If someone joining you as an intern is going to do real work rather than sit and watch, the answer is almost always yes, you have to pay them. Worker status, not the label stamped on the contract, is what decides whether pay is owed. This article is written for the moment before you fill in the intern agreement, when you are deciding what to actually offer, not for the moment after something has already gone wrong.
> Quick answer: Pay depends on what the intern actually does, not the word "intern". If they are required to turn up and carry out tasks that benefit the business, they are almost certainly a worker and entitled to at least the National Minimum Wage. Genuine work-shadowing with no set hours and no obligation to perform tasks can sit outside worker status, but that is a narrow exception, not the default. When in doubt, pay.
Why the label on the contract does not decide anything
Employment status in England and Wales is a question of fact, worked out from what happens day to day, not from what a document calls the arrangement. A business can write "unpaid internship" across the top of a page and it changes nothing if the person underneath that heading is required to show up at set times, follow instructions, and produce work the business relies on. Tribunals and enforcement bodies look at the reality: is there an obligation to do work, is there control over how and when it is done, does the business benefit from what is produced. If those three things are present, worker status generally follows, and worker status brings a right to at least the National Minimum Wage.
This is the single most common mistake in intern hiring. A founder assumes that because the person is a student, or because the placement is short, or because everyone calls it "work experience", pay is optional. None of those things touch the legal question. The only thing that touches the legal question is what the intern is actually doing.
Work-shadowing versus doing real work
There is a genuine, narrow category of internship that can sit outside worker status: a placement where the person observes, asks questions, and is not required to be there on any particular day or to complete any particular task. Think of someone sitting in on meetings for a week, watching how a team operates, with no rota and no output expected of them. That is closer to shadowing than employment, and it is the case where an unpaid arrangement is more defensible, though our companion piece on when an unpaid internship crosses into unlawful territory covers how easily that narrow exception is lost in practice.
The moment that shifts, the analysis shifts with it. If the same person is given a project to complete, a desk to sit at five days a week, a manager who assigns tasks, and a deadline, they have crossed into doing real work. At that point the business is receiving value from labour under some degree of control, and the safe legal position is that pay is owed. Most internships that businesses actually want to run, the kind where an intern contributes to a live project, drafts material someone will use, or covers routine tasks a paid employee would otherwise do, fall on the paid side of that line. Genuine shadowing with no work product is rare in practice, and it is not what most employers mean when they say "intern".
There are narrow further exceptions gov.uk sets out, such as certain placements that are a required part of a UK-based further or higher education course of a defined maximum length, and some voluntary roles with specific categories of organisation. These exceptions are fact-specific and worth checking against the current gov.uk guidance before relying on them, rather than assumed.
The default answer, and why it should be your starting point
Given how narrow the unpaid exception actually is, the sensible default for anyone drafting an intern agreement is to build it as a paid, fixed-term role from the outset. That is not just the cautious legal position, it is also the position that avoids the argument entirely. If pay is set at or above the applicable National Minimum Wage band for the intern's age from day one, the worker-status question becomes far less important, because the answer is being complied with either way.
Setting pay correctly also means checking which age band applies and confirming the current rate, since National Minimum Wage rates change and are reviewed periodically by the Low Pay Commission. Never guess a figure. Check the current position on gov.uk before you fix a number in the contract, and revisit it if the internship runs across a rate change.
What this means for the contract itself
Building the intern agreement around a paid, fixed-term structure means the pay rate, the age band it corresponds to, the hours, and the start and end dates all need to be stated plainly rather than left loose. Holiday matters too. Paid interns are workers, and workers accrue statutory holiday under the Working Time Regulations 1998, currently 5.6 weeks a year, pro-rated for a shorter placement and for part-time hours. That accrual should be written into the contract rather than handled informally, because an intern who leaves partway through a placement is entitled to be paid for holiday accrued but not taken.
None of this duplicates the general checklist for what an intern contract should contain, which our intern agreement template guide already covers clause by clause. The decision this article is about sits one step earlier: before you get to duties and IP clauses, you have to decide, correctly, whether the person in front of you is going to be paid. Get that decision right and the rest of the drafting follows naturally.
If the arrangement is genuinely occasional
Some businesses use the word "intern" loosely for something that is really a casual, on-demand arrangement with no set hours and no obligation on either side to offer or accept work. If that describes what you actually need, a zero-hours contract may be the more honest document than an intern agreement dressed up as unpaid work experience. Mislabelling a casual arrangement as an internship does not change the underlying worker-status analysis, and it adds confusion rather than removing it.
Putting the decision into a document
Once you have decided pay applies, and it almost certainly should, our guide on drafting an intern agreement with AI covers assembling the intern agreement from vetted England and Wales clauses through AI Legal Drafting, a live feature that assembles existing clause wording rather than generating new legal language, the same assembled-versus-invented distinction worth understanding before you rely on any drafted clause, and treat the output as a starting point rather than a final answer for anything borderline. Send the finished contract for e-signature in the browser: electronic signatures are admissible for most commercial documents in England and Wales, with exceptions including deeds, wills, land transfers and lasting powers of attorney, so an intern agreement signs cleanly this way. Keep the signed document in the same rooms where your other people paperwork lives, with page-by-page analytics showing whether the intern actually opened and read the terms, and set a reminder ahead of the placement's end date through your contract register so the fixed term does not quietly roll on unnoticed.
This article is written for England and Wales, where the National Minimum Wage Act 1998 and the Working Time Regulations 1998 set the framework described above. If you are hiring an intern elsewhere, these specific statutes will not apply, but the underlying question, does the reality of the work make this person a worker, and does the local minimum pay law apply to them, is the same checklist to hold your own jurisdiction's rules against.
Frequently asked questions
Is it legal to have an unpaid intern?
Only in narrow circumstances, genuine work-shadowing with no set hours and no required output, certain course-required placements, or specific voluntary roles. If the intern is required to do real work under any degree of control, they are almost certainly a worker and must be paid at least the National Minimum Wage. This is general information, not legal advice.
Does it matter if the intern agreed to work unpaid?
No. Worker status and the right to the National Minimum Wage cannot be signed away by agreement. An intern who consented to an unpaid arrangement can still be a worker in the eyes of the law if the reality of the role meets the test, and consent does not change the pay obligation.
What is the difference between an intern and a work-shadowing placement?
Work-shadowing involves observing with no set hours and no required task completion. An internship that assigns duties, expects attendance, and produces work the business relies on is closer to employment and generally attracts worker status, meaning at least the National Minimum Wage applies.
Do interns get holiday pay?
Yes, if they are paid workers. Workers accrue statutory holiday under the Working Time Regulations 1998, currently 5.6 weeks a year, pro-rated for the length and pattern of the placement. This should be written into the intern contract rather than left informal.
How do I know what to pay an intern?
Check the current National Minimum Wage rate for the intern's age band on gov.uk before fixing a figure, since rates are reviewed and changed periodically. Never rely on a remembered figure from a previous year, especially if the placement spans a rate change.
Draft your intern agreement with AI
Set the intern agreement up as a paid, fixed-term role from the outset, drafted from vetted England and Wales clauses and signed in the same place you drafted it. The free tier gives you three rooms and twenty-five active links, forever, with no card required; the AI drafter and e-signature start on Pro at £19 a month. Start for free and settle the pay question correctly before the placement starts, not after.
This article is general information, not legal advice. Worker status is fact-sensitive, and a borderline internship deserves a proper check with a qualified adviser before you rely on any of the above.
Sources
- Employment status and the tests for worker/employee status: gov.uk, Employment status, https://www.gov.uk/employment-status
- Rights of interns and when the National Minimum Wage applies: gov.uk, Employment rights for interns, https://www.gov.uk/employment-rights-for-interns
- National Minimum Wage rates and age bands, reviewed by the Low Pay Commission: gov.uk, National Minimum Wage and National Living Wage rates, https://www.gov.uk/national-minimum-wage-rates
- National Minimum Wage Act 1998: https://www.legislation.gov.uk/ukpga/1998/39
- Statutory holiday of 5.6 weeks under the Working Time Regulations 1998: gov.uk, Holiday entitlement, https://www.gov.uk/holiday-entitlement-rights ; https://www.legislation.gov.uk/uksi/1998/1833
- Electronic signatures, validity and exceptions: Law Commission, Electronic execution of documents (2019), https://lawcom.gov.uk/project/electronic-execution-of-documents/ ; HM Land Registry Practice Guide 82, https://www.gov.uk/government/publications/electronic-signatures-accepted-by-hm-land-registry-pg82