Engaging apprentices has historically been both a benefit and a risk for employers. Apprenticeships provide an opportunity for employers to recruit and develop talent and skills specific to their business.

However, traditional ‘old-style’ contracts of apprenticeship gave apprentices enhanced employment rights, meaning that an employer could expect to incur significant liabilities in respect of loss of earnings and loss of future career prospects if they terminated the apprenticeship early, other than in certain specific circumstances such as on the closure of a business, or for gross misconduct which was so serious that the apprentice could effectively no longer be trained. Since 2013, employers have been able to employ apprentices in a different way, using apprenticeship agreements. Apprenticeship agreements allow employers to treat their apprentices in exactly the same way as other employees, meaning that they can be dismissed before the end of their apprenticeship for redundancy, poor performance or misconduct.

Changes introduced in May 2015 mean that, for all new apprenticeships, an “approved English apprenticeship agreement” must be put in place. There are a number of conditions for such an agreement to be valid, including a requirement for the agreement to be entered into in connection with work in a sector for which the Secretary of State has published an approved apprenticeship standard. It is vitally important to get the documentation right, as there is a risk of inadvertently creating a traditional contract of apprenticeship if the agreement does not satisfy the various conditions. The changes are likely to have a particular impact on employers in the manufacturing sector, where apprenticeships are common.