27 Oct 2016

Thinking of taking on an apprentice?

Thinking of taking on an apprentice? Here are 3 important legal and practical considerations....

Apprenticeships are becoming more common with school leavers choosing to further their aspirations through a combination of on-the-job training and further education. In 2014-15, there were 499,900 new apprenticeships, a 14% increase on the previous year. 
It is unsurprising that employers are keen to tap into the brightest and most motivated through apprenticeships in order to develop their talent base. 89% of apprentice employers report that they have helped their business improve and grow. However, for every encouraging account as to how apprenticeships work and benefit the individual and the employer, some employers exploit the relationship, even acting unlawfully.  So what are some of the key questions in organising arrangements so as to ensure the maximum return for both parties? 

What are the costs to the employer?

  • You may get help with the cost of employing an apprentice through a government grant of up to £1,500 if you employ less than 50 people and your apprentice is aged 16-24. You can also apply for funding to cover the cost of your apprentice’s qualification through the National Apprenticeship Service. If your apprentice is aged 16-18 you can get all of the course costs up to advanced level qualifications. 
  • A great start is to visit www.gov.co.uk to establish an overview of what relief your business is entitled to. 
  • You must pay your apprentice the applicable minimum wage. This is £3.40 for any apprentice in their first 12 months. After this, even if they are still in training you must pay the minimum wage for their age.
  • Don’t forget that if an apprentice is aged over 25 and not in their first 12 months of the apprenticeship, they will be entitled to the National Living Wage.

Can employers get away with the obvious trick?

“I know. I’ll call my employee an ‘apprentice’ so I can pay half the minimum wage”. The advice from our in-house employment lawyer, Nigel French would be to think again. He points to a landmark case and we now see a comprehensive view expressed in the case of HMRC –v- Jones and Ors (T/A Holmesdale Riding Centre) 2014. The Respondents owned a stabling business in which a number of young workers were employed for up to and over 40 hours per week. They were paid around £100 per week plus board and entitled to sponsored support for training up to 4 hours per week in their pursuit of various certifications. The HMRC investigated in response to a complaint and argued that the ordinary worker minimum wage rate was applicable for the “apprentices” saying that the limited scope of training meant that they were not genuine apprentices at all. Also, the very often menial tasks being carried out were not to be regarded as part of an authentic apprenticeship. For example the business did not employ anyone other than apprentices and yet a number of workers were heavily relied upon. The Employment Appeal Tribunal in a carefully considered judgement were persuaded to find in favour of the workers and were heavily influenced by the following arguments:

  • The terms of employment were inconsistent with an apprenticeship, having no fixed period, the arrangement being terminable with notice etc.
  • The “primary purpose” of an apprenticeship is training for the benefit of the worker, with other work being incidental to that.  In this case it was the other way round.
  • Although the contract was described in clear terms as one of apprenticeship, the surrounding circumstances were not consistent with that.  Therefore it is an objective test for courts to determine the status of the contract based on the reality of the working arrangements. 

What is the employment status of an apprentice?

With so many employers taking on apprentices, it is important to be clear as to their legal status. Since 2012, any employer wishing to take on an apprentice in connection with a qualifying apprentice framework, must enter into an apprenticeship agreement under The Apprenticeship, Skills, Children and Learning Act (ASCLA) 2009. This regulates apprenticeships through tripartite agreements with a qualifying apprentice framework (provided by a learning provider); the employer and the apprentice. This is referred to in law as a contract of service, and not a contract of apprenticeship. 

It is important to get your documentation right. Many employers seeking to implement an agreement simply use a standard company contract of employment and change the job title to “Apprentice”. This will not serve as an Apprenticeship Agreement, and instead is likely to be viewed as a contract and have additional rights, which can be very costly to your business. An apprenticeship agreement must be in the form of a written statement of particulars of employment that complies with s.1 of the Employment Rights Act 1996.  There are a range of other duties and obligations in respect of:
Specific rules on redundancy.
Working time, breaks, holidays and hours (Working Time Regulations 1998).
Time off for study and attendance at college.
Funding of books materials etc.
‘Clawback’ of fees and deduction of wages in cases of non-completion.

These are all areas in respect of which care is needed and employers should not embark upon an apprenticeship arrangement without taking appropriate advice.  Our consultants at Nigel French and Associates are experts in providing advice on apprenticeship implementation from initiation and business planning through to selection, assessment and contractual documentation. 

Lydia French – Nigel French and Associates Ltd. 

Apprentice employment law advice