Hiring interns can transform your startup, but navigating India's legal landscape is crucial. This comprehensive guide covers everything from labor laws and stipends to contracts and compliance—ensuring your internship program is both effective and legally sound.
Internships are a win-win: startups get eager talent and fresh perspectives, while students gain real-world experience and industry exposure. But in the excitement of building your team, it's easy to overlook the legal requirements that govern internship programs in India.
The consequences of non-compliance can be severe—from hefty fines and back-payment claims to reputational damage and even criminal liability in extreme cases. Many startup founders assume that "we're just a small company" or "interns aren't real employees" provides some legal cover. It doesn't.
This guide demystifies the legal framework surrounding internships in India. Whether you're hiring your first intern or scaling your internship program, you'll find actionable guidance on staying compliant while creating a great experience for your interns.
Disclaimer: This article provides general information and should not be considered legal advice. Consult with a qualified labor law attorney for advice specific to your situation.
The first question every startup founder asks: Are interns considered employees under Indian law? The answer is nuanced and depends on several factors.
India's labor laws don't specifically define "intern." However, courts have generally held that:
Courts apply the "control test" to determine employee status:
If most answers are "yes," the intern may be classified as an employee, triggering full labor law compliance.
| Scenario | Likely Classification | Legal Implications |
|---|---|---|
| College credit internship (learning-focused) | Trainee | Fewer compliance requirements |
| Project-based work with deliverables | May be workman | Consider minimum wage, working hours |
| Full-time, 6+ month engagement | Likely employee | Full labor law compliance needed |
Several central and state laws may apply to internships in India. Understanding which ones affect your startup is crucial.
India has enacted four new labor codes that consolidate 29 central labor laws. While not yet fully implemented, they will impact internships:
Labor is a concurrent subject in India, meaning states can have their own laws. Key state-level considerations include:
The question of whether you must pay interns is one of the most common queries from startups. Here's what you need to know.
There is no specific law mandating that interns must be paid. However:
Minimum wages in India vary by:
| State | Unskilled (per month approx.) | Skilled (per month approx.) |
|---|---|---|
| Delhi | ₹17,494 | ₹20,903 |
| Maharashtra | ₹10,000-12,000 | ₹12,000-15,000 |
| Karnataka | ₹11,500-13,000 | ₹14,000-16,000 |
| Tamil Nadu | ₹9,000-11,000 | ₹12,000-14,000 |
Note: These are approximate figures. Check the latest state notifications for accurate rates.
Based on industry standards for startups:
Even if labor laws don't strictly apply, following standard working conditions is good practice and reduces risk.
The Occupational Safety, Health and Working Conditions Code provisions apply. Ensure:
For remote interns:
A written internship agreement is your most important legal protection. It sets clear expectations and documents the nature of the relationship.
INTERNSHIP AGREEMENT
This Agreement is made on [Date] between:
Company: [Legal Name], having its registered office at [Address] ("Company")
Intern: [Full Name], residing at [Address] ("Intern")
RECITALS:
WHEREAS the Intern desires to gain practical experience in [field], and the Company is willing to provide such training opportunity under the terms set forth herein...
[Continue with numbered clauses covering all essential terms]
Depending on how your internship is structured, various statutory compliances may apply.
The Sexual Harassment of Women at Workplace Act, 2013 applies to all workplaces:
For short-term internships (under 6 months):
However, if the internship is long-term (6+ months) and resembles employment, consult with a compliance expert.
While not legally mandatory, consider providing:
The Apprentices Act, 1961 (amended in 2014 and 2019) provides a formal framework for workplace training that offers legal clarity.
| Feature | Internship | Apprenticeship |
|---|---|---|
| Legal Framework | No specific law | Apprentices Act, 1961 |
| Duration | Flexible (weeks to months) | 6 months to 3 years |
| Stipend | Negotiable | Minimum prescribed by government |
| Registration | Not required | Mandatory with Regional Directorate |
| Certification | Company-issued | Government-recognized certificate |
Post-COVID, remote internships have become common. They come with their own legal considerations.
If hiring interns from other countries:
Unpaid internships exist in India, but they carry significant legal risks. Here's what you need to know.
US courts use this test, and Indian courts may adopt similar reasoning:
Risk Warning
A disgruntled unpaid intern can file a complaint claiming they were an employee who was denied minimum wage. If authorities agree, you may face: back-payment of wages with interest, penalties under the Payment of Wages Act, and potential criminal liability in severe cases.
Pay at least a nominal stipend. Even ₹5,000-10,000/month:
Sometimes internships don't work out. Having clear termination procedures protects both parties.
Typical notice periods for internships:
Every intern is entitled to a certificate upon completion. Include:
Protecting your company's IP when using interns is crucial, especially for tech startups.
Under Indian law, the creator of original work owns the copyright by default. Your internship agreement MUST include:
"The Intern hereby assigns to the Company all right, title, and interest in any and all intellectual property created, developed, or conceived by the Intern during the internship period in connection with the Company's business, including but not limited to inventions, works of authorship, software, designs, and trade secrets..."
Follow these best practices to run a compliant and successful internship program:
Use this checklist before, during, and after each internship:
❌ No Written Agreement
Operating on verbal agreements creates ambiguity and exposes you to legal risk. Always have a signed document.
❌ Treating Interns as Free Labor
Using unpaid interns for productive work that employees would do is legally risky and ethically problematic.
❌ Ignoring Working Hours
Making interns work excessive hours without breaks or compensation can lead to complaints and health issues.
❌ No POSH Compliance
Failing to have sexual harassment prevention measures in place is a legal violation and puts all employees at risk.
❌ Missing IP Assignment
Without proper IP assignment, the intern may own the work they create, causing problems later.
❌ Delayed or Missing Certificates
Not providing experience certificates or delaying them damages your reputation and the intern's career.
Is it legal to have unpaid interns in India?
There's no explicit prohibition, but it's legally risky. If the intern is doing productive work, minimum wage laws may apply. Paid internships are strongly recommended.
Do I need to pay EPF/ESI for interns?
Generally not for short-term, training-focused internships. However, if the internship looks like employment (long duration, full-time productive work), these benefits may apply. Consult a compliance expert.
Can I terminate an intern before the end date?
Yes, if your internship agreement includes termination provisions. Follow the notice period and grounds specified in the agreement. Document the reasons for termination.
What if an intern gets injured at work?
Workmen's Compensation Act may apply in severe cases. Having insurance coverage is recommended. Report serious injuries to appropriate authorities and ensure the intern receives necessary medical care.
Can interns file complaints with labor authorities?
Yes. If an intern believes they've been treated as an employee without proper compensation or rights, they can file complaints with labor departments. This is why proper documentation and compliance matter.
How do I handle interns from other states?
For on-site interns, your state's laws generally apply. For remote interns, specify governing law in the agreement. Be aware of Interstate Migrant Workmen Act if applicable.
Running a legally compliant internship program isn't just about avoiding problems—it's about building a sustainable talent pipeline and a reputation as a great place to work.
The key takeaways: always use written agreements, pay fair stipends, respect working hours, protect your IP, and treat interns as valuable members of your team. These practices not only keep you compliant but also help you attract and retain the best intern talent.
When in doubt, invest in professional legal advice. The cost of getting it right upfront is far less than the cost of defending a complaint or lawsuit later.
Now go build an internship program that benefits your startup and the next generation of professionals! 🚀
