In a fairly recent case, the EAT overturned a Tribunal’s finding that trainees at a livery yard and horse riding centre were apprentices for the purposes of the National Minimum Wage.
The employer was a family partnership operating a riding school business open to the public for the provision of riding lessons and livery services. They employed livery stable trainees who were referred to in various contractual documents issued at different times and hours “trainees/employees”, “equestrian trainees” and “a training position working towards the HS qualifications”. Key elements of the role were that they:
- performed various duties for the riding school including general yard and horse maintenance and teaching riding lessons;
- received training each week towards recognised professional qualifications from the British Horse Society (“BHS”). The employer paid for the BHS examinations. Each worker was free to choose which qualifications to take and when;
- the workers lived in the family home attached to the riding school. They lived in a separate part of the property to the family and led separate lives;
- their contracts of employment contained notice provisions and the power to dismiss for gross misconduct on no notice;
- the trainees would usually leave the employer once they had attained BHS Stage 3 when they had the competences and ability to look up to four horses in stables and at grass. There were no vacancies for instructors at a higher level.
When the National Minimum Wage legislation was first introduced the partners were advised that they were exempt from paying the trainees the National Minimum Wage because the work undertaken related to the family household. A complaint was made to HMRC, and the employer was issued with a notice of underpayment which they appealed to the Employment Tribunal.
The Employment Tribunal found that the trainees were not treated as members of the family and so the work was not related to employer’s family household, but did find that the trainees were working under contracts of apprenticeship and that the notice provisions, and the power to dismissal for gross misconduct, and lack of fixed duration were not fatal to it being a contract of apprenticeship.
HMRC then appealed the decision to the EAT who allowed the appeal and found that the claimants were not employed under Contracts of Apprenticeship but under Contracts of Service. The EAT held that the contracts were very much for the benefit of the employer and that the training aspect was incidental and subsidiary to that contract. In that case, the EAT did not accept the employer’s argument that training does not have to be the primary purpose of a contract of apprenticeship, and that there was no reason why the employer could not benefit from the work done by the apprentice. They also found that there was no fixed contractual term and this, together with the gross misconduct provisions, were not consistent with a contract of apprenticeship.
Many employers pay in excess of the National Minimum Wage of £3.30 for apprentices under 19 or in the first year of the apprenticeship. But if they pay the basic amount only it is important they ensure that their apprentices are truly apprentices, and not working under a contract of service.