The Truth About Unpaid Internships

Employers could be breaking the law if they continue to offer unpaid internships, experts have warned.

The warning came after a survey from the Sutton Trust found that of employers offering internships, almost half said they were unpaid positions.

Just over a quarter offered expenses only internships and 12% no pay or expenses whatsoever.

The Pay As You Go survey found that both graduates and employers are confused about the current law on unpaid internships. Under national minimum wage legislation, interns must be paid if they are expected to work set hours or on set tasks. Up to 50% of employers and 37% of graduates surveyed were not aware that most of such unpaid internships are likely to be illegal.

Retail had the highest proportion of unpaid internships at 89%, followed by the arts, 86% and the media, 83%.

Only 26% of IT & telecoms and 32% of manufacturing internships were unpaid.

The research found that graduate internships appear to be on the rise, with 46% of 21-23-year olds have been employed this way, compared to 37% of 27-29-year olds. Younger graduates are also more likely to have taken on more than one internship. According to the report, there are around 100,000 interns working in Britain every year, with around 58,000 unpaid.

The survey comes as a bill to ban unpaid internships over four weeks in length is brought to the House of Commons. It would like to see all internships longer than one month to be paid at least the National Minimum Wage of £7.05 for 21-24-year olds, and ideally the Living Wage of £9 per hour.

In addition, the report recommends that internship positions should be advertised publicly, rather than filled informally and recruitment processes should be fair, transparent and based on merit.

Sir Peter Lampl, founder of the Sutton Trust and chairman of the Education Endowment Foundation, said: “Unpaid internships prevent young people from low and moderate-income backgrounds from accessing careers in some of the most desirable sectors such as journalism, fashion, the arts and law.

“This is a huge social mobility issue.  It prevents these young people from getting a foot on the ladder. The legal grey area around internships allows employers to offer unpaid internships with impunity. That is why the law should be changed.”

GDPR AND IMMIGRATION PROCESSES

Most employers will be aware of the upcoming introduction of the General Data Protection Regulation, or GDPR. But how can they be sure the way they collect and store information for immigration purposes will be compliant? Amelore look at the key risk areas.

GDPR

The introduction of the General Data Protection Regulation (GDPR) presents a huge challenge for employers in many data processing scenarios.

Not surprisingly, immigration processes necessitate the collection and processing of considerable personal data by an employer and, in many situations, one or more third parties such as legal advisers.

And with the deadline (25 May 2018) fast approaching, there is a chance that certain types of personal data processing will not be captured in your thinking, and will therefore create a risk of a breach.

For many employers, immigration is a niche activity that changes constantly and is therefore difficult to fully understand and account for with internal policies and processes.

However, given the sensitive nature of data collected and processed, and the multiple parties often involved in this, now is the time to look at key immigration activities and ensure that they are GDPR compliant.

Here are a few scenarios that illustrate the wide range of immigration data points to be accounted for in preparing for GDPR.

Right to work checks

Employers must conduct right to work checks on any new employee, ideally before they start working for you so you only employ people with the ‘right to work in the UK’.  Employers should take copies of any original documentation they see and copy, sign and date the document copy which should then be securely stored.

While it is easy to assume that this is covered by a “legal obligation” that is not actually the case.

A right to work check is done to establish a statutory excuse against a civil penalty – that is, to avoid a fine should an employee be found to be working illegally. It is not strictly speaking a legal requirement to perform a right to work check and there are no penalties for failing to perform a right to work check where the employee is working legally. However, employers that do not carry out right to work checks will not have a statutory excuse.

Therefore, the retention and processing of data relating to immigration status would be categorised under “legitimate interests” and this processing should be covered in a privacy notice.

Resident labour market test

The resident labour market test (RLMT) is conducted as part of a Tier 2 General (new hire work permit) application to justify the recruitment of a non-UK/EU individual, ahead of a UK/EU individual.

The employer generally needs to place two adverts on two websites for 28 days each, and then assess applications against the skills, education and experience described in the advert.

If there are no suitably qualified candidates from the UK/EU, then a non-UK/EU individual can be offered the role and be sponsored under Tier 2 General.

Documentation, including job applications, CVs and interview notes need to be retained for up to seven years in the event that the Home Office conducts a compliance audit.

Now imagine you were one of the candidates who applied for that role. You were interviewed for the job but ultimately were unsuccessful. It would be reasonable to expect that your details would be retained for a reasonable period, for example six months, to allow the employer to defend any challenges arising from the appointment.

However, most candidates would be surprised to learn that their personal information would be stored for up to seven years and shared with legal advisers and the Home Office as part of the immigration process for the successful candidate.

While employers may be able to argue that retaining the information is a legal obligation, the Home Office document that describes document retention is not technically part of the immigration rules. Rather, it is a policy document and therefore it may be open to interpretation whether it is a legal obligation or not.

As such, employers may instead have to rely upon “legitimate interests” as the appropriate legal basis to retain such information. This of course requires a proper assessment to ensure those interests are not outweighed by risk of prejudice to individuals.

What steps do employers need to take to ensure that their RLMT processes are GDPR-compliant?

  1. Ensure your privacy notice for recruitment purposes makes clear the possibility of personal data being processed and retained for the purpose of immigration requirements, specifically the RLMT for Tier 2 General, including the sharing of that data with legal advisers and the Home Office, and the length of time data may be stored.
  2. Minimise personal data where possible. The personal data that must be retained on file, as per the relevant Home Office policy document, relates only to applications shortlisted for final interview – rather than all candidates who responded to the advert. Likewise, do not ask for personal data that is not strictly required at this stage of the process, for example, copies of passports, immigration documents and evidence of qualifications and experience.
  3. Redact and anonymise personal data. A further way to minimise the personal data you hold is to redact information that is not relevant to the information you need to retain, such as contact details, interests and hobbies.

Immigration enquiries and opinions

Throughout the course of employment an employee can expect that their employer may need to consult with legal advisers and other professional advisors on a range of matters, including immigration, and in doing so may need to share personal data.

This should of course be covered in the section within the privacy notice dealing with disclosures to third parties.

However, what if as part of these enquiries it is necessary to transfer data outside the European Economic Area (EEA)? For example, where the organisation is looking to transfer an employee to the US and would like a US-based immigration lawyer to assess eligibility.

Transfers of personal data outside the EEA need to be addressed within privacy notices. Also, any such transfers of personal data should only take place where steps are taken to ensure adequate protection for that personal data in the recipient country (this is also the existing position under the Data Protection Act 1998).

With just over a month to go until GDPR goes live, now is the time to understand the data points in your immigration processes and ensure they are GDPR compliant.

What every manager wants to avoid

In our work, we audit any new company we work with and have observed that a common theme in many is that managers don’t appear to want to manage.

By that we mean managing people. Setting standards on performance and monitoring them, holding employees to account, identifying what behaviours are needed to create the right culture to grow the business and being confrontational if and when it is necessary. Or they are only embracing the nicer side of management. Giving out pay rises and promotions etc

Managers and leaders seldom avoid this type of work for any other reason than they don’t know how to do it and are worried about getting it wrong. Often employees pick up on a fear and become experts on how to make the most of this which is rarely beneficial for the manager or the company. Equally managers aren’t set any targets or held to account about whether they do it (well) or not. So they will naturally focus on what is valued.

As we are all aware, being good at a technical or specialist role can often lead to promotion into a completely different type of role. Leading and managing a team is so much more than being the most senior member of it with the biggest say. The person that earns the most does so because they also have significant people management responsibilities and are accountable for their team as well as business area. Rarely is this properly explained. During recruitment or promotion discussions. Usually the elephant in the room and therefore often misunderstood.

No training or guidance for managers

Here are some of the things that managers have often had no training or guidance on whatsoever:

  • A core understanding of management theory and what is relevant to their company and industry
  • How to delegate and communicate effectively
  • An understanding of their obligations and duty of care under employment and health and safety legislation
  • How to turn key organisational KPI’s into objectives or targets for staff
  • The difference between technical and behavioural competence
  • How to understand and harness the power of personality
  • How to select staff – interview competentantly, understand and recognise unconscious bias and discrimination. Understand the equality act.
  • Motivational techniques and team building

It stands to reason that if you don’t know how to do something you may avoid it or try and get someone else to do it. Particularly if you fear negative consequences for yourself. Or if you observe that no-one else is tackling similar issues.

Revolving door culture

But as many will be aware, not doing something often has a bigger impact on your culture than doing something, even if it’s not perfect. Not tackling people management issues will build up over time until you start to observe that your good people are leaving. You will replace them of course. At considerable time and expense. And then your fanastic new hire might leave before their probabtion period is up and you start to wonder if it’s something in the business.

The truth is that it’s your culture. How you do things. What you avoid or ignore.

Targetted development

But you can address the fear and reluctance of maangers with some targeted management development training. A core part of that should be an assessment of whether you have the right poepe in lead roles.  Often you will have and they just need devellping. But some people don’t make or want to manage people. No matter how much you spend on core Leadership programmes. However they may be suited to a different specialist role? Or have a No 2 that is interested?

What provider to pick?

There are plenty of companies around who specialise in leadership and management development training. Many long established and many newer ones coming through.

Talking to CEO’s about their previous experiences of such engagement they often report that many staff enjoy attending such initiaitves but they rarely had a long lasting effect as they often didn’t address the following issues:

  • Who held managerial posts
  • What their remit was v what they did
  • Whether the corporate structure was correct
  • What the culture was (desirable v actual)
  • How they would be managed post the intervention

It was hard therefore to quantify any return on the investment made often because the desired outcome hadn’t been pinned down or properly understood.

Our approach

At Amelore, supporting organisations to develop managers has become a growing area for us.  We usually work with companies that are already established and performing well but who want to develop their management team and culture to create space for a senior team to focus on the strategy. Often they don’t have an HR Director in their business.

Our work as external HR professionals can involve us recruiting new managers and coaching key individuals along side regular internal workshops. We can honestly say that every company has different needs and consequently different programmes.

What we bring is our insight into how to make companies work better which we’ve gained over many years. And our HR expertise.  And just like Mary Poppins, we stay as long as we are needed. Ultimately our aim is to leave that company in a good place to grow, compete and innovate. To give it competitive advantage because it works as well on the inside as the outside.

Your Recruitment Options

Hiring the right people is as significant to the success of a company as the business model and health of the balance sheet.

Recruitment is a highly lucrative unregulated and fast growing industry. It is important therefore for companies to understand the different options available to them, the costs as well as the benefits and any downside of the choices they make.

Common recruitment mistakes

Organisations in high growth mode often run very inefficient and costly recruitment processes with little thought for the candidate experience even though it is a seller’s market.  Multiple repetitive interviews, waiting until vacancies have been created to start a process and failing to assess candidates thoroughly are typical.

Some Key Facts

The CIPD (Chartered Institute of Personnel and Development) in partnership with Hays Recruitment, conducted a Resourcing and Talent Planning survey in 2015.

Resourcing and talent management in current economy “an employee’s market”

  • Half of CEOs have recruitment & talent management as a priority;
  • Three quarters are recruiting key talent/niche areas;
  • Growing demand for labour – more than half expecting headcount to increase;
  • Skills shortages are escalating – four-fifths feel that competition for talent has increased;
  • Lack of specialist or technical skills & lack of sector/industry or general experience were common problems;
  • Organisations are increasingly required to be creative in both their search for candidates and the packages they offer.

What are your recruitment options?

Your network – Many companies use their personal network to find staff and this can be very effective. However it can also lead to skills shortages and complications with personal relationships.

Advertising on line – Companies may advertise via online sites such as Linkedin, Indeed, Monster, Fish4jobs etc  This has the benefit of advertising that your company is busy and hiring but can create a lot of administration.

Recruitment Agencies – You won’t have been in business long before the sales calls start.  When choosing an agency, try and get a recommendation and check their credentials. Anyone can set an agency up with no qualifications or experience. If things like diversity and inclusion are important to your company make sure you ask about this.

Executive Search or Headhunters – This is usually used for senior or specialised roles due to the cost. Finding a firm that understands and challenges you is worth a lot. Meeting a few firms and interviewing them can be helpful.

Independent HR company or freelance individual – Many experienced HR professionals have strong recruitment experience gained from working in-house. A key component of recruitment is identifying the passive candidate.  You pay a day rate for experienced professionals to find and speak to candidates for you.

They will often also manage the entire process for you, even if you work with an external recruiter. Always a cheaper option but requires an investment in developing knowledge and relationships so the right candidates are identified. Key factor here is that there is no placement fee so no pressure to put up salaries or package to enhance the fee.

What is the difference between Executive Search and Recruitment Agencies?

The aim of Recruitment Agencies is to fill a position with the best available person. Recruitment agencies source from a pool of candidates that are actively looking for a new challenge by advertising on various platforms. This leads to a group of candidates that are “self-selected” of which the selection was not pre-determined by the company.

The aim of Executive Search consultants is to locate and recruit the best person, regardless of whether he or she is already employed or seeking a new position.

This approach can broaden and deepen the talent pool available to a search firm’s clients and places the control of who should be part of this talent pool, squarely in the hands of the client company.

There may also be the use of specialised psychometric tools, resources and skills to enhance the selection process.

The costs

Executive Search and Recruitment Agencies tend to charge a percentage fee or a retainer.

The percentage fee is based on the starting salary of the candidate and is normally payable once the candidate starts work with you. This form of charging is most common and if you don’t find a suitable candidate, you don’t have to pay the agency anything.

However, fees can vary from 8-25% depending on the agency and the salary. If you choose a retainer fee, it is agreed at the outset; with a percentage being payable upfront and the remainder due when the candidate starts their employment.

If you are using an independent HR consultancy you won’t pay a placement fee. Just a day rate which almost always works out cheaper.

Looking ahead

It is important for companies to understand and cultivate their ability to read market conditions, trends, movement and fluidity in order to develop and manage effective recruitment strategies. Needs changes as companies grow and it is important to regularly review this.