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Sharon Latham

Clarke Willmott

Employment Law Specialist

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Legal Insight: How will changes to apprenticeship laws affect you?

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As of 6 April 2012, the law concerning apprenticeships will change, which means that employers must be wary of apprentices’ protected status and how it could impact upon their ability to manage and/or dismiss them.

What is changing?
 
Under the new regulations, which are set to come into force tomorrow, if an apprenticeship agreement meets certain criteria, apprentices must be treated as being employed under a normal employment contract rather than under a distinct apprenticeship agreement.
 
As a result, employers will have considerably more rights to manage and dismiss their apprentices than was previously the case.
 
How is being an apprentice different to being an employee?
 
In law, the primary purpose of a traditional contract of apprenticeship is to provide training for an apprentice (doing work for the employer is considered secondary).
 
Although employers often don’t realise it, this means that running apprenticeship schemes brings greater responsibilities than ordinary contracts of employment do.
 
An apprenticeship usually takes place over a fixed term (for example, three years) and cannot be terminated early unless the apprentice’s conduct is such that it makes it impossible for their employer to carry out the central purpose of the relationship – that is, teaching the apprentice their trade.
 
This threshold is much higher than is usual when managing performance issues relating to employees.
 
Premature termination of an apprenticeship contract for any other reason than this gives apprentices the right to claim compensation for loss of wages, loss of training and loss of status.
 
Because of the current economic climate, most employers have tended to assume that, because they can fairly make employees redundant, they can also do the same with apprentices. Not so.
 
To make matters worse, the compensation that can be awarded to apprentices if their apprenticeships are cut short early is potentially much higher than claims by employees for unfair dismissal.
 
However the provisions of the Apprenticeships, Skills, Children and Learning Act 2009 – which allow for an apprenticeship agreement to be entered into – have been in force in England since 6 April 2011.
 
The Act states that an apprenticeship agreement entered into under the Act will constitute a ‘contract of service’ – in other words, only ordinary unfair dismissal rules will apply, just as with normal contracts of employment.
 
Until recently, the sticking point here was the criteria for determining the particular wording that had be used in order to turn an apprenticeship agreement into a contract for services.
 
This situation will change tomorrow when the Apprenticeships (Form of Apprenticeship Agreement) Regulations 2012 come into force, however.
 
What do employers need to be aware of with the changes?
 
The first issue is to determine whether or not employers are dealing with a normal employee or an apprentice. If they are normal employees, the usual rules apply for managing or dismissing them. If they are apprentices, read on. If in doubt, take advice.
 
The new law will apply to any apprenticeship entered into after tomorrow, if the apprentices concerned fall within the confines of the Act.
 
If an apprenticeship is entered into on or after 6 April 2011 – but before 6 April 2012 – and the agreement meets the criteria laid down in the Act, the question that employers need to ask themselves is, can it also be argued that their apprenticeship contract has been converted into a contract of service?
 
If so, the normal rules relating to terminating that contract will apply. This means that employers could make apprentices redundant, just as they could with any other employee, or indeed dismiss them for any reason that they could also dismiss an employee.
 
If not, the premature dismissal of such an apprentice could prove a costly mistake.
 
As a result, the new law is likely to make a significant difference to employers when undertaking workforce planning– particularly during tough economic times.
 
A final thought – if an apprenticeship agreement does not meet the necessary criteria, the Act says that the agreement has ‘no effect’. But does this mean that it is not an apprenticeship agreement or not a contract of employment? If it is neither, then what is it?
 
To get an clear answer, we will have to wait for case law and to see what happens in the first employment tribunal case.
 
 
Sharon Latham is an employment law specialist at legal firm, Clarke Willmott.

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One Response

  1. Traditional contracts of apprenticeship will still exist

    The 2009 Act does not do away with traditional apprenticeships. It simply makes the framework for a new sort of apprenticeship governed by an "apprenticeship agreement". It is clear from section 37 that contracts of apprenticeship can still exist.

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Sharon Latham

Employment Law Specialist

Read more from Sharon Latham