knowledge | 18 August 2021 |
Hiring Interns – What Businesses Need to Know
Internships are relatively common in certain areas of Irish business and have become an important part of the start-up environment, particularly in knowledge-based industries such as technology and business services. Internships allow businesses to identify new talent and also provide individuals with an insight into an organisation of particular interest to them.
A difficulty arises, however in that some employers believe that internships in Ireland are unregulated, as the concept is not one that is expressly included in most Irish employment laws. This misconception can cause problems for employers, as many internships can and do fall within the scope of Irish employment law.
Definition of ‘Intern’
There is no definition of ‘intern’ in Irish law. An intern may, or may not, be an employee, depending on the nature of their role. In general, an intern is understood to be a person who will spend some time with a business in order to enhance their knowledge of the type of work that the business engages in.
In determining whether or not an intern is an employee of the business, the following factors need to be considered:
- the amount of control exercised by the employer over the person;
- the extent to which the person is integrated into the workplace; and
- whether or not there is an obligation that the business provide work for the intern, and that the intern is, in turn, obliged to perform such work (known as mutuality of obligation).
It is important for a business that engages in the hiring of interns to note that a court or tribunal will look beyond any title given to the relationship by the parties and will focus on the practical nature of the relationship in determining whether the intern should be classified as an employee.
The type of work that the intern participates in must be clearly understood by the employer and the intern. There is a risk, that an intern may be classified as an employee if they engage in certain types of work. If this is the case, an intern would be entitled to extensive legal protections and rights afforded to employees under Irish law.
A rule of thumb for employers is to look at the nature of the internship and its objectives. An educative, or ‘shadow’, internship, which would involve an intern following or ‘shadowing’ an employee for a short-period of time, but not doing valuable work, is unlikely to cause difficulty. The purpose of these internship is usually to give the intern ‘work experience’ in a particular industry, and most transition year and some short-term college placements will fall into this category. In contrast, if the intern is being required to carry out valuable work, then this type of internship is likely to be an employment relationship.
Rights of an intern
Under the Health and Safety Act 2005, all persons in a workplace are protected. However, extensive protections are afforded to those with employee status. Such protections include the right to minimum wage, a limit on working hours and statutory minimum notice of dismissal.
All 'interns' in Ireland have basic employment rights; the right to a safe working environment, data protection rights, protection against sexual and other types of harassment or discrimination, protection from excessive working hours, the right to adequate breaks and holidays, fair procedures and the right to join a union. The title of ‘intern’ does not mean that a person has no employment rights, and businesses should avoid any attempt to avoid those rights by labelling a role as an ‘internship’.
Additionally, interns have legal protection against excessive working hours and overwork, which are covered by working time rules.
Should interns be paid?
Whether an intern is entitled to be paid depends entirely on their employment status, which will be determined by the nature of the work and their relationship with the organisation. Businesses should be mindful that if an intern is actively participating in work that adds value to the business, is being supervised, and has responsibilities similar to employees, then the intern is likely to be an employee and have a right to be paid national minimum wage. Under the National Minimum Wages Acts 2000 and 2015 (the “Acts”), an employer must pay employees engaged under a contract of employment the minimum wage at €10.20 (gross) per hour.
Businesses should note that failure to pay the national minimum hourly rate of pay to an eligible intern is a criminal offence, punishable upon summary conviction, by a fine not exceeding €2,500 or imprisonment not exceeding 6 months or both. In addition, a worker not in receipt of the national minimum hourly rate of pay may refer a complaint to the Workplace Relations Commission who may make an order for payment of wages unpaid or underpaid.
There are certain schemes which may be exempt from minimum wage laws, these include government internships or interns involved in the Work Placement Experience Scheme. Different rights to payment apply in these scenarios.
In an “educative” internship, or where the intern shadows an employee, payment is less likely to occur. If it is an educative process, the arrangement should be short, clear and should not involve any service of value. In the case of an unpaid internship, the employer must be certain that the intern’s work would not replace or equate to that of an employee, and they should also ensure that the intern is aware and understands that it is an unpaid internship.
Considerations for businesses when hiring interns:
- In Ireland, there is no legal obligation to have an internship agreement. However, it would be strongly advised for a business to have an agreement setting out the role of the interns, the duration of the internship, and payment (if any);
- The internship agreement should clearly state that the intern is not an employee of the business, although in any dispute, the court will look beyond the title provided by the employer; and
- If the intern’s duties will be such that it is likely to create an employment relationship, the internship agreement should provide the interns certain information that employers are required to give to employees at the start of the employment relationship.
Confidential Information and IP
In order to ensure that any confidential information intellectual property accessed or created by an intern during their internship is protected and is owned by the employer, the business should ensure that appropriate confidential information and IP provisions are included in the internship agreement.
Induction Training on Policies and Procedures
Induction training should be provided to interns to ensure that they are familiar with the company’s policies and procedures. The intern should be informed of the employer’s expectations to comply with established policies and procedures, including, for example the company’s health and safety and anti-bullying and harassment policies.
Start-ups wishing to engage interns should first ask why they wish to do so. If the purpose of the internship is to carry out valuable work for the business, then they should be aware that the relationship may be one of employment and attract employment rights including the right to be paid. Educative, ‘shadow’, internships are unlikely to create an employment relationship if set up and operated correctly and within the law, though the need to ensure that such interns do not carry out valuable work for the start-up is unlikely to be attractive.
Interns who are hired to do valuable work should be treated as employees and provide with a contract or statement of terms of employment that complies with Irish employment law.
If a business wishes to hire a shadow intern on an unpaid basis in Ireland it is advisable that:
- the internship is predominately educative, short (1-2 weeks) and should be of benefit to the intern;
- the business ensures that the intern understands that they are engaging in an unpaid educational internship;
- an internship agreement is signed by the parties;
- induction Training is carried out on company policies and procedures; and
- the internship is operated in a manner which ensures that the intern is ‘shadowing’ other employees rather than being assigned tasks and doing work that is of value to the business.
How can we help?
McCann FitzGerald is a premier Irish law firm. With over 650 staff located in our principal office in Dublin and our international offices in London, New York and Brussels, our specialists are ready to help your business thrive. Our Corporate practice combines with our Company Secretarial and Compliance Services group to offer your start-up enterprise the market-leading advice that you need to grow, from corporate advice on fundraising and governance, to day-to-day advice on compliance matters – leaving you free to focus on developing your business. Please contact any member of the McCann FitzGerald Start Strong team to assist.
This document has been prepared by McCann FitzGerald LLP for general guidance only and should not be regarded as a substitute for professional advice. Such advice should always be taken before acting on any of the matters discussed.