Know your law when it comes to apprentices

By: Charlotte Morris, Senior Solicitor at ESP Law

Firms employ apprentices for any number of reasons, chief of which are the cost savings available given that a lower minimum wage applies specifically for apprentices aged under 19, or aged 19 and over who are in the first year of their apprenticeship.

IMI Apprentices (File picture)

But there are non-financial benefits for employers too. They can train apprentices not only in how to perform the role, but how to do so in line with the preferred methods. This can result in employees who can not only undertake the roles required, but who can be moulded in a firm’s ways of working from the outset rather than to seeking to change what has been learned previously.

The practicalities of employing and dismissing apprentices depends largely on the type of apprenticeship agreement in use. Using the wrong contract is the main pitfall for employers to be wary of; it can make dismissing an apprentice, even for gross misconduct, high risk.

There are two types of apprenticeship agreement:

Approved English Apprenticeship Agreement

If a business operates within a sector for which the government has published an approved apprenticeship standard (which applies to most sectors) then it should seek to engage apprentices on an ‘approved English apprenticeship agreement’. This is governed by the rules under ASCLA 2009 (Apprenticeships, Skills, Children and Learning Act 2009).

Employers can check the list of sectors for which approved standards have been produced or see an example of the standards and required learning outcomes on the Institute for Apprenticeship’s website.

There are many reasons why an employer may seek to end an apprenticeship agreement early, including a downturn in work, poor attitude to work or attendance issues. It is much easier to dismiss an apprentice employed under an approved English apprenticeship agreement as they are treated far more as a standard employee would be in terms of their employment law rights.

If a dispute arises over the nature of a particular apprenticeship the courts will determine which form of apprenticeship agreement is in place. ASCLA sets out various criteria that the contract must meet to be classified as an approved English apprenticeship agreement. If a contract does not comply with the provisions of ASCLA and fails to include all the relevant provisions required, it may be determined that a common law contract of apprenticeship has been entered into.

Common Law Contracts of Apprenticeship

Traditional apprenticeships are a contract under common law in England and Wales. The primary purpose of the contract of apprenticeship is training and teaching, to enable the apprentice to secure the required qualification. Work is only a secondary purpose of the contract.

A traditional apprenticeship cannot be lawfully terminated before the expiry of the fixed term contract, except in exceptional circumstances. This is because the contract is entered into to enable the apprentice to receive training and obtain qualifications as a means to obtain better employment. This gives the apprentice far greater employment rights than an ordinary employee.

If an employer terminates a contract of apprenticeship early, and as a result deprives the apprentice of training, the apprentice is entitled to claim damages for wrongful dismissal under the contract. The remedy for such a claim would include their loss of earnings for the remainder of the fixed-term apprenticeship in addition to damages for future loss of earnings and prospects as a qualified person. This applies even if the individual is a poor performer or is having difficulty passing any of the exams. The apprentice would be able to make a claim regardless of whether there are conduct issues such as time keeping and attendance. Even a genuine redundancy situation, such as a downturn in work, would not entitle an employer to terminate a traditional apprenticeship agreement (regardless of the length of service).

Employers can still discipline a traditional apprentice, but it will only be safe to dismiss, except in exceptional circumstances, in certain situations.

These include where an employer completely closes down the business; where the nature of an employer’s business changes to such an extent that the employer cannot properly teach the apprentice the trade or profession that was intended to be taught. The latter would include acts of serious gross misconduct and continual neglect of duties or serious incapacitation on behalf of the apprentice to the extent that it has become impossible for the employer to continue to teach the apprentice (subject always to following a fair dismissal procedure); and where the agreement is terminated by mutual agreement. Where both parties genuinely agree that the contract can come to an end this is an acceptable termination.

Terminating Employment at the Expiry of the Apprenticeship

The expiry of any fixed term employment contract constitutes a dismissal and as such employers need to have both a fair reason and follow a fair procedure in doing so if they are to minimise the risk of resultant claims. In many instances this will be “some other substantial reason” and the employer will be able to say that the apprenticeship was a one-off agreement and there is no need for it to be renewed once it has been completed and a qualification obtained. At the end of the fixed term the apprentice will not be deemed redundant if they do not get a new contract and, therefore, they are not entitled to redundancy pay.

Training Fee Agreements

Training fee agreements are not uncommon for apprentices, however, employers need to be mindful of how the apprenticeship has been funded. If the co-funded levy has been utilised, an apprentice cannot be required to contribute towards this on termination or otherwise including as part of any training fee agreement.

While apprentices are employed to learn, they also have rights. Their position is not sacrosanct but good advice is necessary is they are to be dismissed.

The Apprenticeship Levy

The Apprenticeship Levy was introduced in April 2017 by the government and applies to all employers paying a wage bill of more than £3 million per year. Employers that meet this criterion must pay 0.5% of their payroll each month as a levy tax. This levy can then be drawn down and reinvested back into their workforce in the form of apprenticeship training.

Ferrari apprenticeship programme (File picture)

Since then, the entire apprenticeship landscape has changed, with new workforce development programmes being created by employer groups known as Trailblazers.

The new apprenticeship standards are being developed from level 2 up to Level 7, which is the equivalent to a Masters degree. Many of them also include valuable professional qualifications.
Where the levy becomes interesting for SMEs is that employers with a wage bill less than £3 million arenot subject to the Apprenticeship Levy. However, they are able to access funding for up to 10 employees with the government contributing 95% towards the cost of apprenticeship training.
The author said that “a lot of companies are using [the levy] as a means to help their existing staff study for degrees as an aid to retaining valuable people within their organisation.
Further, FE News noted that there are significant barriers to businesses taking on more young apprentices including the sheer volume and complexity of paperwork and the time and effort required to fill it in – a situation made worse because of the pandemic.
And now there are inflationary pressures to cope with and firms have enough on their plates just trying to stay afloat let alone having the time or incentive to think about training.Employers seem to want fully formed members of staff. But that means wage inflation as the best are sought out.
FE News believes that the solution is for a proportion of the levy to be ringfenced for under-19s along with a simplification of the apprenticeship process.

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