HR Formalities to Keep in Mind while Creating an Internship Program

‘Tis the season of Summer Internships. India being a country obsessed with academic excellence; views internship programs as just another mundane activity which students can add to their resumes with no emphasis on acquiring new skills or networking.

Thus the laid back approach makes internship programs responsible of creating wide-eyed coffee-bringing students who’ve learnt only how to hop, skip and jump to the nearest Starbucks.

If you are start-up or a small & medium sized business looking to introduce an internship program in your company; here are a few HR formalities you must consider to make it a successful internship program.

Part 1 – Employee or Intern: Where do you draw the line?

A successful internship program starts long before your new intern’s first day at work. The reason why most internship programs tend to make no impact is because of the lack of  clarity on how to differentiate an employee from an intern.

A carefully planned internship program must clearly set apart an intern’s responsibilities from those of the employees. This classification is also important when deciding whether the new intern would be eligible for paid leaves, certain allowances and employee perks/benefits etc.

Part 2 – Determining the Pay structure

It is also important to decide whether the internship program is going to be unpaid or paid internship program.

Most internships in India are usually unpaid internships. Some companies also pay stipends to their interns. Paid internships definitely would give you a wider pool of candidates to choose from.

How much you pay your intern also depends on the nature of work. You can either choose to pay your intern a fixed monthly stipend if it’s a marketing internship or you can choose an incentives-based compensation structure for an intern with a target oriented tasks.

Part 3 – Are Interns eligible for Leaves and other Employee Benefits?

Another dilemma that companies face is understanding the eligibility for leaves and employee benefits.

Any intern employed for duration of less than 3 months are not eligible for paid leave.

Those employed for duration of more than 3 months but less than 8 months can be given a maximum of 2.5 days per month. Thus depending on the duration of the Paid Internship program, paid leave can be granted.

Part 4 – Are Deductions such as TDS, PT applicable to Paid Internship program?

Paid Interns will be considered for the purpose of PF, ESIC and PT as per norms. No deductions such as TDS or Professional Tax need to be made for Unpaid Interns.