Apprenticeship Agreements or Contract of Apprenticeship?
The new government have made great play of their desire to see apprenticeships multiply across the economy and we wait to see how they go about introducing their plans and there is no doubt that this has resulted in a successful route into employment in difficult times. In the meantime we thought it appropriate to look at the need for employers to understand what an apprenticeship means in terms of their relationship with the apprentice and how getting this wrong could be expensive if you want to end that relationship.
A Contract of Apprenticeship is governed by common law and the focus is on the apprentice’s training, rather than the job. It involves greater responsibilities and liabilities for employers than ordinary contracts of employment. Normally apprenticeships are for a fixed term and are protected against early termination. Termination before the apprentice is qualified can result in legal challenge and enhanced awards for unfair dismissal and breach of contract which may include compensation for loss of training/trade, loss of status and loss of wages both as an apprentice and future earnings had they qualified.
In 2009, legislation introduced the concept of Apprenticeship Agreements and the Apprenticeships (Form of Apprenticeship Agreements) Regulations, which came into force in 2012, specified a prescribed form of such an agreement. Under the regulations the Agreement must include the basic terms and conditions of employment and a statement of the skill or trade that is being trained. This can be in a principle statement or letter of appointment. If the Agreement satisfies these requirements, it can be considered as a contract of service (or contract of employment) and not a contract of apprenticeship.
Under a contract of employment, an apprentice's contract can be terminated on notice, subject to the normal rules of unfair dismissal. Therefore an Apprenticeship Agreement which complies with the terms of the Regulations can be terminated early without this amounting to a breach of contract and without the resultant higher compensatory loss for loss of trade.
It is important to get the wording of these Apprentice Agreements correct, if the new provisions are to apply.
Modern Apprenticeships add a further complication as they involve a third party, namely a training provider. Here the employer does not provide the training but allows the apprentice access to training by a third party provider. Recent case law has ruled that such arrangements could constitute a Contract of Apprenticeship, but use of an Apprenticeship Agreement under the Regulations will avoid this confusion.
As you can see this is an area we would not wish employers to get wrong. Therefore if you are to take on an Apprentice, we advise you seek advice at the outset.
Our ongoing clients get such advice already. If you want to become one just drop us a line or call us on 03456 446 006.