Are Interns Considered As Employees? Here's What The Law Says

In Malaysia, the law is pretty blurry when it comes to paying the interns. Basically, it all depends on their employment status. If an intern is classed as an employee, they would be entitled to salary or wage. In fact, they may also be entitled to minimum wages under the Minimum Wages Order 2016, as well as other statutorily imposed employee benefits.

But, it's a little bit more complicated than that.

Malaysian Law

The term "employee" means different things if you compare our local statutes.

Employment Act 1955 (EA)

Under the First Schedule of the EA, an employee is defined as including persons. A person would be an employee under the First Schedule if:

• They have entered into a contract of service with an employer where wages do not exceed RM2,000 a month
• They are engaged in manual labour
• They supervise other employees engaged in manual labour or
• They are engaged in operation or maintenance of any mechanically propelled vehicle.

In the EA, "contract of service" means any agreement where one person agrees to employ another as an employee and that other agrees to serve their employer as an employee and includes an apprenticeship contract. What defines "apprenticeship contract"? An "apprenticeship contract" is defined as a written contract for no less than 2 years of apprenticeship training. 

National Wages Consultative Council Act 2011

This act, under which Minimum Wages Order 2016 is given legal authority, refers back to the First Schedule of the EA for the meaning of the word "employee" and is therefore not very helpful.

Though there are many cases in Malaysia on the issue of whether a person is an employee or an independent contractor, case law is not specifically instructive on the point of when a person will be considered to be an intern and not an employee.

The Status of an Intern in Australia and the UK

In United Kingdom, if an intern does normal paid work for an employer, then they are qualified as an employee and are eligible for employment rights. There are exceptions such as when a person undergoes a student internship or a school work experience placement, is a voluntary worker or they are on on-the-job learning.

As for Australia, they use a range of indicators to find out if an employment relationship exists. These indicators are:

• The intention to enter into an agreed arrangement to do work for the employer,
• A commitment by the person to perform work for the benefit of the business or organisation as opposed to for their own benefit 
• An expectation that the person receives payment for their work.

Since Malaysia lacks the guidance from case law and local statues, Malaysian court could look up the positions in other Commonwealth countries, such as the UK and Australia, for guidance.

Bottomline

As employers, we should ensure that interns do not do regular paid work that employees are expected to do. Moreover, the tasks performed by interns should be done for the interns' own benefit.

Employers should take this matter seriously as there are big implications if employers fail to provide statutorily imposed benefits to individuals that they thought were interns but who are in law, employees.

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Source: Yeong Hui Yap | LinkedIn

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