HR budgets or thinking analytically about the payroll won’t be enough but instead, the impact will be felt across all functions as marketing and sales budgets, for examples, are squeezed to find new salaries.

Hopefully, The Internships Bill will not only create financial problems for UK businesses but companies will also embrace the changes to the work environment it will encourage. Salaried employees are worth more to any company and should be a motivation to create a working framework that allows their interns to do more than collect the dry cleaning and make coffee. Enabling graduates to contributing to a business in a meaningful and productive way is a win for them - they get hands on experience and are fairly paid for it. Companies have the chance to delegate key responsibilities to young people who are really motivated to succeed.

We believe that the Bill will mean positive things for companies as well as graduates, and we hope businesses can agree.

This was posted in Bdaily's Members' News section by Instant Impact .