Apprentices: New prescribed agreement will be contract of service not apprenticeship

Apprentices: New prescribed agreement will be contract of service not apprenticeship

Published:

Author: Kevin McCavish

New legislation allows employers to engage apprentices on contracts of service (rather than contracts of apprenticeship) for the first time, subject to compliance with the specified conditions.

An individual employed under a contract of apprenticeship is protected against unfair dismissal and enjoys employment protection just like an employee. However, contracts of apprenticeship have traditionally involved heavier burdens for employers than ordinary contracts of employment as the whole purpose of such an arrangement is to provide training to the individual.

Background

An individual employed under a contract of apprenticeship is protected against unfair dismissal and enjoys employment protection just like an employee. However, contracts of apprenticeship have traditionally involved heavier burdens for employers than ordinary contracts of employment as the whole purpose of such an arrangement is to provide training to the individual.

Usually apprenticeship contracts are for a fixed term of several years and can not be terminated early. Therefore, if an employer terminates the contract early, any damages payable for breach of contract are potentially much greater than damages for breach of an ordinary employment contract. In addition, the apprentice could be entitled to be compensated not just for loss of wages to the end of the contract but also for loss of the training opportunity and loss of status.

In recent years so-called "modern apprenticeships" have involved an employer, an apprentice and a third-party training provider entering into a tri-partite agreement: the apprentice works for the employer and receives training leading to a recognised qualification provided by a central body.

Apprentices were originally excluded from the national minimum wage (NMW) but, in October 2010 an apprentice rate was introduced for apprentices under 19 or in the first year of their employment. Once an apprentice is aged 19 or over and has completed a year of their apprenticeship, they are then entitled to the NMW rate for their age.

Latest position

The Apprenticeship, Skills, Children and Learning Act 2009 (the "Act) provides that an agreement will be an "apprenticeship agreement" if:

  • the apprentice undertakes to work for the employer under the agreement
  • the agreement is in the prescribed form
  • the agreement states that it is governed by the laws of England and Wales
  • the agreement states that it is entered into in connection with a qualifying apprenticeship framework

Section 35 of the Act provides that an apprenticeship agreement which satisfies these conditions should be regarded as a contract of service not a contract of apprenticeship for common law or statutory purposes.

Regulations have now been laid before Parliament and will come into force on 6 April 2012 which set out the "prescribed form" of the apprenticeship agreement.

While it had been expected that the regulations would include an example document in fact, the regulations simply say that that apprenticeship agreements entered into under the Act must contain the basic terms of employment required to be given to employees under section 1 of the Employment Rights Act 1996. This could be in the form of a written statement of particulars of employment, a written contract of employment or a letter of engagement.

In addition, the regulations state that the prescribed form of agreement must contain a statement of the skill, trade or occupation for which the apprentice is being trained under the apprenticeship framework.

Comment

Where section 35 of the Act applies, so that an apprentice is deemed to be working under a contract of service, it appears that they will be entitled to the more generous age related rate of the NMW rather than the apprentice rate. However, this has to be balanced against the potential advantages of being able to terminate a contract of service more easily.

Source

The Apprenticeships (Form of Apprenticeship Agreement) Regulations 2012 (SI 2012/844)