Apprentice Contracts

Apprentices have become an important part of the Government’s plans to encourage growth in the economy. In August it was announced that companies bidding for Government contracts worth more than £10m would need to show that they have employed with them a “reasonable proportion” of apprentices. This followed the announcement of 16,000 new apprentices in April.

While there are some obvious benefits of employing apprentices, it is important to note some lesser known issues, along with some recent changes.

Apprentices have the benefit of normal employment protection laws such as the right to claim unfair dismissal, a redundancy payment and protection from discrimination. However, there are two types of apprentice contracts:

  • ‘traditional’ apprenticeships; and
  • new style ‘apprentice agreements’

Each has differing levels of protection for the apprentice.

Traditional Apprenticeship
The essence of a traditional apprenticeship is that it is for a limited term, either for a period of years or until the apprentice attains a qualification. It establishes a relationship akin to that of a ‘father and son’ or ‘teacher and pupil’ under which the employer will train the apprentice to the relevant standard in their particular trade / profession / discipline. Under a traditional apprenticeship, the employer can only lawfully terminate the arrangement before the end of the fixed term / training period in exceptional and rare circumstances.

Examples would be if the relationship is frustrated by a totally unexpected event (such as a fire destroying the employer’s business) or gross misconduct (for which there is usually a higher threshold of poor conduct required than for ordinary employees) or if it is clear that, despite training, the employee is never likely to progress to the standard required of someone in that trade or profession.

If a traditional apprenticeship is wrongfully terminated early, the apprentice will have an action for wrongful dismissal and may be awarded lost wages for the balance of the period of the contract and damages for losing their ‘life chances’ because of not becoming qualified and / or loss of opportunity in the job market by reason of not completing the apprenticeship. This can amount to a very significant amount of money. The termination would also be treated as a dismissal for unfair dismissal purposes (if the apprentice has sufficient service for the right to make such a claim).

New Style Apprenticeship Agreement
Since April 2012, employers have been able to use apprenticeship agreements for apprentices, which constitute contracts of employment and therefore give the apprentice the status of an ordinary employee. The effect is that the normal principles applicable to employees with regard to misconduct, poor performance and redundancy will apply – unlike the position with a traditional apprenticeship contract referred to above.

Under the new style apprenticeship agreement, provided certain conditions are met, in particular regarding the contents of the apprenticeship agreement and the apprenticeship being in accordance with a recognised Government Framework, the employer can treat the apprentice in the same way he treats all other employees in relation to discipline and termination of employment.

In England (but not Wales), from 26th May 2015 the Government started to replace the framework schemes referred to above with a simplified system of Approved Apprenticeship Standards. This has in turn changed what needs to be contained within the apprenticeship agreement for it to remove the enhanced protection apprentices once had.

There are transitional provisions in place which mean that any agreements entered into before 26th May 2015 in furtherance of a framework act as before. It is not entirely clear what happens to those framework apprenticeships which do not have an Approved Standard issued as yet, although it is believed that the framework will continue until it has been replaced.

In light of the fact that the use of apprentices is likely to increase, getting an agreement in place which removes the additional protections previously afforded to apprentices will provide much more flexibility. Clients of Ellis Whittam can receive advice and assistance with the drafting of such agreements.

Director of Legal Services

James Tamm

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