Apprentice Agreement or Contract of Employment? A Guide for Employers

When taking on apprentices, it is crucial to ensure they are issued an Apprenticeship Agreement, as opposed to a contract of employment, to avoid the risk of them becoming a common law apprentice.

What is a common law apprentice?

If an apprentice is on a contract of employment as opposed to an Apprenticeship Agreement, they become a ‘common law apprentice’. This is problematic, as common law apprentices have enhanced protection against dismissal, which can make it incredibly difficult to terminate their employment before the end of the apprenticeship.

The reason for this is that the focus of the contract for a common law apprentice is the training side, rather than the work performed for the employer. It is only in very serious cases of gross misconduct, where an apprentice would be deemed ‘unteachable’, that an employer could be comfortable dismissing them, which is rare. Dismissal may also be possible where there is a closure of the business or the employer’s business undergoes a fundamental change in its character.

Misconduct which might typically justify dismissal is unlikely to do so for a common law apprentice. If dismissed without being deemed ‘unteachable’, they can submit a claim for compensation for both loss of earnings/training during the remainder of the term of the apprenticeship agreement, and also loss of future career prospects.

The consequences can therefore be quite significant, particularly for those organisations who offer five-year apprenticeship schemes and may wish to terminate an engagement in the first year.

How can we avoid this from the outset?

To avoid issues arising, it is best practice to ensure your apprentices are on an Approved English Apprenticeship Agreement from the beginning of their apprenticeship (or an alternative specified type of apprenticeship agreement for Welsh apprenticeships). This agreement needs to contain certain provisions to comply with the Apprenticeship, Skills, Children and Learning Act 2009, and a standard contract of employment will be insufficient.

Employers should opt for an apprenticeship agreement, which will allow them to dismiss an apprentice in the same way as any other employee. If the apprentice is employed under a correctly drafted apprenticeship agreement, normal principles will apply, and employers will be able to subject apprentices to their normal procedures, such as absence management, in the usual way.

It is important to educate those within your workforce who draft new starter contracts, so they are alert to the fact that apprentices should be placed on apprenticeship agreements, as opposed to standard contracts.

What if we have apprentices on contracts of employment?

If you are concerned that your apprentices are not on the correct agreement, you should seek legal advice and may need to move them across to the correct agreement. Of course, as this will result in a change to the apprentices’ terms and conditions, the usual consultation process will typically be necessary, and the apprentice will need to provide express and written consent to the changes. If you require any assistance or have any queries in relation to this or otherwise, please do contact us.

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