Apprentices: do you understand their legal status?

Apprentices: Do you understand their legal status? Photo: REX/Stephen Simpson
Ed Miliband said last week that as many school leavers should go into apprenticeships as go to university. Photo: REX/Stephen Simpson

With both Labour and the Conservatives pledging to create more apprenticeships after the next general election, William Downing and Sara Thompson set out what employers thinking of taking on apprentices need to know about their legal status.

House of Commons Library statistics show there were 510,200 new apprenticeship starting in the academic year 2012/13, an increase of around 80% from 2009/10. With so many employers providing apprenticeships, it is important to be clear on their legal status. Can you treat apprentices as “normal” employees or do they have additional rights?

The traditional apprentice

The traditional apprenticeship has been a two-party arrangement between a master craftsman and an apprentice, generally lasting for a fixed term, under which the apprentice is trained in the master’s skill and works under a contract of apprenticeship. It differs from a contract of employment, as the primary purpose of the contract is training and not work.

Traditional apprentices are employees, but they have enhanced protection against dismissal. They cannot be made redundant unless the business actually closes or its fundamental nature changes. A conduct dismissal requires more extreme misconduct than for a normal employee, with one old case going so far as to say that the apprentice must be “virtually unteachable”.

An apprentice wrongly dismissed before the end of his or her contract can be awarded an enhanced claim for damages with compensation, not only for loss of earnings and training for the entire remainder of the apprenticeship, but also for loss of future career prospects.

The statutory apprentice

In 1994 the Government introduced what it called “modern apprenticeships”, which were rebranded as simply “apprenticeships” in 2004. These were generally three-party arrangements between the employer, the apprentice and an external third-party training provider, often supported by government funding. The apprentice would obtain a nationally recognised qualification, either at NVQ level 3 (equivalent to two A-levels) or at NVQ level 2 (equivalent to five GCSEs).

It might be thought these statutory apprenticeships had little in common with the traditional idea of apprenticeships. However, the courts decided that – even though the training was provided by a third party – it could still amount to a contract of apprenticeship, bringing with it an apprentice’s enhanced protection from dismissal. Such a situation was clearly less than appealing from an employer’s perspective.

Apprentices resources on XpertHR

Model apprenticeship agreement

The current statutory system

The current statutory system was introduced under the Apprenticeship, Skills, Children and Learning Act 2009 (ASCLA) and came into effect from April 2012, when regulations were introduced setting out the prescribed form of the agreement. Apprentices are employed under an apprenticeship agreement and, under the terms of the ASCLA, this is not a contract of apprenticeship but a contract of service – meaning that apprentices employed under an apprenticeship agreement can be treated as “normal” employees.

However to be an apprenticeship agreement, certain conditions must be fulfilled. These are:

  • the apprentice must undertake to work for the employer under the agreement;
  • the agreement must include the written basic particulars of employment required by s.1 of the Employment Rights Act 1996, and a written statement of the skill, trade or occupation for which the apprentice is training under the relevant apprenticeship framework;
  • it must state it is governed by the law of England and Wales; and
  • it must state it is entered into in connection with a qualifying apprenticeship framework.

A failure to meet any one of these conditions risks the arrangement being viewed as a contract of apprenticeship with its enhanced protections.

Future of the statutory apprentice

The Government plans to reform apprenticeship agreements in England, although they will remain in their current format in Wales. The changes will be made under the Deregulation Bill that is due to receive Royal Assent in 2015 and are aimed at simplifying the current system. It will also introduce the “approved English apprenticeship”. Like the apprenticeship agreement, it will be a contract of service (not an apprenticeship) and have to meet similar conditions.

The changes include:

  • replacing the apprenticeship frameworks with simpler general apprenticeship standards approved by the Secretary of State;
  • changing the government funding of the third-party provider so that, instead of funding being routed through the provider (the current system), it is routed through the employer;
  • implementing a system of co-investment where the Government and the employer share the cost of third-party training; and
  • removing the current full funding of third-party training for younger apprentices.

The funding changes, due to be introduced in 2016, seem likely to increase the financial costs to employers, although the final model to be adopted has not yet been decided.

About William Downing and Sara Thompson

William Downing is a partner and Sara Thompson is a solicitor in the employment law team at Blake Morgan LLP, with offices in Oxford, Reading, Southampton, Cardiff, Swansea and London.

4 Responses to Apprentices: do you understand their legal status?

  1. Iain Mackinnon 30 Sep 2014 at 2:36 pm #

    William, Sara, Which camp would an employer fall into if they choose not to take the subsidy on offer from BIS (for example because the strings attached appear too onerous) and employ an apprentice entirely separate from the Government’s programme? I presume they would then be covered by what you’ve called “traditional” arrangements?

    Iain Mackinnon
    Secretary, Maritime Skills Alliance [a Round Two Trailblazer]

    • Sara Thompson 1 Oct 2014 at 11:29 am #

      Hi Iain,

      If an employer meets all the conditions of an apprenticeship agreement, one of which is that the agreement is entered into in connection with a qualifying Apprenticeship Framework, then the employer can be certain the apprentice is employed under a contract of service rather than a contract of apprenticeship. The training must be provided in accordance with the qualifying Apprenticeship Agreement, but there is no requirement that the training should be publicly funded for it to be an apprenticeship agreement.

      If one or more of the apprenticeship agreement conditions is not met then the “apprentice’s” status is less certain. The courts will have to weigh up whether the “apprentice” is employed under a contract of apprenticeship or a
      contract of service. There are a number of factors that will be relevant in
      answering this question, but the central one will be whether the primary
      purpose of the contract is training or the execution of work. Such uncertainty
      is unlikely to be helpful for an employer.

      Sara Thompson
      Solicitor
      Blake Morgan LLP

  2. Sam 3 Oct 2014 at 2:57 pm #

    Are there any plans to remove the enhanced protections Apprentices receive, i.e. that in order to be dismissed it has to be a greater level of misconduct than the norm and so they can be made redundant without the business having to go under completely? I really think it should be a level playing field with other employees.

    • Sara Thompson 6 Oct 2014 at 9:44 am #

      Hi Sam,
      Statutory apprentices are on a level playing field with other employees. As long as the conditions of the statutory apprenticeship agreement are fulfilled, then the apprentices will be employed under contracts of service rather that contracts of apprenticeship. The enhanced protections against dismissal then do not apply. The government plans to replace the apprenticeship agreement in England with the “approved English apprenticeship”, but this will also be a contract of service.
      The risk for the employer is if it fails to meet the conditions for a statutory apprenticeship agreement. In those circumstances it may unwittingly create a traditional contract of apprenticeship with the enhanced protections.
      Sara Thompson
      Solicitor
      Blake Morgan LLP