Internships do not only matter to young opportunity-seekers, but matter to employers as well. With clear and unambiguous terms, both employers and interns can refer to their rights and responsibilities and protect themselves in cases of contingencies. However, a lot comes into ensuring a great internship experience. Below are issues employers should be aware of when hiring interns and the typical documents employers and employees may need before and after an internship.
Are unpaid internships legal?
Employers should always consider whether they have the capacity to pay their interns. In this case, they should be aware of how to classify their interns. In many jurisdictions, unpaid interns are illegal. Some jurisdictions will require passing complicated tests to qualify the unpaid status. Here are some examples:
The Fair Labor Standards Act (FLSA) states that any employee of a for-profit company must be paid for their work. Since interns are not considered employees in the act, interns can be unpaid, however given that they can pass a 7-step test proving the intern to be the ‘primary beneficiary’ of the internship, which can be excluded for public sectors and non-profit organizations. Factors to consider include:
The test is, in reality, rather hard to pass as there may be subjective differences between the level of benefits interpreted by the intern versus the company.
The law states that any intern that carries work considered valuable to the company and has set hours and responsibilities must be paid. Hence, companies who do not wish to pay their interns may need to provide unfixed working hours and duties. Unlike many countries that have a fixed number, the minimum wage for the UK is categorized into age groups. Employers should consider whether to classify their interns as ‘workers’, who are entitled to the National Minimum Wage, or ‘volunteers’, ‘student internships’, ‘student work experience placements’ or ‘work shadowing’, where the National Minimum Wage would not apply. Further definitions of these terms can be found on https://www.gov.uk/employment-rights-for-interns .
Hong Kong has various legislations regarding the payment status of the intern. Again, under the Minimum Wage Ordinance (MWO), Statutory Minimum Wage (SMW) and Employment Ordinance (EO), unpaid internships are illegal. However, adopting a similar approach to the UK, interns that are classified as ‘student interns’ and ‘work experience students’ can be exempted from payment.
Student Intern is a student undergoing a period of work arranged or endorsed by a local education institution specified in Schedule 1 of the MWO, who must be a student resident in Hong Kong and undergoing a period of work arranged or endorsed by an institution, and the work is a compulsory or elective component of the requirements of a full-time education programme for a non-local academic qualification at degree.
Work experience student is a student who is enrolled in a full-time accredited programme provided by a local education institution who’s also specified in Schedule 1. The student must be under 26 at the start of the employment and have a continuous period of up to 59 days if the student has not commenced another student employment within the same calendar year and has made a statutory declaration verifying the fact above and provided said declaration to their employer.
On the other hand, there are also jurisdictions that allow unpaid internships.
Under the Employment Act in Singapore, there is no stipulation as to the minimum wage to interns. Therefore, interns can be unpaid.
Employers should take note of the Internship Laws in their own jurisdictions along with their own financial position to consider policies of taking interns.
Documents required to hire an intern
A) Internship Offer letter
An internship offer is sent by the company when an employer is interested in hiring an intern after reviewing his/her qualifications and/or interviewing the candidate. The offer letter should not be simple and merely stating the gist of what needs to be complied by the candidate if he/she chooses to accept the offer.
The following should be also included in an offer letter :
As the offer letter closes, summarize the condition towards constituting official acceptance of the internship (usually by signing the enclosed internship contract and sending a copy back to the company, with details covered in the next section of the blog). A deadline should also be set to accept the internship for the employer to easily keep track of the number of interns officially joining.
Link to the document on DocPro: https://docpro.com/doc1371/internship-offer-employer-to-candidate-internship-offer-letter
B) Internship Agreement
An internship agreement, or internship contract, is initiated by the company/employer to interns whom they have given an offer to, which provides background of the internship and detailed terms that will be followed if the intern accepts the internship. Certain clauses, like the confidentiality clause and intellectual property (IP) clause, are particularly important in the agreement (see later section on Internship Agreements).
Link to different versions of the document on DocPro:
C) Internship Completion Letter
An internship completion letter officially recognizes the end of an internship period for an intern. No matter if it’s part of the internship package or upon request by the intern, an official recognition helps interns move on to pursue their career in other companies, as the recognition usually includes a short evaluation of the intern’s performance in his last role.
Start off by going to the point and confirm the intern (with his name printed) has completed an internship with your company. Again, include the period of internship and the name of the role.
When giving a feedback summary on the intern, address the intern’s name throughout the feedback section. While it is essential to keep the comments honest, try to use more positive adjectives to describe the intern and provide specific examples of what the intern has done in particular, if available, to support the description. Most importantly, linking these positive attributions to how the intern contributed to the company will significantly help the intern in establishing a good impression on other employers.
Conclude the letter by wishing the intern all the best in the future, and include the name, post and company represented by the referee.
Link to the document on DocPro:
Do you need an Internship Agreement?
To consider whether an employer needs an internship agreement, he should consider:
However, no matter if it is a paid or unpaid internship, having an internship agreement is important for the employer to estimate the budget required to hire an intern, and to establish clear boundaries with the intern on the rights both sides are entitled to.
What to include in an Internship Agreement?
The following should be included in an Internship Agreement:
1. Duties and Job Description
This will be the official summary declaring the position the intern will be taking up and the jurisdiction the contract is guarded under. The corresponding jurisdiction is often the location where the internship takes place, which should be clearly mentioned in the offer letter and once again in the internship agreement. This is important for the intern to check once again that the position offered is what he/she intends to be.
2. Period of Employment
This will be where the exact period of employment, daily work hours and holidays for the intern is included. It is also important, if necessary for the company, to include that the intern may need to work over the stipulated hours if the workload is too demanding, subject to relevant legislation and approval by the person the intern reports to, so that extra work will be within the intern’s expectations
This will be the section to include the pay to the intern and the laws and insurance applicable to assure the intern on his/her rights on receiving the salary that is agreed to. It is also crucial for the company to include what will not be covered by the company, such as the intern’s taxes and health conditions, etc., to exclude the company from liabilities of the intern that may be too large. In the case of unpaid internship, the employee should state the purpose of the internship and that it is therefore unpaid and the intern is not entitled to any remuneration.
4. Nature of internship
This section explains to the intern the purpose of the internship, such as educational, training, etc, and whom the intern seeks supervision from. This will also be where the company should draw the line on the scope of risks assumed by the intern regarding the internship. Interns are advised to look clearly into this section and consider whether they accept these terms with regard to their own circumstances.
Here, the rules that need to be followed by the intern are included, depending on the company’s own standards and practice. Examples may relate to etiquette, refrain from accepting new clients in the name of the company, disclosing any conflict of interest etc. This serves as a reminder to interns regarding how they should act in the workplace and the following consequences that may be resulted if they violate any of these rules.
6. Termination clause
The company should also set out terms on when the contract will be terminated, usually relating to violation of discipline by the intern. Typical points to consider will be:
7. Disputes clause
This section illustrates the method of settling disputes between the intern and the company in case any situation arises so that the intern can be mentally prepared, despite the need for invoking this section is usually remote.
8. Entire agreement clause
This section sets out how the current contract is binding and how either the company or the intern can modify the contract to be bound, which is subject to agreement by both parties. This therefore strictly restricts rights to variation between the two parties involved.
9. Confidentiality clause
This section requires interns to keep classified company information to themselves and reminds them that any unauthorized disclosure of such information may be subject to consequences.
10. Intellectual property clause
An IP clause governs the ownership, title and rights associated with intellectual property such as creations, documents, etc. owned by the company. The company should decide on the scope of IP protection and draft the clause to be broad that acts as a guide for the intern to understand where the company positions itself in its interests.
11. Non-solicitation clause
This section requires interns to agree that they will not approach the company’s clients and manufacturers for a specific time after the contract period to avoid conflict of interest, and the consequences of violating the clause.
The above format of internship agreement applies to a more extensive internship agreement.
Different versions of Internship Agreements on DocPro
A) Hourly/Unpaid contractor
This is a template for an Internship Agreement between the Company and the Intern, with the Intern being hired as an independent contractor on a full time or an hourly basis (paid or unpaid).
Link to the document on DocPro: https://docpro.com/doc1560/internship-agreement-hourly-unpaid-contractor
B) Simple form for hourly/monthly/unpaid salary
Companies may also opt for a simpler version of the agreement to to hire an Intern on hourly/monthly basis (paid or unpaid)
Link to the document on DocPro: https://docpro.com/doc2034/internship-agreement-simple-form-hourly-unpaid-monthly-salary
C) Internship agreement
This is a template for an Internship Agreement between the Company and the Intern with the Intern being employed as a salaried employee on a full time or part time basis.
Link to the document on DocPro: https://docpro.com/doc1559/internship-agreement-salary-employee
Having these documents fully equipped will help ensure a smooth transition into and out of an internship. Employers should familiarize themselves with the local laws on hiring interns. Whether paid or unpaid it is important to have agreement to protect their rights and avoid disputes.
Please note that this is a general summary of the position under common law and does not constitute legal advice. As the laws of each jurisdiction may differ, you may wish to consult your lawyer.
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