The introduction of Government apprenticeship grants in 2008, together with the numerous benefits to employers such as investing in future skilled labourers and minimising cost has resulted in an increase in apprenticeship schemes being offered by employers.

What are the benefits?

An apprentice allows an employer to train workers with specialist knowledge of the job role required by the employer, and the specific culture and ethos of the employer’s business. This, coupled with the cost effectiveness of employing apprentices as opposed to skilled staff and availability of government apprenticeship grants available under the Apprenticeships, Skills, Children and Learning Act 2009, means apprenticeship schemes can lower costs and increase long term productivity.

What is the employment status of apprentices?

An apprentice engaged under a Contract of Apprenticeship, or an Apprenticeship Agreement will be deemed to be an employee. With this comes not only the right not to be unfairly dismissed, automatic transferal to any purchaser of the business and the usual rights to receive a statutory redundancy payment but potentially an enhanced protection from early termination of the apprenticeship agreement.

If the apprentice is engaged under a common law contract of apprenticeship, as opposed to an Apprenticeship Agreement created under the Apprenticeships, Skills, Children and Learning Act 2009, they will benefit from enhanced protection on termination. If the contract of apprenticeship is terminated early, the apprentice may be eligible to claim damages for loss of earnings and training for the remainder of the term together with loss of future career prospects. Furthermore, the apprentice may not be dismissed by reason of redundancy unless there is closure of the business or the business undergoes a fundamental change in its character. ‘Misconduct’ in the normal employment context will also not be a sufficient reason for dismissal, unless the apprentice’s actions are so extreme that the apprentice is effectively unteachable.

Apprenticeship agreements and approved English apprenticeship agreements, which apply after 26 May 2015, do not attract enhanced rights upon early termination, and are usually used in sectors where there is an approved apprenticeship standard, such as the trades. However, it will be for the courts to determine which form of apprenticeship is in place should a dispute arise. It is important that employers are aware of the legal implications of the engagement with the apprentice.

Is it discriminatory?

Government funding means that employers receive higher funding for younger apprentices. Notwithstanding this, we recommend that employers not impose an upper age limit on applicants for their schemes as this could potentially discriminate against older applicants, unless the employer could show that the limit is objectionably justified.

We also recommend that employers exercise caution when deciding terms of employment to ensure apprentices’ terms of engagement are consistent to those offered to other employees of similar status and length of service, therefore avoiding claims of indirect age discrimination.