Internship Agreement UK Guide 2025: Legal Requirements, National Minimum Wage & Employment Rights [Complete Compliance Suite]

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• How does an internship agreement work
• Is internship agreement legal for UK employees
• Do you legally have to pay interns in the UK
• Is internship agreement covered by UK employment law
• How does IR35 affect internship agreement
• Is internship agreement GDPR compliant
• What insurance is needed for internship agreement
• Do internship agreement workers get holiday pay

How Does an Internship Agreement Work?

Quick Answer (40-60 words): An internship agreement is a legally binding document outlining the terms between an employer and intern, including roles, duration, compensation (if applicable), and employment rights. Unlike employment contracts, internship terms depend on whether the intern qualifies as a “worker” under UK law. If they perform regular duties, they’re entitled to the National Minimum Wage — currently £12.21 per hour for those aged 21 and over from April 2025.

An internship agreement sets the foundational terms for a work placement, establishing clear expectations for both parties. The agreement should specify the intern’s responsibilities, the duration of the placement, reporting structures, and crucially, whether payment will be provided.

Employment Status Matters Most: The UK doesn’t have a legal definition of “intern.” Instead, entitlement to the minimum wage does not depend on what someone is called, the type of work they do, how the work is described (such as ‘unpaid’ or ‘expenses only’) or the profession or sector they work in. What matters is whether the person qualifies as a worker under employment law.

If an intern is classed as a worker, then they’re normally due the National Minimum Wage. Internships are sometimes called work placements or work experience. These terms have no legal status on their own. The rights they have depend on their employment status.

Key Elements of an Effective Agreement: A well-drafted internship agreement should include the intern’s title and reporting structure, specific duties and deliverables, start and end dates, agreed hours of work, compensation (hourly rate or expenses only), break entitlements, holiday rights, confidentiality clauses, and termination provisions. The agreement should also clarify any probation period and performance expectations.

Why Documentation Matters: Even if the internship is unpaid or voluntary, documenting the arrangement protects both parties. If someone claims that they owed minimum wage arrears, you must demonstrate that they are not a worker for minimum wage purposes or that no arrears are owed. Written records become essential evidence if disputes arise.

A clear internship agreement also facilitates professional conduct, sets achievable learning outcomes, and ensures the placement benefits the intern’s career development. This creates a positive experience for both employer and intern.

What Does an Internship Agreement Look Like?

Internship agreements vary in format and complexity depending on industry, duration, and whether payment is involved. Some are simple one-page documents; others are comprehensive contracts.

Typical Structure: Professional internship agreements follow a standard format beginning with header information (company name, date, intern details). The first section defines the role, including job title, department, reporting manager, and key responsibilities. The second section specifies duration (start date, end date, notice period for early termination). The third addresses compensation and hours — either confirming paid employment with hourly rates or clarifying that it’s a voluntary, unpaid placement with expenses reimbursement.

Most agreements include confidentiality and intellectual property clauses, outline health and safety responsibilities, state holiday/leave entitlements (where applicable), and include standard termination language. Professional agreements also reference compliance with UK employment law, data protection regulations, and equality legislation.

A well-drafted agreement fosters transparency, professionalism, and a positive working relationship between both parties. The agreement should be written in clear, jargon-free language accessible to the intern.

Is Internship Agreement Legal for UK Employees?

Short Answer: Yes, internship agreements are entirely legal in the UK — provided they comply with employment law. The legality depends on whether the arrangement constitutes a worker relationship under the National Minimum Wage Act 1998.

Internship agreements themselves aren’t regulated by specific legislation; instead, their legality is determined by the nature of the work and the relationship created. The term ‘intern’ has no legal status under minimum wage law. Entitlement to the minimum wage does not depend on what someone is called, the type of work they do, how the work is described (such as ‘unpaid’ or ‘expenses only’) or the profession or sector they work in. What matters is whether the agreement or arrangement they have with you makes them a worker for minimum wage purposes.

When Internship Agreements Must Be Paid: An intern is generally entitled to NMW if they meet any of the following criteria: You have a contract (even unwritten or implied) to do work or services personally. This includes oral agreements and implied contracts where regular work is expected.

Legal Exemptions (Where Unpaid Internships Are Permitted):

• Educational Component: Students required to do an internship for less than one year as part of a UK-based further or higher education course are exempt from minimum wage requirements.
• Work Shadowing Only: If the internship involves only observing and does not include performing any work, minimum wage doesn’t apply.
• Genuine Volunteering: Interns volunteering for charities or voluntary organisations who receive only reimbursement of limited expenses (travel, lunch) are exempt — but only if they choose their own hours.
• Compulsory School Age: Students of compulsory school age undertaking work experience are not entitled to minimum wage.

Critical Legal Point: Stating in documents that the minimum wage does not apply will not limit your liability to pay the minimum wage when it is due. National Minimum Wage legislation ensures an employer cannot avoid paying minimum wage in this way (even if the person concerned agrees to this).

Attempting to waive minimum wage entitlements through contractual agreement is void and unenforceable. The law prioritises worker protection over contractual freedom in this area.

Recent Legislative Developments: The government is increasingly taking a stand against unlawful internships. The term ‘intern’ is not defined in legislation, but proposals to define interns within legislation are under consultation for potential future changes, indicating stricter regulation may be coming.

Do Internship Agreement Employees Get Employment Rights?

Employment rights for interns depend entirely on their legal classification as workers, employees, or volunteers — not simply on their job title.

Rights by Classification:

Workers (Most Interns): If an intern is classified as a worker, they’re entitled to: the National Minimum Wage (currently £12.21 per hour for those aged 21 and over from April 2025), paid holiday leave (20 days minimum for full-time), protection from discrimination, right to request flexible working, protection for whistleblowing, and statutory notice periods.

Employees (Regular Paid Interns): If the intern is classified as an employee (usually through regular paid work), they also receive: statutory sick pay, statutory maternity/paternity/parental leave rights, protection from unfair dismissal, and enhanced redundancy rights.

Volunteers Only: True volunteers at charities who choose their own hours receive limited protection: protection from discrimination, safe working environment, and protection for whistleblowing — but not minimum wage or holiday pay.

Critical Issue – Unfair Dismissal: An intern is entitled to the National Minimum Wage if they count as a worker. Employers cannot avoid paying the National Minimum Wage if it’s due by: saying or writing that the minimum wage does not apply to them. Similarly, if an intern qualifies as an employee, dismissal protections apply regardless of contractual terms attempting to exclude them.

Employment rights cannot be contractually waived or removed. Even informal arrangements can trigger statutory protections if the nature of the work qualifies the intern as a worker under law.

Do You Legally Have to Pay Interns in the UK?

Direct Answer: An intern is entitled to the National Minimum Wage if they count as a worker. Employers cannot avoid paying the National Minimum Wage if it’s due by any contractual arrangement, written agreement, or verbal understanding.

Who Must Be Paid: An intern qualifies as a worker entitled to minimum wage if any of these apply:

• They have a written or verbal contract to perform work or services personally
• They’re required to work set hours, even if they dislike the schedule
• They’re promised a contract of future employment
• They perform work that directly benefits the business (rather than pure observation)
• They undertake regular duties as directed by the employer

Current Minimum Wage Rates (April 2025):

• £12.21 per hour (aged 21 and over)
• £10.00 per hour (aged 18 to 20)
• £7.55 per hour (aged under 18)
• £7.55 per hour (apprentice rate)

When Internships Can Legally Be Unpaid: Limited exemptions exist. Students required to do an internship for less than one year as part of a UK-based further or higher education course are not entitled to the National Minimum Wage. Additionally, work shadowing (purely observational) and genuine volunteer placements at charities are exempt.

Recording Obligations: If you take someone on as a worker, the usual rules on record keeping apply. Employers must maintain payroll records showing payment at the appropriate minimum wage rate, work hours, and any deductions.

Enforcement Risk: Failure to pay minimum wage to qualified interns carries significant penalties. HMRC actively pursues non-compliance through investigations, back-pay claims, and public naming-and-shaming campaigns. Penalties typically include arrears with interest plus statutory fines.

Practical Action: Before bringing on an intern, assess whether they’ll qualify as a worker. If yes, plan to pay at least the age-appropriate minimum wage rate. If truly unpaid, ensure the arrangement meets one of the limited legal exemptions and document this clearly.

Is Internship Agreement Covered by UK Employment Law?

Yes, internship agreements are covered by UK employment law. The legal framework depends on whether the intern qualifies as a worker, employee, or volunteer under statutory definitions.

Primary Legislation Applying:

• National Minimum Wage Act 1998: Governs whether minimum wage is due based on worker classification
• Working Time Regulations 1998: Sets maximum weekly hours (48 hours average), rest breaks, and holiday entitlements
• Equality Act 2010: Prohibits discrimination by age, disability, gender, race, religion, sexual orientation
• Health and Safety at Work etc. Act 1974: Requires safe working conditions, risk assessment, and proper equipment
• Data Protection Act 2018: Governs handling of intern personal data and GDPR compliance
• Employment Rights Act 1996: For employees, covers unfair dismissal, redundancy, statutory notice

Common Law Duties: Regardless of classification, employers owe interns common law duties of care, confidentiality, and good faith. These duties exist even without explicit contractual terms.

Right to Dispute Classification: If an intern believes they’ve been misclassified, they can bring claims to an Employment Tribunal. The burden of proof typically falls on the employer to demonstrate the intern doesn’t qualify as a worker.

Contract vs. Reality Test: Employment law looks at the actual working arrangement, not merely what a contract states. If a contract claims someone is a “volunteer” but they work set hours and perform regular duties, the contract term is disregarded in favour of worker status.

How Does IR35 Affect Internship Agreement?

IR35 (the Intermediaries Legislation) can potentially affect internship agreements, though most traditional internships fall outside its scope. However, understanding IR35 matters if you’re using umbrella companies, recruitment agencies, or if the intern has established their own limited company.

What is IR35? IR35 is anti-avoidance legislation designed to prevent workers avoiding income tax and National Insurance by working through intermediary structures (typically limited companies) when they would otherwise be employees.

When IR35 Applies to Interns: IR35 typically doesn’t apply to traditional internship agreements where the employer directly engages the intern. However, if an intern establishes their own limited company and contracts through it, or if recruitment agencies are involved, IR35 status must be assessed.

IR35 Assessment Questions:

• Does the intern control when and how they work?
• Can they subcontract their duties to someone else?
• Are they required to attend specific locations?
• Are they financially exposed to loss?
• Do they have a mutuality of obligation?

If IR35 Applies: The employer must treat the intern as an employee for tax purposes, operating PAYE withholding on fees paid to the intermediary company. This increases costs and compliance complexity.

Practical Impact: For most internship agreements between established employers and individuals, IR35 is irrelevant. However, if engaging self-employed interns through intermediary companies, IR35 assessment is essential to avoid tax underpayment and penalties.

Recommendation: For conventional internship arrangements, keep the intern directly employed or classified as a worker. This avoids IR35 complications and ensures clearer compliance with minimum wage and employment law.

Is Internship Agreement GDPR Compliant?

GDPR compliance is essential for any internship agreement involving personal data processing. Interns have the same data protection rights as any worker.

What Data Protection Applies: The Data Protection Act 2018 and GDPR (retained post-Brexit) govern how employers collect, process, and store intern personal data including names, contact details, educational records, performance evaluations, and health information.

Key GDPR Requirements for Internship Agreements:

1. Privacy Notice: Provide interns with a privacy notice before collecting their data, explaining how data will be used, stored, who has access, and their rights (access, rectification, deletion).

2. Lawful Basis for Processing: You must identify the lawful basis (typically “contract” for internship data, or “legitimate interests” for general HR administration). Processing without a lawful basis is unlawful.

3. Consent vs. Legitimate Interest: For most internship processing, explicit consent isn’t required — the contractual relationship provides the lawful basis. However, marketing communications or non-essential monitoring may require consent.

4. Data Subject Rights: Interns can request access to personal data (subject access requests), request rectification of inaccurate information, and in some cases request deletion (“right to be forgotten”).

5. International Transfers: If intern data transfers outside the UK, ensure there’s an adequacy decision or appropriate safeguards (Standard Contractual Clauses) in place.

Common GDPR Violations in Internship Arrangements:

• Collecting excessive personal data beyond what’s necessary for the internship
• Sharing intern data with third parties without transparent notice
• Retaining intern data indefinitely after the internship ends
• Processing sensitive data (health information, criminal records) without proper safeguards
• Failing to respond to data subject access requests within 30 days

Data Security Obligations: Employers must implement appropriate technical and organisational security measures to protect intern personal data. This includes secure storage, access controls, encryption of sensitive data, and incident response procedures.

Data Breach Notification: If a data breach occurs affecting intern data, you must notify the Information Commissioner’s Office (ICO) within 72 hours if there’s risk to individuals’ rights. You must also notify affected interns without undue delay.

Practical Steps for GDPR Compliance: Include a GDPR compliance clause in your internship agreement acknowledging data protection obligations. Provide a privacy notice at the start of the internship. Minimise data collection to essentials. Establish data retention schedules. Train staff on data protection. Implement secure document storage (both physical and digital).

What Insurance Is Needed for Internship Agreement?

Insurance requirements for interns depend on the work nature, industry, and whether the intern is classified as an employee or volunteer.

Essential Insurance Types:

1. Employers’ Liability Insurance: This is legally mandatory if you have any employees or workers. It is your responsibility to decide whether the person is a worker for minimum wage purposes and, if they are, whether an exemption applies to them. If the intern qualifies as a worker, employers’ liability insurance is compulsory. Failure to maintain it carries a £20,000 per day penalty.

Employers’ liability insurance typically covers compensation claims from workers injured during employment, legal defence costs, and awards for occupational disease claims.

2. Public Liability Insurance: While not legally mandatory, this is strongly recommended if interns work with members of the public or on client premises. It covers accidental injury or property damage claims from third parties (clients, visitors, customers).

3. Professional Indemnity Insurance: If interns provide professional advice or services (consulting, engineering, architecture), professional indemnity protects against claims of negligent professional advice causing financial loss.

4. Directors’ & Officers’ Insurance: For limited companies with intern directors or officers, this protects against personal liability claims.

Insurance for Unpaid Interns & Volunteers: If the intern is genuinely unpaid and unclassified as a worker (e.g., true volunteer at charity), employers’ liability is less likely mandatory — but public liability remains prudent. Charities often hold voluntary worker coverage as part of their public liability policy.

Coverage Gaps to Avoid: Ensure your policy explicitly covers interns (some policies exclude unpaid workers). Check that coverage applies to all locations where the intern works. Verify that cyber liability is included if interns access company systems or client data.

Liability for Intern Accidents: Who’s responsible for internship agreement workplace safety? The employer remains liable for workplace safety regardless of the intern’s classification. Health and safety obligations apply equally to all workers, including unpaid interns.

Documentation: Maintain clear records of all insurance policies, coverage limits, exclusions, and renewal dates. Include insurance information in your internship agreement, confirming the intern is covered by employers’ liability and explaining the scope of coverage.

Do Internship Agreement Workers Get Holiday Pay?

Simple Answer: Any intern that counts as a worker would be entitled to receive the National Minimum Wage. Most importantly, interns qualifying as workers are also entitled to paid holiday leave.

Holiday Entitlement by Classification:

Workers (Most Interns): Minimum 20 days paid holiday per year for full-time workers (pro-rata for part-time). Bank holidays may be included within this 20-day minimum or provided in addition — your policy determines this. The holiday entitlement accrues during the internship and must be paid if not taken.

Employees (Regular Paid Interns): Entitled to the same 20 days minimum. Additionally, employees are protected against “use it or lose it” policies — unused holiday can be carried forward to the next year and must be paid out if employment ends.

Unpaid Interns & Volunteers: If genuinely unpaid and unclassified as workers, holiday pay isn’t due. However, documentation proving genuine volunteer status is essential if challenged.

Short-Term Internships: For interns on placements lasting a few weeks or months, holiday entitlement is calculated on a pro-rata basis. For example, a 10-week summer intern would be entitled to approximately 3.8 days of paid holiday (20 days ÷ 52 weeks × 10 weeks).

Payment Calculation: Holiday pay is calculated at the intern’s usual hourly rate or average earnings. If the intern’s hours or pay varies weekly, use the average of the previous 12 weeks (or entire internship if less than 12 weeks).

Critical Point: You cannot contract out of minimum holiday entitlements. Even if the internship agreement states holiday pay isn’t provided, if the intern qualifies as a worker, they’re legally entitled to it. The contractual provision would be void and unenforceable.

Holiday Payout on Termination: When the internship ends, any accrued but untaken holiday must be paid out as a lump sum. For example, if an intern accrued 5 days of holiday over 10 weeks but took only 2 days, they must be paid for the remaining 3 days upon termination.

Is Internship Agreement Tax Deductible for Businesses?

Yes, legitimate internship costs are generally tax deductible as business expenses, provided they’re incurred wholly and exclusively for the purpose of the business.

Deductible Internship Costs:

• Intern wages/salaries (full cost)
• Employer National Insurance contributions on intern wages
• Training and development costs directly supporting the internship
• Equipment or materials purchased specifically for the intern
• Workspace allocation and utilities (pro-rata)
• Supervision and management time (staff costs)

Non-Deductible Costs:

• Capital expenditure (assets lasting over one year)
• Costs primarily benefiting the intern rather than the business
• Expenses incurred before the internship formally begins
• Internship recruitment costs (may be deductible separately as recruitment expenses)

Claiming the Deduction: For self-employed individuals and partnerships, internship costs are deducted from business income when calculating tax liability. For limited companies, costs are deducted against corporation tax. Proper documentation (invoices, timesheets, payroll records) is essential to support the deduction if HMRC inquires.

Employment Allowance: Employers with an annual payroll over £3 million can claim Employment Allowance against employer National Insurance, reducing their NICs liability. Intern wages count toward this allowance. For 2025, the allowance has increased from £5,000 to £10,500, providing additional savings.

Practical Action: Maintain detailed records of all internship-related expenses. Categorise costs properly (wages, training, equipment). Ensure invoices are retained for three years. Consider consulting an accountant regarding timing of deductions and tax planning.

Can Internship Agreement Be Claimed as Business Expense?

Yes, internship agreements qualify as business expenses, but the treatment depends on the specific cost category and timing.

Recurring Operational Costs: Intern wages and related employment costs (NICs, apprenticeship levy, training) are claimed as operational expenses in the year incurred, deducted against business income or corporation tax.

Capital vs. Revenue: Most internship costs are revenue (operational) expenses, not capital. However, if you purchase fixed assets (computers, furniture) specifically for the intern that will be used for multiple years, these may be capitalised and depreciated over their useful life rather than deducted immediately.

Timing Rules: The expense must be incurred in the year you’re claiming it. Prospective internship costs (expenses incurred before the internship starts) generally aren’t deductible until the placement begins. However, recruitment costs for the internship may be deductible as separate hiring expenses.

Supporting Documentation: To substantiate the business expense claim, maintain: employment contracts or internship agreements, payroll records and payslips, timesheets or work records, training invoices and receipts, expense claims for internship-related costs.

Do Internship Agreements Pay VAT in the UK?

VAT treatment of internship agreements is nuanced and depends on the nature of the services provided and the organisation’s VAT registration status.

When VAT Applies: If you’re a VAT-registered business charging for internship-related services (e.g., selling internship placement services to other businesses), VAT applies at the standard rate (20%). However, if you’re an employer simply engaging an intern for internal work benefit, VAT doesn’t apply.

Exempt Supplies: Internship placements by educational institutions (universities, colleges) as part of their educational services may be VAT-exempt. Charities providing internships as part of their charitable activities are also typically exempt.

Input Tax Recovery: If your business is VAT-registered and you incur costs related to internships (training materials, equipment, third-party services), you can typically recover the VAT paid as input tax, reducing your net VAT liability.

Practical Scenario: Most private employers engaging interns don’t charge for the internship (it’s an internal HR arrangement), so VAT doesn’t apply. The intern wages are business expenses but not VATable supplies. However, if you’re a recruitment agency or consultancy charging other organisations a fee for providing interns or internship placements, VAT would apply to that fee.

Documentation: If claiming input tax recovery on internship-related costs, retain VAT invoices and maintain records of how costs relate to internship provision.

Can Internship Agreement Be Used by Disabled Employees?

Yes, internship agreements can absolutely be used by disabled interns. Disability does not disqualify someone from internship participation, and employers have specific legal obligations to support disabled interns.

Legal Protection: The Equality Act 2010 prohibits discrimination against disabled people in employment, including internships. It’s illegal to exclude, disadvantage, or treat a disabled intern less favourably because of their disability.

Reasonable Adjustments Requirement: Employers must make “reasonable adjustments” to enable disabled interns to participate equally. These might include: modified working hours to accommodate medical appointments or fatigue, accessible physical workspaces (wheelchair access, accessible toilets), flexible break schedules, assistive technology or adapted equipment, mentoring or support from experienced colleagues, modified duties to accommodate physical or mental health limitations.

What’s “Reasonable”? Reasonableness depends on the cost, effectiveness, and practicality of the adjustment. An adjustment isn’t required if it would cause unjustifiable hardship or substantial additional cost disproportionate to business size and resources.

Disability Disclosure: Disabled interns aren’t obligated to disclose their disability. However, voluntary disclosure enables employers to make appropriate adjustments. When an intern discloses disability, treat the information confidentially and discuss necessary adjustments collaboratively.

Practical Example: A deaf intern is entitled to participate in team meetings with a sign language interpreter provided at employer expense (if reasonable). A neurodivergent intern might request quiet workspaces to manage sensory sensitivities. A mobility-disabled intern might need level access and parking arrangements.

Failure to Make Adjustments: Discrimination claims under the Equality Act carry unlimited compensation awards plus tribunal costs. Even if unintentional, failure to make reasonable adjustments is unlawful.

Can Pregnant Employees Use Internship Agreement?

Yes, pregnant employees can participate in internship agreements, and employers have specific legal obligations to protect pregnant interns.

Legal Protection: The Equality Act 2010 and Employment Rights Act 1996 protect pregnant workers and those on maternity leave from discrimination. Pregnancy-related discrimination in hiring, during internship, or upon return from maternity leave is unlawful.

Health and Safety Obligations: Employers must conduct a risk assessment specifically addressing pregnancy-related risks in the intern’s role. Common risks include physical hazards (heavy lifting, chemical exposure), ergonomic hazards (prolonged standing, repetitive movements), stress, and fatigue management.

Adjustments for Pregnant Interns: Reasonable modifications might include: modified working positions to reduce physical strain, additional rest breaks, reduced working hours if medically necessary, rescheduled duties to eliminate specific hazards, flexible timing for medical appointments, workplace parking or priority seating.

Maternity Rights for Worker Interns: If the intern qualifies as a worker (entitled to minimum wage), they’re also entitled to statutory maternity benefits upon becoming pregnant, including: 52 weeks’ statutory maternity leave (26 weeks paid, 26 weeks unpaid), return to the same job or suitable alternative, continuation of certain employment benefits during leave, protection against detriment for asserting maternity rights.

Practical Considerations: An internship agreement must be flexible enough to accommodate potential maternity leave. If the internship is short-term (e.g., 12 weeks), discuss maternity plans early. Employers cannot force a pregnant intern to stop work simply because she’s pregnant — only when medical evidence shows work is unsafe.

Discrimination Vigilance: Avoid treating pregnant interns differently in recruitment, task allocation, or performance evaluation. Equal pay must be maintained if on leave. Return-to-work interviews should welcome the intern back without prejudice.

Can Internship Agreement Be Used During Probation Period?

Yes, internship agreements can be used during probation periods, though the arrangement is uncommon and requires careful legal structuring.

What This Means: An internship arrangement during formal employment probation might involve: a structured internship programme run by the employer as part of probationary evaluation, mentored placement within different departments to assess cultural fit and capability, rotation through various roles to identify the best fit, ongoing skills development assessment.

Legal Considerations: If the individual is classified as an “employee” (not merely an intern), probationary period employment protections apply: National Minimum Wage must be paid throughout probation, statutory notice periods apply even during probation (though may be shortened by mutual agreement), unfair dismissal protection applies after two years’ service (probation doesn’t extend this), discrimination laws apply equally during probation.

Probation and Dismissal: Dismissal during probation must still comply with employment law — it cannot be arbitrary or discriminatory. An employer must follow fair procedures, provide feedback, and give reasonable opportunity to improve. Unfair dismissal claims exist even during probation if the process is fundamentally unfair.

Internship-Within-Probation Risk: Be cautious of creating two-tier internship arrangements for probationers that don’t apply to permanent staff. This could constitute discrimination if the internship-style role is assigned based on a protected characteristic (age, disability, etc.).

Best Practice: If using internship-style structured programmes during probation, apply them consistently to all probationers in similar roles, ensure minimum wage is clearly established and paid, document learning objectives and assessment criteria, provide regular feedback and opportunities to progress to full roles, maintain all employment law protections and statutory obligations.

What Happens if Internship Agreement Equipment Is Stolen?

Liability for stolen equipment depends on contract terms, fault attribution, and whether the intern was negligent.

General Principle: The employer typically bears liability for equipment purchased for business use, even if an intern caused loss through theft. However, if the intern was negligent (left equipment unsecured, ignored security protocols), this may be recovered through deduction or employment disciplinary processes.

Contractual Protection: Internship agreements should specify: equipment remains employer property, interns are responsible for securing assigned equipment, security protocols that must be followed, consequences of loss or damage through negligence, whether the intern must contribute to replacement cost for gross negligence or deliberate damage.

Third-Party Theft: If equipment is stolen by external parties despite reasonable security, the employer absorbs the loss. The intern is not liable unless they failed to follow required security procedures. Business insurance (contents coverage, cyber liability) typically covers third-party theft losses.

Intern Negligence: If the intern was negligent (left a laptop on a desk unattended despite clear security policy, shared passwords, failed to lock doors), disciplinary action is appropriate — potentially including recovery of loss through deductions (subject to wage law limits) or dismissal for serious negligence.

Deduction Limits: Any deduction from an intern’s wages for equipment loss must comply with wage protection laws. Deductions are limited to ensuring the intern receives at least minimum wage. For gross negligence or deliberate damage, the intern may be dismissed and held liable in civil proceedings.

Documentation: Include equipment inventory in internship agreement records. Photograph and document equipment condition at internship start. Maintain security logs showing who accessed equipment. Report theft to police and obtain crime reference number for insurance purposes.

Can Internship Agreement Employees Claim Unfair Dismissal?

Yes, interns classified as employees can claim unfair dismissal under the Employment Rights Act 1996, provided they meet statutory requirements.

Eligibility Requirements: The intern must be classified as an “employee” (not merely a worker), have completed two years of continuous service, be dismissed while protected (not on temporary suspension or probation without reason), demonstrate that dismissal procedures were unfair.

What Qualifies as Unfair Dismissal:

• Dismissal without following fair procedures (no hearing, no opportunity to respond)
• Dismissal for discriminatory reasons (age, disability, gender, race, religion)
• Dismissal for asserting statutory rights (requesting leave, maternity protection, whistleblowing)
• Dismissal due to union membership or activity
• Dismissal without adequate notice or payment in lieu
• Dismissal for economic reasons without genuine redundancy process

Fair Dismissal Reasons: Conduct (misconduct, gross misconduct), capability (poor performance, lack of skills), redundancy (genuine, fairly selected), breach of statute (inability to work legally), some other substantial reason (SOSR — rare, fact-specific).

Intern-Specific Considerations: Most internships are fixed-term, temporary arrangements. An intern dismissed at the end of their agreed internship period hasn’t been “dismissed” in the legal sense — the arrangement has simply expired. Unfair dismissal protection typically doesn’t apply to end-of-contract situations unless the intern was promised continuation.

However: If an internship agreement is terminated early without valid reason, follows unfair procedures, or is discriminatory, unfair dismissal claims may succeed. Example: An intern dismissed midway through a six-month placement without investigation into misconduct allegations could claim unfair dismissal.

Tribunal Claims: Claims must be brought within three months of dismissal (or up to six months if early conciliation attempted). The limit for unfair dismissal compensation is currently £105,493 (or up to £157,240 for age/race discrimination cases).

Frequently Asked Questions: Internship Agreements

What is an internship agreement?

An internship agreement is a documented arrangement between an employer and an individual (intern) outlining the terms of a work placement, including role, duration, responsibilities, and compensation (if applicable). Unlike employment contracts, internship agreements can vary from brief one-page documents to comprehensive multi-page contracts depending on the role and organisational practice.

What does an internship agreement look like?

Professional internship agreements typically include: company and intern details, role and reporting structure, start and end dates, hours of work, compensation, confidentiality clauses, health and safety obligations, termination provisions, and reference to applicable employment law. Format varies from simple letters to formal contracts, with industry standards influencing presentation.

What is the meaning of internship agreement?

An internship agreement is a contractual or documented arrangement defining the legal and practical relationship between an employer and an intern. Its primary purposes are establishing clear expectations, protecting both parties’ interests, ensuring legal compliance, and documenting the employment/work relationship for HR and legal records.

Examples of internship agreement?

Typical examples include university summer internships (10–12 weeks, usually paid), graduate internships (12 months post-degree), professional development internships in law/accounting/consulting, apprentice placements (longer-term, clearly paid and supervised), and international exchange internships. Each follows the same basic legal structure but varies in duration, intensity, and compensation.

How to make an internship agreement?

Steps to create an internship agreement: (1) Define the role, responsibilities, and reporting structure; (2) Specify duration and hours; (3) Clarify compensation and any expenses; (4) Address data protection and confidentiality; (5) Include health and safety obligations; (6) Specify termination procedures; (7) Reference applicable employment law; (8) Have both parties sign and retain copies; (9) Review annually for legal updates.

What are the legal requirements for internship agreement UK?

Legal requirements include: written documentation (strongly recommended though verbal agreements can be binding), National Minimum Wage compliance if the intern qualifies as a worker, working time regulations (max 48-hour weeks averaged), health and safety provisions, equality and discrimination protections, data protection compliance (GDPR), and employment law acknowledgment. The internship must be structured to comply with the National Minimum Wage Act, Working Time Regulations, and Health and Safety at Work Act.

How to create an internship agreement legally in the UK?

To create a legally compliant UK internship agreement: (1) Assess whether the intern qualifies as a worker (determines minimum wage obligation); (2) Include all mandatory clauses (wages, hours, confidentiality); (3) Specify termination and notice periods; (4) Address data protection and GDPR compliance; (5) Include health and safety acknowledgment; (6) Reference equality law protections; (7) Have a solicitor review if unsure; (8) Ensure both parties receive signed copies; (9) Retain records for minimum three years.

Is internship agreement legal for contractors?

Internship agreements can be adapted for contractor relationships, but contractor interns are typically self-employed rather than workers. Contractor status means no minimum wage obligation, no holiday pay, no employment protections — but also no employer tax contributions. IR35 may apply if the contractor operates through a limited company. Contractor internship agreements should clearly define: deliverables, fees, payment terms, intellectual property ownership, confidentiality, liability insurance requirements, and termination terms.

Conclusion: Building Legally Compliant Internship Agreements

Internship agreements are fundamental HR documents that establish the legal and professional relationship between employers and interns. Understanding whether the arrangement constitutes a worker relationship — which determines minimum wage obligation and employment law protections — is the critical first step.

Key Takeaways:

• Minimum Wage: Most interns qualify as workers entitled to the National Minimum Wage (£12.21/hour for ages 21+, from April 2025). This cannot be waived through contractual agreement.
• Employment Rights: Worker interns are entitled to paid holiday (minimum 20 days annually pro-rata), protection from discrimination, safe working conditions, GDPR data protection, and statutory notice periods.
• Documentation: Always document internship arrangements, even if unpaid. Written records protect against misclassification disputes and wage arrear claims.
• Compliance Pillars: Ensure National Minimum Wage compliance, working time regulation adherence, GDPR compliance, health and safety standards, equality law observance, and proper insurance coverage.
• Risk Management: Misclassifying interns as volunteers, failing to pay minimum wage, or violating employment rights creates significant HMRC penalties, tribunal claims, and reputational damage.
• Professional Framework: Use our comprehensive Employment Documents Guide for detailed legal frameworks, and consider our Employment HR Pack (£50.00) for ready-to-use templates across your entire HR function.

Next Steps: If you’re bringing on an intern, download our free Internship Agreement Compliance Checklist (listed under Employment Documents on our Free Templates page), assess whether the intern qualifies as a worker, ensure your insurance covers interns, implement GDPR compliance procedures, establish minimum wage payment processes, and document all arrangements in writing.

For comprehensive, solicitor-reviewed internship agreement templates and a complete employment document suite, explore our Employment Documents Guide.

The Truth About “Free” Legal Template Sites (What You’re Really Signing Up For)

Most websites offering a “free legal template” follow the same pattern:

• You click because it’s advertised as free
• You spend 10–15 minutes answering questions
• At the very end, you must create an account or start a “free trial”
• Your card is required upfront
• The subscription auto-renews at £29–£39 per month

This isn’t a free template — it’s a subscription funnel. Many people only realise after being charged £300–£400 over the year.

Why These “Free” Templates Are a Legal Risk

• Outdated wording: not aligned with current UK law
• Missing mandatory clauses: required for legal validity
• No compliance guidance: leaving users without legal context
• No structured checklist: no way to verify the document works
• Not kept updated: often unchanged when legislation changes

One incorrect clause can weaken or invalidate the entire document.

Hidden Problem: Many “Free Template” Sites Aren’t Even UK-Based

Another major issue is that many free or auto-subscription template sites operate outside the UK and use documents originally drafted for the US legal system. These are then loosely adapted for “international use,” which creates serious problems:

• Incorrect terminology: taken from US contract law
• Missing UK statutory references: essential legal requirements omitted
• Non-applicable clauses: terms that don’t apply under UK legislation
• Legal conflicts: risks breaching UK consumer, employment, or GDPR rules

This is one of the most common reasons UK businesses face disputes or regulatory issues when using generic US-style templates.

Why Templates UK Does the Opposite

• Drafted by UK professionals: written by experienced business & legal experts
• UK-law only: no US crossover or generic “international” templates
• £10 one-time price: no subscriptions, no renewals
• Full preview: see the exact document before buying
• Two versions included: Editor + Interview formats
• Lifetime access: free lifetime updates included
• Free compliance checklist: included with every document

No tricks. No trials. No hidden fees. Just the exact UK-specific legal document you came for — at the price we told you upfront.

Get the professionally drafted Internship Agreement Template and get it right the first time.

If your situation is complex or you want personalised guidance, you can also book a consultation with our UK legal experts here: Book a Consultation.

Explore the Master Legal Templates Pillar Guide

The complete overview of 37 essential UK business templates and all legal categories:

UK Business Legal Templates – Complete 2025 Master Guide

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• Employment Documents Guide UK
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Related Guides

• Employment Documents Guide UK
• Employment Contract Guide UK
• Employee Handbook Template UK
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Last updated: November 2025

Disclaimer: This guide provides general UK legal information, not legal advice. Laws are current as of November 2025.