An apprenticeship can be hugely beneficial to a business as well as to the apprentice. A well-run apprenticeship can provide a business with a valuable resource at a lesser cost than a fully trained employee. There may also be government funding available in respect of an apprentice. The apprentice also benefits from certified on the job training.
However, there are potential pitfalls for a business particularly when it comes to the termination of an apprenticeship.
There are two different types of apprenticeship and it is really important that you are aware of the distinction as it can have a huge impact on the contractual relationship with your apprentice.
Contracts of apprenticeship are governed by common law principles and are generally for a fixed term. They cannot be terminated early except for in cases of extreme misconduct. They can be created orally and do not need to refer to the terms “apprentice” or “apprenticeship” but training must be the main purpose of the agreement.
Apprenticeship Agreements must comply with the apprenticeship framework published by the government and incorporate a training element, generally through an external training provider. Government funding is available to cover part of the cost of this training. These Agreements are governed by the Apprenticeships, Skills, Children and Learning Act 2009 (ASCLA).
The ASCLA sets out certain conditions that must be met to constitute an Apprenticeship Agreement. You would not be eligible for government funding if the conditions are not met. The agreement must:
To reduce the risk of a common law agreement being deemed to exist, we recommend that you include provisions which are inconsistent with common law apprenticeships. While a label is never definitive as to employment status, it would be prudent to state expressly that the agreement is intended to create a contract of service (under the ASCLA) and not a contract of apprenticeship. A provision allowing you to terminate the agreement immediately after the apprentice’s gross misconduct or otherwise after a period of notice would also be inconsistent with a common law apprenticeship.
We appreciate that things do not always work out and that you may wish to terminate an apprenticeship early however, we would advise that you act cautiously.
Common law apprenticeships are usually for a fixed term and cannot usually be terminated early except in cases of extreme misconduct. Case law suggests that the misconduct must be so serious that it is impossible to carry on teaching the apprentice and that gross misconduct may not be sufficient to justify early termination. The early termination of a common law apprenticeship not only carries with it the risk of statutory claims such as unfair dismissal, the apprentice may also be able to pursue a claim for breach of contract which could potentially be very costly to you if successful.
Apprenticeship agreements will generally be treated like any other contract of employment however, it would be open to an ASCLA apprentice to argue that the higher standard required of an employer to dismiss a common law apprentice applies equally to ASCLA apprenticeships. Given the unfair dismissal test under the Employment Rights Act 1996 requires consideration of all the circumstances, it is easy to see how an employment tribunal may be persuaded to hold an employer to a higher standard when dismissing an apprentice.
It is not uncommon for a business to want to keep an apprentice on once their apprenticeship has been completed successfully but what happens if things do not work out six months later and the business wishes to terminate the contract?
The business would need to take into account the service accrued during the employee’s apprenticeship when determining their employment rights i.e. if the apprenticeship was for a period of two years, the business would need to add this period on to their total length of service which would mean that the employee would have been employed continuously for a total period of 2 years and 6 months.
You’ll see from this article that an apprentice can be a great benefit to your business but we would always advise that you seek help and guidance as the rules around apprentices can be tricky. If you fancy a chat about this, please do give us a call.