Internships and NMW – are you accidentally underpaying workers?
Have you considered that unpaid internships and NMW often go hand-in-hand and could land your business in trouble with HMRC?
Internships and work experience opportunities should be accessible to all; not just those who can afford to work unpaid. But beyond the ethical implications, there are legal responsibilities too.
Many employers assume that interns can work for free. But in the majority of cases, interns are classed as workers for National Minimum Wage (NMW) purposes. That means they are legally entitled to be paid at least the statutory minimum wage — regardless of whether the role is labelled as “work experience” or “an internship.”
This misunderstanding is exactly why so many well-meaning businesses unintentionally fall short of compliance.
HMRC actively investigates minimum wage compliance, and errors can result in fines, public naming, and reputational damage – even when the mistake is accidental.
Gemma Sargeant, our Head of HR, added “putting aside HMRC and NMW, unpaid placements can sometimes exclude those from lower socio-economic backgrounds. They can limit diversity and reinforce inequality. Employers must be responsible and recognise that unpaid work, especially when it delivers equal value to paid employees, can create barriers for talented individuals who simply cannot afford to participate”.
Internships and NMW, how do you know if you’re paying your people correctly?
We asked Tim Humphries our Head of Tax to explain more and break this down for us:
How do you determine whether internships and NMW are an issue for you?
For NMW purposes, a “worker” is broadly someone who:
- Has a contract (written or verbal) to perform work or services;
- Is personally providing the work (not subcontracting it to someone else);
- Is not genuinely self-employed running their own business.
That means:
- Most interns count as workers if they are performing regular tasks, have set hours, or are expected to deliver outcomes.
- Calling someone a “volunteer” doesn’t automatically exempt you from NMW rules. True volunteers must have no contractual obligation, no set working hours, and no expectation of payment (other than genuine expenses).
- Only very specific exemptions apply — for example, students undertaking genuine work experience as part of a UK-based higher education course, or individuals simply shadowing without performing tasks.
Common scenarios and payroll pitfalls
Businesses most often trip up in the following areas:
- Internships with set hours and tasks
- If your intern has responsibilities like any other employee (e.g. admin, research, client support), they are a worker and must be paid.
- Expenses vs. wages
- Covering travel or lunch expenses doesn’t replace wages. If they’re a worker, you still need to pay NMW in addition to reimbursing expenses.
- Trial periods
- Short unpaid trials are sometimes lawful, but only if they are genuinely limited to testing practical skills. Anything resembling actual work for your benefit is likely to count as paid work.
- Family businesses
- Even if someone is a family friend or relative, once they perform regular duties, NMW rules apply.
- Apprenticeships and training
- Apprentices have their own statutory minimum rates, which are often lower than the standard NMW, but they must still be paid.
Internships and NMW – what do you do if an underpayment occurs?
If you discover that workers (including interns) have been underpaid:
- Act quickly — calculate the underpayment and settle the outstanding wages without delay.
- Correct payroll records — ensure future pay runs meet the relevant NMW rate (which changes annually each April).
- Communicate clearly — explain to the worker what has happened and confirm the correction has been made.
What do you do if HMRC raises a Minimum Wage Enquiry?
HMRC has significant enforcement powers and regularly opens enquiries into NMW compliance. If this happens:
- Cooperate fully — provide requested payroll records, contracts, and correspondence.
- Seek professional advice early — engaging with advisors like RPGCC can help you manage the enquiry process, minimise penalties, and ensure accurate back-pay calculations.
- Learn from the process — many enquiries highlight systemic issues in time recording, payroll classification, or expense processing that can be fixed to prevent repeat problems.
Internships and NMW – RPGCC’s final thoughts
National Minimum Wage compliance is more complex than many businesses realise — especially when it comes to internships and less formal arrangements. The safest approach is always to assume that interns are entitled to pay unless a clear statutory exemption applies.
At RPGCC, our employment tax and payroll specialists regularly support businesses in reviewing their arrangements, correcting errors, and responding to HMRC enquiries. If you’re unsure whether your interns or workers are being paid correctly, it’s better to check now than risk an investigation later.
If you would like to speak to a member of our team regarding internships and NMW or national minimum wage enquiries in general, please contact us on 020 7870 9050.
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Internship and NMW Checklist
Do they have set hours or a regular schedule? – If they are expected to show up at certain times, that points to “worker” status.
Are they performing tasks that benefit the business? – If they’re doing actual work (e.g. admin, research, client support), they must be paid.
Do they have a contract (written or verbal)? – Any agreement to perform services for the business is enough to create worker status.
Are they supervised like other employees? – The more they are treated like staff, the more likely they are a worker.
Are you reimbursing more than genuine expenses? – Covering travel/lunch alone isn’t enough — they may still qualify for NMW.
