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Technicalities of internships

    Home Blogs Technicalities of internships
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    Technicalities of internships

    By admin | Blogs | Comments are Closed | 30 August, 2015 | 0

    The past few weeks we’ve been having a couple of issues and question marks over some of the technicalities behind running our internships in Parliament. The first relates to how the interns will be paid and who their employer is, the second to issues around Electoral Commission rules on declaring donations and expenditure.

    Employer status and PAYE

    A bit of background:

    • Our internships are paid, and as such they are classed as employment.
    • The interns will be working for MSPs, and will consider them their employer
    • The funding for their salaries will come from the project funding we received from the Scottish Government
    • MSP staff (and indeed MSPs themselves) are normally paid via the Scottish Parliament payroll

    Where we have run into issues is that the Scottish Parliament payroll pays MSP staff under the auspices of the Members Allowance system. This is where each MSP is given by the Parliament a sum of money with which to pay parliamentary staff, cover travel costs, office expenses, postage, stationary, and all the usual running costs of a Parliamentary office. This money comes from Government, from the tax payer, and is a standard thing across all MSPs, fairly carefully controlled for obvious reasons and they make sure its fair. Regardless of party, they all generally get the same, allowing for obvious differences like greater travel costs for those based further away from Edinburgh.

    The funding of these interns obviously falls outside that scheme – it’s additional – and as such the Parliament is reluctant to be involved with it. We were therefore told as part of the set up of this scheme that we’d need to arrange an alternative way to pay the interns.

    Here is where we run into another problem. According to guidance from the HMRC, employees should generally always be paid under the PAYE (Pay As You Earn) reference number of their employer. This implies that if we arrange for the interns to be paid separately, we should be doing so under the correct PAYE for each MSP. The problem with that is that the MSPs generally don’t have a PAYE reference number, because their staff are paid for them by the Parliament – and even where they do, they will already have a payroll agent operating for them. A payroll agent is a third-party authorised to submit information and payments to the HMRC on behalf of an employer. Any organisation who uses an external payroll provider will have granted such authorisation. HMRC rules make it clear that an agent is merely acting on the employers behalf to submit information, and takes no employer role. But you can only have one agent.

    So this means there is no way for us to pay the interns while correctly doing so under the PAYE reference of their actual employers, the MSPs. Either the MSP wont be registered as an employer, or they will be, but will already have an agent.

    This leaves us with the only alternative, that we pay the interns through our own payroll – but that brings us back into contention with the HMRC guidance and indeed a previous court case ruling that this isn’t correct. Furthermore there is a potential legal argument to be made that if we are in control of their pay, then we are defacto in control of their employment and hence could be considered to be their employer. There are good reasons why we might wish to avoid this:

    • Being the employer means taking on liabilities of various kinds, such as insurance cover and (should the worst happen) potentially being the target of an employment tribunal. Given that we would not have day-to-day control of the working environment, that means that an intern could potentially experience poor conditions and/or discrimination or harassment or similar, we would not necessarily be immediately aware of it nor able to deal with it efficiently, and it would be us that would be held legally responsible for it.
    • There is a case to be made that the interns may better value their experience if they can clearly state they worked for an MSP, rather than for a disabled persons organisation, and it would make more of an impact on their CV
    • Being the employer would mean we’d need to take a much more active role to ensure there were no problems, and may create a capacity issue given the interns will be working out in MSP offices

    So, what to do? Over the past few weeks now, ever since becoming aware of the technical issue with PAYE references and realising that there had been something of a miscommunication over this issue in the early stages of the project, I have been consulting the internet, discussing with the Scottish Parliament staff, and mostly enquiring with the HMRC on how to proceed.

    I have to say, the staff I have spoken to in HMRC on this issue have been hugely helpful, friendly and professional. Definitely not the experience most would probably assume they would get! They grasped the unusual situation, they clearly got what we are trying to do, and have been going out of their way to find a solution.

    At this time we expect to end up with two possible models:

    1. The MSP remains the employer, we just pay the intern through our payroll, we make sure the contracts and documentation all reflect this and make clear who is responsible for what (and who isn’t) and the HMRC give us permission to do it this way despite it not being the most technically correct way to do it. Given that they have already granted the Scottish Parliament itself such permission, this seems likely to be OK.
    2. We become the employer, but we then enter into a “secondment agreement” with the MSPs, under which the interns are contractually working for the MSP but remain technically in our employ. We would beef up our oversight of the employment situation and ensure very clear written agreements over how any issues should be resolved.

    Political party accounting and campaign expenditure

    A separate issue, I am also checking into – political parties are required to declare in their accounts any donations, including “notional” ones which might not be monetary but instead be in the form of free services. Similarly, during any controlled campaign periods, any expenditure relating to that campaign must be declared and accounted for within the spending limits of the campaign.

    Normally, parliamentary staff are exempt from both of these, since the funding for them is generally through the Members Allowance scheme and therefore already “known” by the authorities as it were. However the funding for our interns doesn’t fall under this, as discussed above.

    We therefore think it likely that, given the interns will be providing work that benefits the MSP and almost certainly could be argued to benefit their party, that they will need to be accounted for under party accounts in some fashion. As far as campaign expenditure goes, that will depend entirely on the work the interns agree to take on and if it could in any way be deemed “campaign activity”.

    We are now in the controlled period for the Scottish Referendum on Independence. Such a colossal constitutional issue can hardly help but impact in some way on the work we expect our interns to get involved in during this period. Some of them may agree with their employer MSPs to take an active role in work which is campaigning activity. If this happens, the party in question will almost certainly have to declare an appropriate share of the interns salary as “notional expenditure” for campaign purposes.

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