Apprenticeships: beware of the pitfalls

Following the Chancellor’s recent announcement to incentivise and encourage employers to hire more apprentices we look at the common pitfalls and things to be aware of when engaging apprentices.

Another welcome move by Rishi Sunak has seen him increasing government support in an attempt to prevent a generation of young workers from becoming economic casualties of coronavirus. The economics and politics of the support measures aside, it remains to be seen how much, if any, of a financial incentive the moves will be for employers, many of whom are already either reviewing their current workforce requirements or who have already commenced redundancy consultations.

If, however, employers are minded to take up these incentives it is important that the apprentice is engaged on appropriate terms and conditions as there can be unforeseen consequences when this is not done at the outset.

What is an apprenticeship?

Apprenticeships have existed in law and industry for many years. Historically they were ‘contracts of apprenticeship’ (also known as common law apprenticeships) where traditional trades or crafts were learned on the job in exchange for the ‘master’ providing food and lodgings. Today, apprenticeships are mainly work-based training programmes, which lead to nationally recognised qualifications. They enable employers to avoid skills shortages in traditionally skilled occupations. They also allow apprentices to develop their skills by combining working alongside experienced staff with day release training at an educational institution.

Apprenticeships are open to all age groups above 16 and are available at intermediate, advanced and higher degree level. An apprenticeship will be for a fixed term (usually between one to four years) and/or until a level of qualification is reached. In general, apprentices work for at least 30 hours a week. However, the number of hours an apprentice works each week can be reduced if the length of the apprenticeship programme is also extended.

Apprentices are entitled to a minimum hourly wage rate. The training element of the apprenticeship is usually fully or partially government funded. The agreement will usually be in a form common to all apprentices in that trade. This is all straightforward so far, however...

Types of apprenticeship

Aside from the common law apprenticeship (which still exists today) there are several other types of apprenticeship agreements or statutory apprenticeships depending on the where in the country the apprenticeship takes place (England, Wales or Scotland), when the apprenticeship started and the sector or industry the apprenticeship relates to.

There are also strict requirements that must be adhered to and terms that must be included for the contract to be an apprenticeship agreement. In the main these are:

• The apprentice must undertake work for the employer
• The agreement must be in the ‘prescribed form’ i.e. it must contain:
  • the basic terms of employment required to be given to employees under section 1 of the Employment Rights Act 1996; and
  • a statement of the skill, trade or occupation for which the apprentice is being trained under the relevant apprenticeship framework
• The agreement has to be entered into in connection with a qualifying apprenticeship framework
• The contract must state that it is governed by the law of England and Wales

If all of the above are not satisfied, the apprenticeship will be a common law apprenticeship.

Why does it matter? 

It matters a lot! A common law apprenticeship’s primary purpose is to provide training therefore it cannot be terminated as easily as a ‘normal’ employee’s contract can be. The enhanced protection such an apprentice has can be summarised as follows:

• The ordinary law of unfair dismissal doesn’t apply which means that the contract can only be terminated by a repudiatory act but it can’t be terminated by gross misconduct that would ordinarily justify dismissal. For example, an apprentice swearing at his line manager won’t be sufficient to enable a misconduct dismissal – instead the misconduct must render the apprentice unteachable (a high hurdle to surmount)
• They can’t be made redundant where there is a proposed reduction in the number of employees (they can be made redundant where the site or business closes but most redundancies fall into the former category)
• The losses that the apprentice can recover for early termination are substantial as they will include damages for loss of earnings and training for the remainder of the full contract, as well as for loss of career prospects

On the flip side, apprenticeship agreements (provided they satisfy the requirements) can be terminated in the same way as those of ordinary employees.

Are there any other things to be aware of generally?

A few... You should avoid putting an upper age limit on applicants for an apprenticeship scheme (government funding for younger apprentices is usually higher) as this could directly discriminate against older applicants.

Employers should also ensure that apprentices’ terms of employment are consistent with those offered to other employees of similar status and length of service. Apprentices, as a group, are likely to be younger than the rest of the workforce and therefore any differences in their terms and conditions could amount to indirect age discrimination.

Given the risks, should we even consider engaging apprentices?

The government clearly wants you to do so, and provided that you engage apprentices on the correct terms there is no more risk that engaging any other employee.

If you want to find out more information about employing apprentices, the UK government’s website has a helpful tool here.

For Scottish employers however, there is no statutory scheme for apprenticeships and therefore apprenticeships in Scotland are all common law apprenticeships with the inherent difficulties involved around early termination.

Read more about the recent plan for jobs to secure the UK’s economic recovery from coronavirus in our article here.