National Minimum Wage (Workplace Internships) Bill

Margot James Excerpts

Friday 4th November 2016 Commons Chamber

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Margot James)]

We have had a good debate, full of insight and good humour and I warmly congratulate my hon. Friend the Member for Elmet and Rothwell (Alec Shelbrooke) on all the work he has done examining the issue of unpaid internships and introducing his Bill today. Indeed, so rich was the debate that it is impossible to do justice to all the excellent contributions. My only disappointment was that my hon. Friend the Member for North East Somerset (Mr Rees-Mogg) tantalised with his presence but confined his remarks to a few pertinent points, rather than giving us the benefit of the full panoply of his views on the matter. That was left to my hon. Friends the Members for Shipley (Philip Davies) and for Bury North (Mr Nuttall), who did not disappoint, and neither did my hon. Friends the Members for Louth and Horncastle (Victoria Atkins) and for North Devon (Peter Heaton-Jones). We have also heard some very good points from the hon. Member for Sheffield, Brightside and Hillsborough (Gill Furniss).

Those of us who have worked with my hon. Friend the Member for Elmet and Rothwell know that he is a tireless campaigner for interns’ rights. He made a personal pledge to act on unpaid internships and this Bill represents only the most recent stage in his impressive campaign to secure fairness of opportunity and equity of consideration for all entrants to the labour market regardless of their personal means or social background.

The principle lying behind and driving my hon. Friend’s efforts is the idea that work can be a powerful engine for social mobility, and the Prime Minister, who talks about her vision of a truly meritocratic Britain and building an economy that works for everybody, is very much of the same mind.

I want to take a little time to talk about the Government review set up by the Prime Minister at the beginning of last month. It will be headed by the chief executive of the Royal Society of Arts, Matthew Taylor, and is to look specifically at developments in modern working practices. I also want to speak about the national minimum wage and the living wage, and a little bit about Government enforcement through HMRC. I also want to address the provisions set out in the Bill.

First, let me make a few remarks about internships in the broader context and share a few points from my constituency experience. I have changed the names of the people I shall mention. The first of them is Susan. She was educated at a well-known public school. Her father was chairman of a public company and a donor to one of our two major political parties. He effected an introduction to the party chairman which resulted in a six-month unpaid internship for Susan at the party’s headquarters, and from the contacts she made there she was able to secure a second unpaid internship for a Member of Parliament.

[Christian Matheson (City of Chester) (Lab)]

And then a safe seat.

[Margot James]

The hon. Gentleman takes my example a little too far, but one can only imagine such an outcome as being highly likely.

Now, let me introduce Jack. Jack’s father works for a landscape-gardening company and just about makes average earnings, and his wife works part-time as a carer. As a family, they are just about getting by and they think Jack will get on fine because he is a bright boy. But Jack is already disadvantaged by some of the choices he made at GCSE which ruled out the sort of A-levels the Russell Group universities favour. He has no contacts in London and his family cannot afford to support him through an unpaid internship. Unlike Susan I think Jack would probably be one of the 40% of young people my hon. Friend the Member for Elmet and Rothwell indicates would reject an internship if offered on an unpaid basis. Those case studies illustrate to me that my hon. Friend is really on to something in challenging the concept of unpaid internships under the conditions set out in his Bill.

However, we believe that good, worthwhile, genuine internships certainly have a part to play, alongside other routes such as work experience, apprenticeships, work placements and work shadowing, all of which we have heard a great deal about in our debate. I believe we all recognise that young people learning about the workplace, developing skills and getting training can produce networking opportunities in and of themselves. Employers can also benefit from fresh thinking and from finding potentially great new permanent employees to join their team in future.

There are many different types of internship. The Gateways to the Professions Collaborative Forum, for example, represents about 60 professional bodies. We have heard about the excellent programme of paid internships that is run from the Speaker’s quarters in this House. In the attempt to define high-quality apprenticeships as an arrangement whereby individuals work and can gain some compensation, there is also the prospect that they will develop professional skills and an understanding of a profession. Those are all good experiences and we would not want obstacles to their fulfilment to be created unnecessarily from any unintended consequences of legislation.

There are many excellent resources, such as the Government-backed graduate talent pool, which is an initiative designed to help new and recent graduates to gain real work experience across Government. It advertises quality internships with a range of desirable employers in numerous competitive sectors. Most significantly, 100% of the vacancies advertised through the graduate talent pool are for paid positions. A 2011 survey of more than 500 people registered with the pool found that over 60% of respondents were motivated to join in order to improve their long-term prospects and gain general work experience, and it showed that over 80% of interns would recommend the experience and scheme to others.

Another example is the popular RateMyPlacement website, which I heard my hon. Friend the Member for Shipley mention—I think in relation to some experience he offered to a young person from his constituency. Graduates and interns can share their experiences of placements anonymously on the site and often find specific guidance on such things as interviews and general careers advice.

There is an increasing wealth of information out there, for employers as much as anyone else, about what well-managed, high-quality internships look like. However, we all know that not all the internships we are debating today are good quality and properly managed, and I think we all, across the House, aspire to improve our system such that there ends up being just good-quality, preferably paid—and certainly compensated—internships in future.

Let me turn to the point that several hon. Members have made: that workers do have rights. Workers have a contract with their employer under which they perform work to agreement and both parties must get something of value from the arrangements. The contract does not have to be written and the value provided to the person performing the work might initially be the opportunity to gain experience or the promise of future work. Other factors to consider are whether a person has the right to send someone else to do the work and whether the person is better viewed as working for the employer rather than being engaged by an independent contractor.

A genuine worker has a “day one” right to be at least paid the appropriate national minimum wage or the national living wage if he or she is over 25. When a court looks at a person’s employment status, it will always consider the reality of their working arrangements and not just how those are described. Simply labelling someone as an intern is not enough to exempt them from the rights associated with being a worker.



However, there is no universally agreed or accepted definition of the term “intern”, despite many attempts to define it today. I sensed considerable sympathy for the view expressed by my hon. Friend the Member for Bury North that it was perhaps a glorified Americanism used to describe what is effectively work experience. We must acknowledge that there are bad examples of work experience and internships, but let me make it absolutely clear that the Government believe that all people in the UK are entitled to fair wages for fair work.

[Philip Davies]

If we complicate this too much, is there not a danger that employers trying to avoid having someone classified as a worker would simply get people in to do menial things such as making the tea, rather than doing a proper job? Most people who do work experience really appreciate being able to muck in and do something worth while. It would be a strange state of affairs if employers were deterred from offering meaningful work experience lest they fall foul of the legislation.

--- Later in debate ---

[Margot James]

I thank my hon. Friend for his apposite intervention. I agree that it would be most deleterious if employers were to downgrade the work experience that they offered, to get round the law. I must point out, however, that the alternative might be that employers would start to compensate the person undergoing the work experience if they were doing genuine work that added value to the firm or organisation in question.

I take the point that my hon. Friend the Member for Shipley made earlier that, in the early stages of work experience, the candidate is often not in a position to add value to an organisation, given that they are learning on the job. Indeed, he told the House that he had been such a candidate in his younger days, working for the best local newspaper in the country—namely, the Stourbridge News. He talked about his experience as a budding court reporter, although he was modest enough to say that his material often required a degree of rewriting before it made it into the newspaper. That underlines his point that it takes a while for interns and people on work experience to be able to add value. I hope that, at the end of his work experience week, his employers took him to one of the town’s many wonderful hostelries for a few pints on a Friday evening.

The Bill seeks to extend the provisions of the national minimum wage to cover individuals who are engaged in workplace internships. It is extremely well intentioned, but I am concerned that it could have unintended consequences that might even undermine existing employment laws and protections. Legally, the Bill is unnecessary because, as my hon. Friend the Member for Bury North and others have said, interns are already eligible for the national minimum wage if they meet the definition of “worker”. It does not matter what the employer calls the arrangement or whether the individual has agreed not to be paid. Only the reality of the employment arrangement matters, and if an intern is a worker, they are entitled to be paid.

We have heard observations about the difficulty of defining the term “intern” in relation to various categories of unpaid work experience. The term is loosely used to apply to a wide range of formal and informal arrangements where there is an expectation of an individual receiving some kind of practical experience. A worker is someone who has a contract with their employer under which they personally perform work. For such a contract to be valid, both parties must be getting something of value from the arrangement. That could pose a problem for interns working for free if they are not getting paid but are getting something of value from the arrangement. Whether they are is not always clear cut. In most cases, however, the answer is likely to be yes. The value may be in the form of training, experience or a job in the company or organisation to which they are lending their labour.

For that reason, we feel that interns are afforded sufficient protections by existing employment laws and that a tribunal would find that an intern who was genuinely a worker would qualify for the national minimum wage. Indeed, tribunal decisions involving interns have reached that conclusion, including the case of Keri Hudson mentioned by my hon. Friend. HMRC has also identified arrears in a several cases that started out as complaints from interns. We heard some interesting remarks from my hon. Friend the Member for Louth and Horncastle (Victoria Atkins) about the days when she was a prosecution barrister for HMRC. As she will know, HMRC follows up every complaint it receives.

I recognise that some people, interns in particular, will be worried about employment prospects if they make a complaint, but I want to make everybody aware that anyone who contacts the ACAS helpline will be treated with strict confidentiality. Anyone whose complaint is referred to HMRC directly will also be treated with absolute confidence. People can choose how much information about themselves to disclose. It is even possible for someone to raise a complaint to be followed up by HMRC without even disclosing their identity. Safeguards are in place, and I urge all MPs to make employers, employees and interns in their constituency aware of their rights and the ease with which they can raise complaints without jeopardising their employment prospects.

[Alec Shelbrooke]

What advice could my hon. Friend give to someone who is the only employee in a business?

[Margot James]

My hon. Friend points to a good exception to what I have been saying. If someone is the only employee in a business, it would be a microbusiness. I would imagine that most people who become an employer’s only employee are family or friends. I accept that such a case could exist and what I said would not apply in those circumstances, but I am sure that my hon. Friend will agree that such circumstances are exceptional. I can accept that there will be circumstances in which people will fear being exposed even if their confidentiality is maintained, so I accept my hon. Friend’s wider point.

If the Bill does proceed to Committee, I ask my hon. Friend to assure the House that it will not have a negative impact on the excellent support offered to disadvantaged young people by organisations and groups such as the Social Mobility Foundation. Short-term work placements, which may go beyond the 28 days mentioned earlier, offer risky and ultimately untenable situations for employers, establishing legal obligations towards participants that none of the parties involved either intended or wished for. I fear that my hon. Friend could not offer that guarantee, as indeed the Government could not were they to introduce something with the broad definition contained in the Bill.

We have heard that unpaid internships are disproportionately filled by people from affluent backgrounds, and I do not dismiss that concern in any way. Indeed, the examples I gave the House earlier about Susan and Jack underline that if we seek to legislate too readily and expand the scope of existing protections too freely, we may end up legislating some existing opportunities out of existence, because employers will not want the risk or nuisance of offering them and putting themselves into an exposed position that their conduct does not really deserve. If there are fewer internship placements as a result of the Bill, will we really have addressed the social mobility problem that lies behind it? I do not think so, and I sense that a number of my colleagues, not least my hon. Friend the Member for Shipley, would agree with me.

A better approach will be to take the opportunity afforded to us by the recently announced Taylor review to look carefully at modern employment practices and to gather evidence to see how we might best direct our efforts to improve fairness of opportunities and consideration for all entrants to the labour market, regardless of their background and whether they have the means to support themselves through unpaid work of any description. As a result of the Bill, I intend to ask Matthew Taylor to look at these questions with respect to interns, and I hope to persuade my hon. Friend the Member for Elmet and Rothwell to lend his considerable experience and credibility to any discussions he may be invited to have by Mr Taylor and the panel members who will assist him in this valuable work, the fruits of which I look forward to seeing.

As the Prime Minister has said on numerous occasions, the Government firmly believe in creating an economy that works for all. We support enterprise but not at the expense of employment rights, wages or job security when job security is desired. Where interns are genuinely workers, they are entitled to all the same rights and protections as any other worker, including, importantly, being eligible for the national minimum wage if they are under 25 and the national living wage if they are over 25.

I take my hon. Friend’s point that, even though the law is clear on that matter, it is governing a great range of grey areas in terms of the nature of the work that people who are starting out on their careers are performing and whether or not they are work shadowing, gaining work experience or undertaking an internship, paid or otherwise. Those are not just grey areas; I would go so far as to call them a minefield for employers.

I wish to protect the vast majority of employers who have a good disposition. I have been one myself, and I know that several contributors to this debate are former business managers who employed people. Indeed, we are all employers in this House, are we not—even your good self, Madam Deputy Speaker? I hope that I may compliment you by saying that, knowing some of your staff as I do, I know that you are an exemplary employer. Those standards go for the vast majority of Members across this House, and the vast majority of employers outside it are very good employers. Unfortunately, a minority are not, and we have heard some scandalous examples today of employers who are using the internships system to get free labour.

Appalling situations have been cited by a number of colleagues from across the House. Those examples are most regrettable and they underline the need that my hon. Friend has identified for us to act in this area, which is what I hope the Matthew Taylor inquiry will do. It will examine this minefield and clarify the conditions, so that we can ensure that interns, and employers’ good intentions, are protected and that all young people can get good experience without their employers falling foul of the law.