Unpaid and underpaid internships have become increasingly common. According to a report by the Sutton Trust, 35% of graduates completed an unpaid internship in 2025, up from 27% in 2018.
While the legal framework has not fundamentally changed, the Government’s recent response and the launch of the Fair Work Agency signal a tougher enforcement environment. For many employers, the priority is to audit current arrangements, check pay obligations and tighten documentation. This article explains the current legal framework and, crucially, what employers should do in practice when setting up internship arrangements.
Unpaid internships are lawful only in limited circumstances. In many cases, if an individual qualifies for National Minimum Wage protection, they must be paid at least the National Minimum Wage unless a specific exemption applies. Certain student work placements forming part of a further or higher education course may fall within an exemption.
The key question, therefore, is whether an intern falls within the categories entitled to the National Minimum Wage. Status depends on the reality of the relationship in practice, not simply the label used. Simply calling someone an “intern” or “volunteer” does not remove any obligation to pay them the National Minimum Wage (“NMW”) if they are entitled to it.
As part of its “Make Work Pay” agenda, the UK Government launched a call for evidence on unpaid internships in July 2025. This extended beyond internships to include work trials, voluntary workers, volunteering, and work shadowing arrangements. The Government’s response, published in February 2026, does not introduce an outright ban on unpaid internships at this stage. However, it signals increased scrutiny of unpaid working arrangements and highlights the importance of employers ensuring compliance with NMW and employment status obligations.
The Government acknowledged concerns that unpaid internships are commonly used as a route into paid employment and that some arrangements may operate in a way that gives rise to worker status and entitlement to the NMW. There was significant support among respondents for stronger protections, including clearer legal definitions and restrictions on unpaid internships outside formal education or training programmes.
Employers offering internships should carefully assess whether interns are undertaking work rather than simply observing or training, and whether set hours, responsibilities or performance expectations are imposed. Employers may also wish to consider introducing written internship agreements clarifying the nature and scope of the placement, and where the arrangement could give rise to worker status and entitlement to the NMW.
While the Government stopped short of proposing a ban on unpaid work trials, the response suggests increased focus on ensuring trials are limited, proportionate and genuinely linked to recruitment assessment.
Employers using work trials should ensure that trials are no longer than necessary to assess suitability for the role and that individuals are not undertaking substantive work for the business. The purpose and duration of the trial should be clearly communicated in advance. Whether the NMW applies will depend on the reality of the arrangement, including whether the individual is carrying out productive work rather than participating only in a limited recruitment assessment.
The Government’s findings suggest broad support for clearer parameters around work shadowing arrangements, including defined time limits and written explanations of responsibilities.
Employers offering shadowing opportunities should ensure that placements remain primarily observational and avoid allocating regular duties or responsibilities. It would also be sensible to set a clear and limited duration for shadowing arrangements and provide written confirmation of the purpose and scope of the placement. If the individual is in practice carrying out duties or producing work of value, the risk of NMW entitlement is likely to increase.
There remains a lack of awareness around the legal obligations and employer responsibilities, which continues to create confusion for both employers and workers.
Instead of legislative reform, the Government has proposed three key measures:
The Government has not ruled out future legislative change, stating it remains committed to ensuring young people have a fair chance at the start of their careers.
In addition, the UK Government launched the Fair Work Agency on 7 April 2026 as an executive agency sponsored by the Department for Business and Trade. It brings together enforcement functions in one place and has powers to investigate and take action in relation to certain breaches, including National Minimum Wage non-compliance.
As of 6 April 2026, the National Minimum Wage rates are as follows:
While the legal position may not have fundamentally changed, the enforcement landscape is expected to become more robust.
The Fair Work Agency has powers to investigate certain breaches of employment law, including National Minimum Wage non-compliance, and to take enforcement action where appropriate. The Government has indicated that it will continue to crack down on unlawful unpaid working practices, and internship arrangements are likely to remain an area of focus.
Employers should not assume that longstanding internship practices remain low risk. With greater scrutiny of unpaid work and a new enforcement body now in place, this is a good time to review arrangements and ensure they are both legally compliant and aligned with wider talent and social mobility goals.
Employers are therefore encouraged to:
Consider paying interns as a default to reduce legal and reputational risk.
© 2026 BTO Solicitors LLP | V.A.T. No: 260371482 | All rights reserved.
Stay informed
