Enterprises prefer to recruit interns, because of 2 reasons: (1) enterprises don’t have to pay for interns’ social security, and interns’ remuneration could be calculated daily, so the cost is relevantly lower than employees; and (2) enterprises don’t have to sign the labor contract with interns, so it is flexible for enterprises to terminate the relationship with interns.
However, if enterprises ignore potential risks related to interns, they might have established a labor relation with interns, or even have to undertake a greater economic loss than a labor relation. HRs may have doubts about these potential risks, but these risks are not alarmist.
Risk 1: Interns are employees?
Article 12 of the “Opinions on Several Issues concerning the Implementation of the Labor Law” implemented in 1995 (hereinafter referred to as the “1995 Opinions”) stipulates that, “On-campus students that utilize their spare time to work to support study shall not be deemed as employed and no labor relations shall be deemed established, they may not conclude labor contracts.” In view of this provision, many HRs interpret as all on-campus students are not the qualified subject for a labor relation.
However, the society is developing, and so does the judicial opinion. Let’s see 2 typical cases.
In the 6th issue of 2010 of the “Bulletin of the Supreme People’s Court”, one of the typical cases is the “Guo v. Y Company Labor Dispute”. In this case, the court held that both parties had established a labor relation during the internship. There are 3 reasons. First, Guo has reached the age of 19, so he meets the employment age specified in the “Labor Law”, and has the ability of behavior and responsibility to establish a labor relation with any employer. Second, Article 12 of the “1995 Opinions” has listed those subjects which should not be implemented with the “Labor Law”, however, on-campus students are not listed, which means this provision could not be inferred that on-campus students are not the qualified subject for a labor relation. Third, Guo has completed all the learning tasks during his internship, expressed his desire for employment to Company Y, registered for employment, and signed a labor contract with Company Y after graduation.
In the case of (2022) Jing 03 Min Zhong No.13681, the court held that Zhao’s internship before graduation should be deemed as a labor relation. The main reason was that, “During the internship, the company managed Zhao as other employees from the perspective of attendance and salary, the only difference is that the company did not pay for social security for Zhao due to his identity as an on-campus student. Both parties aimed to sign labor contract and establish labor relations. Although Zhao is an on-campus student, he has completed all the learning tasks during the internship, the company intends to manage him as an employee, Zhao’s identity as an employee and the characteristics of economic subordination are obviously, which is in line with the essence of labor relations.”
In view of many similar cases, regarding the identification of labor relations, the courts mainly focus on the following factors.
First, the purpose of the internship. If the internship is arranged by the school, it would not be identified as labor relations. The “Opinions of the Ministry of Education on Strengthening and Standardizing the Administration of Internship in Ordinary Undergraduate Colleges and Universities”, and the “Administrative Provisions on the Internship of Students of Vocational Schools” have prescribed that such internship is a part of teaching. In practice, such internship requires schools to sign contracts with internship units. Therefore, such internship would not be identified as labor relations. In addition, if an on-campus student utilizes his spare time to work to support study shall not be deemed as employed as stipulated in the “1995 Opinions”, under such circumstance, it is recommended to clarify the purpose of the internship in the agreement signed by the two parties. Just like the above two cases, there is a high-risk circumstance, which is during the internship, if the intern expressed his willingness to get employed, and the internship unit expressed its willingness to employ the intern, and for some circumstances that the internship unit has signed a labor contract with the intern, then it is highly possible for the court to identify that both parties have established a labor relation.
Second, whether interns have completed all their studies during the internship. Regarding this, the courts usually require interns to prove. (e.g. (2017) Er 01 Min Zhong No. 7429).
Third, regarding the standard and payment of salary and remuneration, the courts would mainly focus on whether interns have remuneration, and whether such remuneration is similar to other employees.
Fourth, regarding the position and content of work, if the responsibilities of the position are relatively clear and independent, and administration on attendance and management are in line with the essence of labor relations, then combined with other factors, it is highly possible for the courts to identify that both parties have established a labor relation.
Therefore, HRs should weigh the risks from the above aspects and mange relevant matters with interns properly.
Risk 2: The security and tort liability related to interns.
There are many tort cases related to interns.
The “Trial Measures for Insurance for Work-Related Injuries of Enterprises’ Employees” once stipulated that if work-related injuries occur during the internship in an enterprise participating in work-related injury insurance, the local work-related injury insurance agency should offer a one-time treatment. However, this document has been abolished. According to the current regulations on work-related injury insurance, it is impossible for an intern to require the local work-related injury insurance agency or the employer to provide the work-related injury treatment.
In the current judicial practice, if a court determines that both parties have established a labor relation instead of an internship, the enterprise should bear the liability for compensation of work-related injury insurance. If the court determines that both parties have established an internship, there would be two resolutions.
Regarding the internship arranged by the schools. Article 28, paragraph 3, of the “Production Safety Law “stipulates that, “The producers and business operators that take on interns who are students from secondary vocational schools or institutions of higher education shall provide such students with appropriate education and training on work safety and necessary labor protection articles. Such schools and institutions shall assist producers and business operators in providing the students with education and training on work safety.” Therefore, in individual cases, it is necessary to check the performance of the obligations of the unit and the school, so as to determine whether the liability should be borne and the proportion of liability. For example, in the case (2021) Yue 13 Min Zhong No.9757, the Huizhou Intermediate People’s Court held that, “There was an internal link between the work of C at the time of the accident and the surveying and mapping work assigned by Company W, so it should be determined that C suffered the injury during the employment activities. As the former internship unit and the actual employer of C, Company W is the direct management obligor. If Company W fails to fulfill the obligation of reminding C to pay attention to potential safety hazards, which causes injury to C in the work, it shall bear the main compensation liability of 30% as an employer. In addition, the construction unit, the school and C also bear a certain proportion of liability.”
Regarding other internship, in individual cases, normally the courts deal with such dispute as a labor service relation, and the internship unit would be ordered to bear a corresponding proportion of liability case by case.
To sum up, in order to reduce the compensation risk of enterprises, it is recommended to assign interns to work for those positions which have less safety risks, to conduct the pre-work safety training comprehensively, and to purchase commercial insurance, such as the employer’s liability insurance, which should include the protection clauses for interns.