Government encourages apprenticeships
Increased funding has been directed towards apprenticeships to
keep the economy competitive and boost employment prospects in the
economic downturn. Apprenticeships are seen as playing a central
role in the Government's plans for growing skills in the economy.
Whilst apprenticeships can be of great value to both the employing
organisation and the apprentice, many employers are not aware of
the special legal protection that apprentices enjoy and the
financial consequences of terminating a contract of apprenticeship
early.
Apprentices are classed as employees under the Employment Rights
Act 1996. This means that they are entitled to all of the rights
contained in this Act, including the right to claim unfair
dismissal, redundancy payments, maternity leave and statutory
maternity pay.
So, how do contracts of apprenticeship differ from contracts of
employment? An apprenticeship is usually for a fixed period or
until a set qualification is achieved. Unlike a contract of
employment, during an apprenticeship an employer has a restricted
freedom to dismiss. Contracts of apprenticeship are in fact usually
only terminable on the conclusion of the agreed period of training
and a dismissal prior to this point may give rise to a claim for
breach of contract. If successful in such a claim, the damages
awarded may be substantial. This is because an apprentice will be
entitled to damages not only to reflect lost wages and training for
the remainder of the apprenticeship, but also to reflect reduction
of future employment prospects.
Is the position the same for Government-sponsored Modern
Apprenticeship Agreements? In 2006 in the case of Flett v Matheson
the Court of Appeal decided that Modern Apprenticeship Agreements
are capable of amounting to contracts of apprenticeship and thus of
potentially attracting substantial damages when ended
prematurely.
The dangers of this are illustrated in the Employment Tribunal
decision of Lloyd v Federal Mogul Sintered Products Ltd (In
Administration). In this case, an apprentice who has signed a
'modern apprenticeship pledge' was awarded £20,000 for breach of
contract after he was dismissed before the end of his
apprenticeship contract due to poor attendance.
The Draft Apprenticeship Bill is due to pass through parliament
in the next parliamentary session. The Bill will establish for the
first time a statutory basis for the apprenticeship programme, and
as currently drafted, an apprenticeship agreement will be treated
as a contract of service, eliminating the risks associated with
apprentices. However, the final form of the Bill is still to be
determined.
Whether an arrangement constitutes a contract of apprenticeship
will depend on the individual circumstances. However, where this is
the case, employers should think very carefully before bringing an
apprenticeship to an end prior to the expiry of the fixed term
period, otherwise the consequences could be significant.
By Emily Cox, Solicitor, Employment Team, Dickinson Dees
LLP