Should you pay for work experience? A small business employer's guide

Work experience remains one of the most accessible routes for young people to gain insight into the professional world.

Whether through internships, placements, voluntary roles or shadowing schemes, it offers practical exposure that can boost a CV and sharpen skills.

But for small business owners, there are often questions around if and when you should pay for such contributions.

There's no one-size-fits-all answer. Work experience exists on a spectrum, from passive observation to hands-on involvement, and the question of payment depends on where the arrangement sits within that spectrum.

What matters is understanding the distinction between each type of experience and making sure any arrangement obeys employment law. The risk of getting into legal trouble, or suffering harm to your reputation, is not insignificant.

What is classed as work experience?

The phrase "work experience" is widely used but can mean very different things depending on the context.

In its broadest sense, it refers to a temporary arrangement that allows someone – often a student or recent graduate – to gain familiarity with a particular job, industry or working environment.

• Sometimes, this may involve observing a professional in action for a short period, such as a week or two. Other times, the person may assist with everyday tasks or small projects to get a feel for the demands of the job.

• Occasionally, the arrangement will last several months, during which time the worker will make meaningful contributions to the business.

Each scenario sits under the umbrella of work experience but carries its own implications for pay and expectations.

Typically, the people taking part aren't yet in full-time work. They may be exploring career options or building practical knowledge to complement their academic background.

In most cases, they aren't trained professionals, so the tasks they're assigned tend to be fairly basic and carry little responsibility.

Internships in more detail

Internships fall at the more structured end of the work experience scale. They usually span several weeks or months and are more common during university holidays or shortly after graduation.

While some internships are unpaid, others offer compensation – particularly when the intern is contributing in a meaningful way.

There are different types of internships.

• Some are arranged through academic institutions and are built into a course of study. These are often unpaid, as the student is receiving course credit in exchange for their time.

• Others are arranged independently by the person involved and tend to resemble short-term employment in practice.

  In these cases, the intern may be given specific responsibilities, expected to attend regularly and contribute directly to the results the business wants to achieve.

Employers tend to value this second type of internship most, as they allow the business to trial a potential future employee while giving them a genuine sense of the workplace.

These arrangements often serve as a stepping stone into permanent employment and are widely seen as beneficial to both parties – as long as they're handled properly.

Placements during university courses

Unlike internships, placements are typically built into a degree programme. Many universities now offer four-year degrees with one year spent in industry.

These placements tend to be longer – usually nine to 12 months – and are a compulsory part of the course, meaning students are assessed on their performance.

Students on placement are more likely to take on a structured role within a team. Their responsibilities often mirror those of a junior colleague, although the level of oversight is usually greater.

For a business, it's an opportunity for you to engage with emerging talent in a way that matches your recruitment needs for the future. If the placement goes well, you may decide to offer the student a role after graduation.

What distinguishes placements from internships is their link to academic study. The student isn't just gaining experience for its own sake. They're fulfilling a requirement their university has set and will be evaluated on what they learn and achieve during their time with the business.

The differences between internships and placements

Although both offer on-the-job learning, the differences are significant enough that you need to treat them separately.

Placements are educational by design and must be approached in a way that supports the student's academic goals. Internships, on the other hand, are typically more informal and can vary widely in terms of structure, responsibility and length.

One clear way to tell them apart is to look at timing. Placements usually occur during the third year of a four-year degree course, while internships often take place during the summer break or after graduation.

The presence or absence of academic credit is another indicator. If the experience counts towards a university qualification, it's a placement. If not, it's likely an internship.

What the law says about paying workers

Whether you should pay someone on work experience depends on their status within the business. According to guidance from Acas (the Advisory, Conciliation and Arbitration Service), anyone who's classed as a "worker" is legally entitled to at least the National Minimum Wage.

A person is likely to be a worker if they:

• have set hours

• have a clear role

• are expected to carry out specific tasks

This can be the case even without a written contract. If someone is doing real work and not simply observing or studying, they are probably owed payment under UK law.

The law makes a few exceptions. For example, if the person is completing a placement as part of a higher education course, or if they're simply shadowing staff without undertaking tasks, there's no requirement to pay them.

Similarly, voluntary work for a registered charity does not fall under minimum wage rules.

Staying on top of minimum wage laws

The National Minimum Wage and National Living Wage rates change regularly, so it's important to stay updated.

These rates vary depending on the worker's age and whether they're classed as an apprentice. If you don't pay them the correct amount, you could be fined and/or suffer damage to your reputation.

Many businesses choose to pay above the minimum, particularly when the person is making a meaningful contribution.

This not only helps attract better candidates but it also shows that your business values fairness and integrity. It sets the tone for a positive workplace culture and lessens the risk of getting into legal disputes later.

Final thoughts

Work experience, in all its forms, can be an excellent way for businesses to connect with emerging talent while offering something of real value in return.

However, the terms of each arrangement need to be clear from the outset. Whether it's a shadowing placement or a structured internship, it's really important to be transparent about responsibilities, expectations and payment.

For small business owners, getting this right makes sure you're keeping to the law and protecting your reputation. It also creates a better experience for everyone involved.

Relevant resources

• How to attract and retain the right talent

• Is it time your business invested in young talent?

• How to create a job advert that attracts the right talent

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