In this article, Part 2 in this series on internships, we outline the clauses that you should include in an internship agreement to protect your business from the risks associated with engaging an intern.
When a business decides to engage an unpaid intern it needs to take the time to set up the internship arrangement properly. As outlined in Part 1 of this series, a true unpaid intern is not entitled to receive remuneration or other employment benefits. For this reason, businesses often overlook the importance of entering into an internship agreement to mitigate the risks associated with engaging an intern.
Where an employment relationship exists, businesses have certain automatic legal protections. Examples of these are the duties on an employee not to disclose confidential information, follow lawful and reasonable directions and use skill and care in the performance of their work. In the absence of an employment relationship, a business doesn’t receive these protections as a matter of course - the intern must agree to them. An internship agreement facilitates this.
Additionally, businesses need to remember that duties are also owed to interns. Work health and safety obligations are an example of this. A proper intern agreement will assist a business and its management to meet these obligations.
Some of the broad duties and responsibilities that businesses may look to impose on an intern include a need to:
The internship agreement should define what constitutes “confidential information”. Although consideration should be given to the nature of the business and the areas to which the intern may be exposed, “confidential information” can include client lists, pricing strategies, internal processes, and business, sales and marketing plans.
Another option is to permit the intern to retain ownership of any intellectual property they create, but have the intern provide the business with a licence to use the intellectual property as it wishes. Whether the licence will entitle the intern to receive royalties from the business should be set out in the intern agreement.
Example: Ownership of computer code written by intern
Having just finished her degree in computer science, Hannah starts an internship with a software development business to get some industry experience. During the internship, Hannah writes a code that the business would like to use in one of the programs it is developing. Because Hannah isn’t an employee of the business, she automatically owns the code she has written and the business cannot use it without her permission.
If the business wants to own the code, Hannah needs to assign the ownership of the code to the business.
If the business is happy for Hannah to retain ownership of the code, but wants permission to continue to use it in the software, Hannah needs to provide the business with a licence to use the code. Depending on the agreement, the licence may or may not entitle Hannah to receive royalties.
Example: Use of blog post written by intern
Phillip decides to commence an unpaid internship at a small accounting firm while he is studying a business administration course. At the end of the internship, Phillip writes a short blog post on his experience as an intern. The accounting firm decides it would like to use it on their website and in marketing material.
Unless Phillip has consented to the accounting firm infringing his moral rights, it is not permitted to publish any part of Phillip’s blog post unless it clearly and prominently identifies him as the author of the material. The accounting firm is also not permitted to edit Phillip’s blog post in a way that might prejudice Phillip’s reputation, such as by making fun of him.
To assist a business meet its work health and safety obligations, the internship agreement should require the intern to follow all relevant health and safety policies and procedures, and report any health and safety risks, or incidents, to their manager or supervisor.
In addition, the intern should also be required to undertake induction training about the work health and safety policies and procedures of the business.
Part 3 of our series looks at some real examples that highlight the importance of correctly categorising an unpaid internship and ensuring that the internship is set up properly.