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Apprenticeship Agreements v Contracts of Apprenticeship


Last month, we discussed the Government’s attempts to prevent the misuse of the term “apprentice” with new legislation under the Enterprise Bill.


This month, we are looking at a distinction in the arrangements that employers can make when taking on apprentices. Although it may appear subtle, it can make a lot of difference to employers if they make the wrong choice.


Some employers seem to treat apprenticeships on a rather casual basis – they may take one on, then realise that they cannot meet the costs involved and decide to dismiss them. That’s when they find that they’ve stumbled into something of a legal minefield.


The problem arises because there are two different types of arrangements – Apprenticeship Contracts and Apprenticeship Agreements. They both confer different rights on the apprentices governed by them.


Contracts


If the main purpose of the agreement is that the employer trains the apprentice, this means that an apprenticeship contract automatically exists.


It does not have to be in writing although it is a good idea for employers to get the contract in written form so that everyone has a point of reference if there are any disputes. There is even no need for the words ‘apprenticeship contract’ to appear within the contract.


Agreements


These have only been with us since the Apprenticeships, Skills, Children and Learning Act 2009. Section 32 of the Act defines what an apprenticeship agreement is, and Section 37 sets out a duty to participate in them.


An arrangement between an employer and apprentice, or a contract, either written or verbal, cannot qualify as an apprenticeship agreement unless it meets the specific requirements laid down in the Act.


“The Apprenticeship Agreement must be a written statement of particulars given to the employee for the purpose of complying with Section 1 of the Employment Rights Act. The Apprenticeship Agreement must also include a statement of the skill, trade or occupation for which the apprentice is being trained under the qualifying Apprenticeship framework.”


One condition that it is important to remember is that an apprentice agreement is entered into in connection with a qualifying apprenticeship framework. Employers have been caught out by this before – merely using a standard contract and changing the job title to ‘apprentice’ will not work as it will not include the required clauses and the employer will therefore have created an apprenticeship contract instead.


Rights


Whilst it might be thought that apprentices are merely employees on fixed term contracts, this is not in fact the case. Section 20 of the Fixed-Term Employee (Prevention of Less Favourable Treatment) Regulations 2002 states that “These Regulations shall not have effect in relation to employment under a fixed-term contract where the contract is a contract of apprenticeship.” This means that apprentices’ contracts are not legally considered to be fixed term and that can have serious implications for an employer if they decide to dismiss an apprentice.


If an apprentice is employed under an apprenticeship agreement, they have the rights of ordinary employees and, should they be dismissed, standard unfair dismissal rules will come into play.


Apprentices taken on with apprenticeship contracts, on the other hand, have more rights. If they commit misconduct or breach the contract, the employer is not automatically able to stop the training.


Neither can an employer terminate the contract by making the apprentice redundant, unless the redundancy is due to the closure of the employer’s business.


If an employer thinks that there might come a point at which they will find themselves wanting to dismiss an apprentice, and with the foregoing taken into account, it is probably best to have specific conditions and disciplinary procedures written into the contract at the start of the apprenticeship. If the apprentice, by virtue of their misconduct, breaks the terms of the agreement, then they will be unable to claim for such things as lost wages.


Compensation


An apprentice on a contract who is dismissed may well receive a higher compensation award than other employees in the same situation. This is because such an award will reflect not only the loss of earnings under the apprenticeship contract but also any future earnings that they will not now be able to realise.


New legislation


From May 2015, the Apprenticeships, Skills, Children and Learning Act 2009 was amended by the Deregulation Act 2015 to introduce the idea of what was called an “approved English apprenticeship agreement”.


This applies to all apprenticeships for which there is a relevant standard published. If this is the case, the agreement needs to mention the standard and will then be known as an “approved English apprenticeship agreement”. If there is no relevant standard, then no changes need to be made to agreements that were drawn up under the 2009 Act.


It should be remembered that this change only applies to England, not Wales. Sectors for which standards have already been published by the Secretary of State include:


  • Aerospace

  • Dental health

  • Energy and utilities

  • Food and drink

  • Property services


Under the law, an “approved English apprenticeship agreement” is considered a contract of service, which gives the apprentice only the statutory protection that ordinary employees enjoy. The rights of an apprentice under a contract of apprenticeship have been covered above.


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