Apprenticeships are work-based training programmes leading to nationally recognised qualifications. They enable employers to avoid skills shortages in traditionally skilled occupations whilst enabling apprentices to develop skills by combining day release training with working alongside experienced colleagues.
Apprenticeships are open to all age groups above 16 at intermediate, advanced and higher degree level. An apprenticeship will be for a fixed term (usually 1-4 years) and/or until a level of qualification is reached. In general, apprentices work for at least 30 hours a week. The National Minimum wage Regulations (NMW) contain a special category for apprentices with hourly rates being substantially less than for other employees.
Who qualifies as an Apprentice?
Apprentices are usually new employees who are taken on to learn a profession or trade but you can also use apprenticeship courses to upskill your existing employees if they meet course requirements.
There are 3 types of apprenticeships:
- Contract of Apprenticeship
Prior to legislation effective from 2011, only case law governed the apprentice/employment relationship and a single legal form of apprenticeship existed – a contract of apprenticeship. An apprentice of this nature is engaged to work for an employer with training being the primary purpose, while undertaking work for the employer is secondary.
An apprentice working under a contract of apprenticeship is entitled to all the statutory employment protections and enhanced protection against dismissal. For example an employer who dismisses an apprentice may find themselves liable for large penalties which can include the cost of training for the balance of their studies, loss of earnings for the original term of the apprenticeship (which could be up to 5 years) and future loss of earnings as a result of the harm done to an apprentice’s ability to earn in the future as a result of not completing the training programme.
- Apprenticeship Agreements.
In 2011 the Apprenticeships, Skills, Children and Learning Act 2009 (ASCLA 2009) came into force. This introduced a new legal form of apprenticeship; an apprenticeship agreement, under which the an apprentice works for an employer in accordance with conditions specified in ASCLA 2009 and the Apprenticeships (Form of Apprenticeship Agreement) Regulations 2012. An apprenticeship agreement has the status of a contract of service, which means that an apprentice engaged under an apprenticeship agreement is only entitled to the statutory protections granted to ordinary employees, but has no enhanced protection against dismissal.
With effect from 26 May 2015, apprenticeship agreements only apply to;
- apprenticeships in Wales and;
- apprenticeships in England where the relevant apprenticeship framework has not yet been replaced by an approved apprenticeship standard (See 3. below)
- Approved English Apprenticeships
Approved English Apprenticeships must satisfy conditions specified in regulations made by the Secretary of State. They are designed to allow employers to create apprenticeship standards for their own sectors. An Approved English Apprenticeship is only applicable once the Secretary of State’s approval has been given.
Like an apprenticeship agreement, approved English Apprenticeship Agreements have the status of a contract of service, which means that an apprentice engaged under an apprenticeship agreement is only entitled to the statutory employment protections.
It is important to note that the apprentice’s contract for apprenticeship should specify what happens at the end of the apprenticeship (i.e. whether employment will end or whether it can be expected to continue) and what could happen if the apprentice fails either academically or in terms of work performance. Prudent employers will clearly stipulate that the apprenticeship will end without further notice if;
- the apprentice fails to meet the study requirements including passing relevant exams or participating in training etc.;
- continual neglect of duties;
- the apprentice commits gross misconduct;
- the apprenticeship comes to an end.
Great care should be taken when contemplating the dismissal of an apprentice. If a tribunal rules that the dismissal is unfair it may require the employer to pay the wages and training fees that would have been due for the remainder of the apprenticeship, and may make further substantial awards to reflect the damage to the apprentice’s future career, i.e. the inability of the apprentice to qualify and therefore to benefit from future enhancements to earnings that the qualification would have brought. This could be particularly costly where the individual would qualify to become a time served tradesperson, e.g. an electrician or plumber.
Typical employment law pitfalls
Failing to note the special position of some apprentices when running redundancy programs, dismissing an apprentice before the apprenticeship is complete, inappropriate or no contract of employment that limit employer flexibility. This is a very high risk and often grey area of employment law, but this should not necessarily put employers off recruiting apprentices as this route has many advantages for both the employer and apprentice.
It is also risky for employers to put an upper age limit on applicants for their schemes on the basis of funding eligibility, as this could directly discriminate against older applicants, unless the employer can show that the limit is objectively justified.
An “apprenticeship rate” of the NMW was introduced in October 2010. An apprentice aged 19 or over however, who has been an apprentice for more than 12 months, would be entitled to either the development rate or adult rate of NMW, depending on age:
- Standard (adult) rate: workers aged 21 or over (there is no upper age limit.)
- Development rate: workers aged between 18 and 20 inclusive.
- Apprentice rate: apprentices under 19 years of age or those aged 19 and over but in the first year of their apprenticeship.
Working time must also be considered. Those between the ages of 16-18 must not work more than 8 hours a day, 40 hours in any week and cannot work between the hours of 10pm-6am. Where working hours of adult workers are averaged over a reference period (17 weeks), there are no averaging provisions for young workers.
Terminating an apprenticeship – to summarise a common law contract of apprenticeship is usually for a fixed term and employers have only a limited right of dismissal before the end of the term. However, apprentices engaged under apprenticeship agreements can be dismissed in the same way as ordinary employees. The contract may therefore be an indefinite contract terminable on notice, or be for a fixed term, with or without a notice provision. If the apprentice is employed under an approved English apprenticeship agreement or an apprenticeship agreement, the normal principles for breach of contract and unfair dismissal claims apply. As a result, employers can effectively performance manage under-performing apprentices as they would any other employee, but if a dismissal of an apprentice is subsequently ruled to be unfair a tribunal may take into account loss of income etc. owing to the failure to complete the apprenticeship (and as a result of the employer’s unfair dismissal.)
The UK government introduced the Apprenticeship Levy at the start of the 2017/2018 tax year. The levy is payable by employers with annual pay bills in excess of £3 million at 0.5% of the total pay bill minus an annual levy allowance of £15,000 (the total amount payable equates to exactly 0.5% of the pay bill over £3 million). The levy is paid to HMRC via the PAYE process.
How can Employers Access Apprenticeship Funding?
If you are a UK employer with an annual pay bill of more than £3 million you will pay the Apprenticeship Levy. You can set up an account to claim back this money and spend it on apprenticeship training which the government will top up an additional 10%.
If you are a UK employer with an annual pay bill of less than £3 million you will not pay the Apprenticeship Levy. You could get up to 95% of the cost of an apprenticeship course funded by the government.
Check out the gov.uk website for more information and to find apprenticeship training.
If you’re thinking of outsourcing your HR, payroll or employment law needs, why not contact myHRdept? Call us on 01628 820515, email us at firstname.lastname@example.org to discuss your requirements, or contact us via our website and we’ll call you back.