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HMRC targets music firms in unpaid internship crackdown

By | Published on Wednesday 12 February 2014


HM Revenue and Customs has announced that it is cracking down on unpaid internships at music companies. The government body has announced that it has written to various record labels and live firms to explain the rules regarding unpaid labour and that if they are not paying their interns the minimum wage they may be breaking the law.

This follows an announcement by Prime Minister David Cameron before Christmas of a crackdown on companies who do not properly pay employees, with an increase in penalties due to come into force this month. Previously, the most a company could be fined was £5000 per unpaid worker, but from this month the maximum penalty will rise to £20,000. Also increased its the exact amount a company will be fined per unpaid worker, now the equivalent of 100% of the wages calculated to have not been paid, up from 50% previously.

Michelle Wyer, Assistant Director of HMRC’s National Minimum Wage Department, told CMU: “Non-payment of the national minimum wage is not an option, it’s the law, and we’re letting the music industry know that we’ve got them in our sights. If they are not playing by the rules, now is the time to put things in order. Last year we fined over around 800 employers, so our message is clear: if you are not paying your interns, but should be, come forward now and put things right to avoid a penalty”.

Although there is no legal definition of what an ‘intern’ is in the UK, the National Minimum Wage Act 1998 states that ‘workers’ – so anyone with a written or oral contract to provide work or services – must be paid the minimum wage, unless they are:

• On a government-accredited apprenticeship.
• Participating in certain kinds of work-based training schemes.
• A student doing their first degree or a teacher training course who must complete a work placement (that’s no longer than twelve months) as part of their course.
• Volunteers employed by a charity or other voluntary organisation.
• In certain other circumstances, including homeless people working in exchange for shelter.

The Institute For Public Policy Research has also noted a series of criteria which distinguish an ‘internship’ from simple work experience, voluntary work or work shadowing schemes, participants in the former likely counting as a ‘worker’ in the eyes of the law. Features of such an internship might include a placement that lasts between three and twelve months, working to set hours (often full-time), being required to complete specific tasks within set timeframes, and undertaking tasks that would otherwise be carried out by a member of staff.

The music industry, as with various other sectors in entertainment, is known for relying heavily on interns, in many cases working unpaid. As the crackdown on this practice began this week, Employment Relations Minister Jenny Willott said: “The music industry is often seen as a glamorous industry to work in, particularly for young people. However, that is no excuse for interns not to be paid at least the minimum wage if they are employed as a worker. We need to make sure that interns who want a career in music are getting a fair deal and are not being exploited”.

So far, 35 music companies have been contacted by HMRC, explaining the rules regarding unpaid workers, with follow up visits due to begin later in the year to monitor compliance.