When can interns sue for minimum wage payment?

HRD talks to Buddle Findlay’s Hamish Kynaston about what HR should know about intern payments

When can interns sue for minimum wage payment?

There are multiple issues associated with interns not getting paid the minimum wage, according to Hamish Kynaston, partner at Buddle Findlay.

An employer can get into trouble if they are charging the intern money for accommodation, training costs or things like that, Kynaston told HRD.

“Sometimes - even though on the face of it the intern is paid enough - those costs may actually come into play when looking at whether or not they are paid enough under the minimum wage act.”

Moreover, sometimes interns are not paid anything and are volunteers. Consequently, there is an analysis done on whether they are in fact an employee, he added.

Another issue to consider is if there is an element of reward or an expectation of reward outside of the benefit of being trained and developing a relationship.

If it’s truly considered not a volunteer relationship then they could say that they are an employee, said Kynaston.

“The test that would be applied is the usual one under section six of the Employment Relations Act.”

Overall, what is the true nature of the relationship? And if you are an employee then you are entitled to be paid the minimum wage, he added.

HRD also asked Kynaston if an employee’s position is redundant when you change the combination of duties to be performed?

“The answer depends. If the change is substantial enough - the phrase the cases use is to ‘break the essential continuity of employment’ then, yes, it will result in the employee’s original position being disestablished and a new position being created,” said Kynaston.

But the million-dollar question is: How much is enough of a change?

For example, things like a shift in reporting line or inserting a new management level above them wouldn’t be enough of a change to bring about a redundancy.

“But then if you are a second-tier person sitting at executive level and suddenly become a third-tier person no longer sitting at executive level that might be a substantial change,” said Kynaston.

“The question that employers often miss is just because a position has changed and therefore disestablished doesn’t mean that the employee is necessarily redundant.

“There is still a serious question to be asked to whether the employee should be redeployed into the new position that’s created or indeed into another position in the organisation.”

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