Unpaid internships are often seen as a way of providing valuable industry experience to students. However, there has been an increasing global focus on whether such arrangements also enable the exploitation of individuals to perform unpaid work. In Hong Kong, while there are exemptions from the application of certain employment related laws which apply to categories of student interns, organisations that wish to host unpaid interns must carefully consider key legislation to ensure compliance.
Existence of an employment relationship
In Hong Kong, the Minimum Wage Ordinance (“MWO“) and the Employment Ordinance (“EO“) will apply to persons “under a contract of employment.” In order to determine whether an intern is in “employment”, it will be necessary to consider the particular facts against the features of an employment relationship including:
- the parties’ own view of their relationship,
- the degree of control exercised by the “employer”,
- whether the individual is properly regarded as part of the employer’s organisation (for example is treated in a similar manner to employees),
- whether the individual takes any financial risk,
- the incidence of tax, MPF and insurances, and
- traditional structures within the relevant trade or profession.
Exemptions under the MWO
The MWO does not apply to student interns or work experience students during a period of exempt student employment. Several requirements must be met in order to fall within this exemption, including in relation to the educational programme the intern or work experience student is undertaking, as well as the intern or work experience student meeting certain age and residency requirements. If these requirements are not met, the exemption will not apply and a failure to comply with the EO (which includes compliance with the MWO) may result in a fine of up to HK$350,000 and imprisonment for up to three years.
Organisations which take on unpaid interns must keep in mind the requirements set out in the MWO in order to ensure that they are exempt from being obliged to pay those individuals minimum wage, as well as being subject to other legal obligations such as those under the EO if a contract of employment is in fact found to exist with the intern. There are certain exemptions for properly structured student internship arrangements, but organisations run a high risk if they fall outside these and in doing so breach key employment laws.