Is an Intern an Employee Under Indian Labour Law?

Last updated: 23 October 2026 · By the Asuraa Team

Quick answer: Not automatically. Indian labour law has no separate category for interns, so status depends on the facts. The Code on Social Security, 2020, in force from 21 November 2025, defines an employee as anyone employed on wages to do work, excluding only apprentices engaged under the Apprentices Act, 1961. A short, learning-focused student internship is usually treated differently from a graduate doing full-time staff work on a monthly stipend.

Key takeaways

• No central Indian labour law defines an intern, so an intern's status depends on the facts of the arrangement rather than the title.
• Section 2(26) of the Code on Social Security, 2020 defines an employee as a person employed on wages for any kind of work, excluding apprentices engaged under the Apprentices Act, 1961.
• Section 18 of the Apprentices Act, 1961 treats apprentices as trainees rather than workers, while section 13 requires employers to pay them at least the prescribed stipend.
• According to PIB, the four labour codes took effect on 21 November 2025, making appointment letters mandatory and allowing fixed-term employees gratuity after one year.
• A graduate trainee hired on wages under an appointment letter is an employee, whatever the designation, unless engaged under the Apprentices Act.

Indian labour law has no separate category called "intern", so whether an intern counts as an employee depends on the facts of the arrangement, not the title. The clearest carve-out is for apprentices engaged under the Apprentices Act, 1961, who are treated as trainees rather than workers. A person who is employed on wages to do the company's work can fall within the definition of "employee" in the labour codes even if the offer letter says "intern". This guide sets out how interns, apprentices, trainees and employees differ on PF, ESI, gratuity and contracts, for Indian founders and HR teams. It is part of our employer compliance basics.

This is general information, not legal advice.

Does Indian law define who an intern is?

No central labour law defines "intern", so the label has no fixed legal meaning. Internships are usually arranged by agreement between the company, the student and sometimes the college. The AICTE internship policy, for example, describes credit-bearing internships for technical students, allows them to be paid, unpaid or partly paid, and treats them as part of education. That policy governs how colleges award credit; it does not decide the intern's status under labour law.

How do the labour codes define an employee?

The Code on Social Security, 2020, in force with the other three labour codes from 21 November 2025 according to PIB, defines an employee in section 2(26) as any person, other than an apprentice engaged under the Apprentices Act, 1961, employed on wages by an establishment directly or through a contractor, for skilled, semi-skilled, unskilled, supervisory, managerial, administrative, technical, clerical or other work. The terms can be express or implied.

Three points matter for internships:

• The only training category excluded by name is the Apprentices Act apprentice. Interns and trainees are not excluded by name.
• The definition turns on being "employed on wages" to do work. Whether a stipend counts as wages under section 2(88), which includes basic pay and similar remuneration, depends on how it is structured and what the intern does.
• Implied terms count. A written "internship agreement" does not settle the question if, in practice, the intern works like a staff member.

How do intern, apprentice, trainee and employee compare?

The comparison below summarises the general position. Each row depends on facts, so read it as a starting point.

Sources for the table: the Code on Social Security, 2020 for the employee definition, the Apprentices Act, 1961 for apprentices, and the PIB release on the labour codes for fixed-term gratuity and appointment letters. Coverage thresholds come from the summary below.

When do PF and ESI apply to interns?

PF and ESI apply to an intern only if the intern is an "employee" of an establishment covered by those schemes. According to a Cyril Amarchand Mangaldas summary of the Code, EPF applies to establishments with 20 or more employees and ESI to establishments with 10 or more persons employed, other than seasonal factories, with smaller employers able to opt in. The Code also limits the EPF chapter's "employee" to those earning up to a notified wage ceiling. If your interns are learning-focused students on short placements, these schemes usually are not the question; if they work full-time on payroll-like terms for months, ask your adviser whether they should be covered.

Our guide on PF and gratuity for freshers explains how these deductions look from the employee side.

How are apprentices treated differently?

Apprentices engaged under the Apprentices Act sit outside the employee definition but come with their own duties. According to the Act:

1. A contract of apprenticeship must be entered into before engagement and sent for registration with the Apprenticeship Adviser, who registers it within the time the Act sets (section 4).
2. The employer must pay at least the prescribed minimum stipend, and apprentices cannot be put on piece-work or output incentive schemes (section 13).
3. Hours are set by the employer within the training rules; overtime needs approval from the Apprenticeship Adviser (section 15).
4. The employer pays compensation if an apprentice is injured during training (section 16).
5. Apprentices are trainees, not workers, and labour laws generally do not apply to them except as the Act provides (section 18).
6. There is no obligation to offer a job after training unless the contract requires the apprentice to serve the employer (section 22).

If you want a structured trainee programme with government support, read our guide to NATS and NAPS apprenticeships.

Is a "trainee" on payroll an employee?

Yes, a trainee hired on wages under an appointment letter, such as a graduate engineer trainee, is an employee in law; the designation describes the role, not a legal exemption. Unless they are engaged under the Apprentices Act, they fall within the Code's employee definition. From 21 November 2025, PIB says appointment letters are mandatory for all workers, so trainees should receive one. Our explainer on offer letters and appointment letters covers what to include.

What do most guides on intern status get wrong?

Most guides say interns are "not employees" as a blanket rule. That is only safe for apprentices under the Apprentices Act, which the Code on Social Security excludes by name. For everyone else, the test is the substance of the relationship. A graduate "intern" who works full-time for six months on billable client work, takes instructions like staff and is paid monthly looks very different from a second-year student on a four-week credit internship.

The second error is assuming that calling a payment a "stipend" avoids labour and tax rules. The Code's definition of wages focuses on remuneration for work, and tax treatment depends on the nature of the payment. See our guide to TDS on internship stipends.

How can employers keep internships clearly defined?

Keep the arrangement visibly educational, or treat it as employment from the start. In practice:

• Tie each internship to a learning plan, a mentor and a fixed end date; our guide on designing an internship programme has a template.
• Prefer college-linked internships for students, with the college's documentation.
• Avoid long, open-ended "internships" for graduates doing regular work; use a fixed-term or probationary appointment instead.
• If you want apprentices, register them properly under the Apprentices Act.
• Write down hours, stipend, leave and duration in the letter, and keep records.

For a wider view of the codes, see what the new labour codes change for employees. This is general information, not legal advice; consult a labour-law professional for your specific case.

Related guides

• HR Compliance Basics for Indian Startups Hiring Their First Team
• Is TDS Deducted on Intern Stipend? Employer Rules

FAQ

Are interns entitled to PF in India?

Only if the intern is an employee of an establishment covered by the EPF scheme. The Code on Social Security defines employees broadly as people employed on wages to do work, excluding Apprentices Act apprentices. Short, learning-focused student internships are usually not treated as employment, but long, full-time paid arrangements may be. Check the facts with an adviser. This is general information, not legal advice.

What is the difference between an intern and an apprentice in India?

An apprentice is engaged under the Apprentices Act, 1961 through a registered contract, must get at least the prescribed minimum stipend and is treated as a trainee rather than a worker. An intern has no statutory framework; the terms come from an agreement with the student or college. Apprentices are excluded by name from the employee definition in the Code on Social Security; interns are not.

Is a graduate engineer trainee an employee?

Yes. A trainee hired on wages under an appointment letter is an employee under the labour codes; the word trainee describes the role, not a legal exemption. The exception is a person engaged as an apprentice under the Apprentices Act. Since the labour codes took effect on 21 November 2025, appointment letters are mandatory for all workers, according to PIB.

Do interns get gratuity in India?

Generally no. Gratuity is payable to employees after five years of continuous service, and to fixed-term employees after one year under the labour codes, according to PIB. A short internship does not meet these conditions. A long internship that is really employment could raise the question, which is one more reason to use a proper appointment for graduates doing regular work.

Can a company call an employee an intern to avoid labour law?

The label does not decide the outcome. The Code on Social Security looks at whether a person is employed on wages to do work, and express or implied terms both count. If an intern works full-time like staff for a long period on a monthly stipend, authorities may treat them as an employee. Define internships clearly as educational or appoint the person as an employee.

Does ESI apply to interns?

ESI applies to employees of covered establishments, which a law-firm summary of the Code describes as establishments with 10 or more persons employed, with smaller ones able to opt in. Whether an intern is an employee depends on the facts. Many colleges also ask host companies to ensure interns are insured, as the AICTE internship policy does for its students.

Final thoughts

The safest approach is to decide at the start whether a role is education or employment, and to document it that way. Short, supervised student internships and registered apprenticeships are clearly defined; long, full-time "internships" for graduates are not. When you are ready to hire freshers on proper terms, you can post roles on Asuraa jobs.