Tuesday, 13 January 2015

Internship in India! Should companies pay stipends to Interns?

Internship is a concept where college or university students are required to do On-Job-Training (OJT) at companies or firms of their choice or selected by the college. The concept is well utilised in the western countries, but in India its a new concept which is coming to age due to liberalization and privatization.

Earlier a student would seek employment after completing his degree course through either campus recruitment or by self engagements, it was seen that such students lack the basic skills required for them to work in professional environment and thus companies had to spend millions of rupees training such students to be up to mark with their regular employees. This means loss of thousands of man hours for the company. Thus companies are now becoming more open to the concept of "Internship" where students still doing their college are selected to do minor task in a professional environment and calibrated by the company if suited to be selected as an employee.

As per labor laws "Interns are not Employees, but students who are with the company to forward their own academic progress, with little or no benefit for the company" thus its upon the company to pay them stipend or not

A stipend is payment made to students for work completed but it is not necessarily based on work performed or hours of work. Many stipends are offered to students who are completing an internship or apprenticeship and used to help defray the costs of housing, food, and transportation. A stipend is a fixed sum of money that is paid periodically and usually agreed upon at the beginning of a work agreement. Stipends may be paid all in one sum or in equal installments throughout the work agreement.

By this definition stipend if paid is at the end of the internship period and not on monthly basis as per the employees, thus companies should be well clear of their stipend policies and should convey the same to the interns before offering them internship.

In India some companies may treat interns like employees but then they should follow the same labor laws as applied to their permanent employees on basis of the pay scale and work hour limits. Interns are not mandatory to attend office regularly as a paid employee, but if he/she regularly attends and does the job at par with the employees then they are liable to be paid. 

Interns can be given small projects or task which generally test their skills and make them gain knowledge about the technologies currently used in the market. It is like a gap filler between the college syllabus and Industrial standards which is quite wide in India. Companies should look at interns from this point. 

Paying stipends at par with regular employees may sometime cause friction between regular staff and management, only due to interns thus management should be careful while setting their stipend policies and should be very clear in their further hiring policies. 

Indian small and medium companies new to this concept should preferably have 2 locations where they can train interns in one location and place regular employees in another.

Internship is a great concept, if their stipend policies are clear by the companies .

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