Hiring and firing the apprentice is a serious matter

With TV show The Apprentice back on our screens, again dividing the nation as to the merits of each candidate, it is likely to spark debate about the benefits of utilising apprentices to help grow businesses.

Apprenticeships benefit the business and the apprentice, but despite the programme’s entertaining approach to hiring and firing, the law governing apprenticeships can be complex and the Lord Sugar approach is not a template for success.

Depending on the type of contract, there are serious considerations for a business from an employment law perspective. An apprenticeship, unlike some other fixed-term contracts, can mean a business is investing in a long-term relationship which it cannot easily terminate – certainly not by leaning across the table and shouting, “you’re fired”.

Apprenticeships typically last between one and four years and with the right approach, can prove a great asset for businesses. A business may need to invest a significant amount of time and resources in managing apprentices, but it has the opportunity to mould talent into the ideal employee with the necessary skills required for the business to grow.

The terms “contract of apprenticeship” and “apprenticeship agreement” sound similar, but the employment law implications differ significantly:

  • Contracts of apprenticeship – covers the traditional apprenticeship arrangements, where the primary objective is for the individual to be trained, rather than perform work for the employer.
  • Apprenticeship agreements – are entered into and governed by the Apprenticeships, Skills, Children and Learning Act 2009 and are more like standard employment contracts.

Apprenticeship agreements

Apprenticeship agreements, usually between the employer, the apprentice and the training provider, must fulfil certain criteria, including: the apprentice undertaking to work for the employer; a statement of terms; a statement that the agreement is entered into in connection with a qualifying apprenticeship framework; and a statement of the skill, trade or occupation for which the apprentice is being trained.

The apprenticeship will usually involve knowledge and competency elements, with on and off the job training delivered by a third-party training provider, at the end of which, the apprentice will receive a recognised qualification.

Apprenticeship agreements can be terminated lawfully, provided the dismissal is fair and in accordance with the contract. If it is a fixed-term apprenticeship, unless the contract provides a right of early termination, an employer may have to pay the salary for the entire term where the agreement is terminated early – this should be addressed in the contract. 

Contracts of apprenticeship

Terminating apprenticeship contracts is less straightforward than terminating the contracts of other workers and employees, with many employers unaware that an apprenticeship cannot necessarily be terminated in the same way as other fixed term contracts.

The objective of a contract of apprenticeship is to provide training and employers can only terminate the contract in limited circumstances, such as severe misconduct or closure of the business. If the employer terminates for other reasons, it might be held liable for loss of earnings and the cost of training for the remainder of the apprenticeship.

Dismissal before an apprenticeship ends

When an apprentice fails to meet the standards of performance or behaviour expected of them, the business cannot dismiss them before the apprenticeship ends, without risking significant liability. It is for this reason that the process for recruiting apprentices must be more thorough than for other members of staff, given that a probationary period cannot necessarily be utilised in the same way.

In view of the above apprenticeship agreements are more appealing to businesses, because they have the option to terminate the agreement.  However, if the prescribed conditions for an apprenticeship agreement are not met or where no contract exists, there is a risk it might then be deemed a ‘contract of apprenticeship’, bringing with it additional obligations – professional advice on the contract can avoid such issues.

Apprentices have the same employment rights as other employees, although the National Minimum Wage is lower for apprentices under 19 (or those 19 and over, but in the first year of their apprenticeship).

It is also more difficult for apprentices to establish their dismissal is for reason of redundancy. And apprentices do not qualify for the right of employees on fixed-term contracts not to be treated less favourably than comparable permanent employees.

Funding for apprentices

Funding for apprentices is age dependent and is typically paid directly to training providers, with the employer often required to contribute towards the training costs in addition to wages and other costs associated with training an apprentice.

Whilst the Government scheme offering small businesses £3,000 cash grants to take on an apprentice ended in September 2021, those that have already employed an apprentice since October can apply for an incentive payment of £3,000 to spend on anything that supports an organisation’s costs, whether that be salary, travel or uniforms.

To be eligible for this, apprentices must have started their employment at an organisation between 1 October 2021 and 31 January 2022 or have started their apprenticeship between 1 October 2021 and 31 March 2022.

Meanwhile, the Apprenticeship Levy was initiated by the UK government in April 2017, for all employers paying a wage bill in excess of £3 million per year. Organisations that meet this criteria are required to pay 0.5% of their payroll each month as a levy tax, which is offset by £15,000 government allowance. The levy funds are then made available to help subsidise apprentice training costs.

For those employers with a wage bill less than £3 million, they will not be subject to the Apprenticeship Levy, but they can benefit from the funds it raises, as they are entitled to access funding for up to ten employees, with the government contributing 95% towards training costs.

Clearly Lord Sugar is aware of the benefits a committed apprentice offers a business, but you can guarantee the rules governing the employment of apprentices will have received a lot of off-screen attention, long before the opening sequence.

Alec Colson is a Partner and Head of Employment Law at Luton-headquartered law firm Taylor Walton. He specialises in Employment and Industrial Relations Law, advising commercial and public sector clients on all aspects of employment law. Alec has a particular expertise in discrimination law and regularly provides training on Employment Law and HR matters.

Taylor Walton is a renowned regional law firm, with more than 150 dedicated professionals, working from offices in Luton, St Albans and Harpenden, providing for businesses and individuals a full range of legal services, including Employment, Commercial Litigation, Professional Negligence, Corporate & Commercial, Commercial Real Estate, Residential Conveyancing, Private Client and Family Law.

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