Alec Colson, a partner and Head of Employment Law at law firm Taylor Walton, covers what businesses need to know about taking on an apprentice.

 

With series 16 of ‘The Apprentice’ now dominating the BBC’s Thursday evening schedule, the nation is once again franticly scrutinising every move the current raft of candidates makes to get the measure of just who of the hopefuls might have what it takes.

However, the show will probably prompt a slightly different response from its business-owning viewers, whose main deliberation will far more likely be about what the overall benefits of utilising apprentices might be. Also, how taking on trainees could realistically be an affordable way to boost their workforce.

Apprenticeships generally benefit both the business and the apprentice.

However, despite the programme’s frequently amusing attitude towards hiring and firing, the law governing apprenticeships is far from being that simple, and the Lord Sugar method is definitely not seen as a model for success.

Depending on the type of contract you decide to enter into, there are numerous major legal concerns that an employer should be made aware of before deciding to take on a new apprentice.

When recruiting an apprenticeship, a business is promising to commit to what it hopes will be a long-term and successful partnership. But in a stark difference to most other fixed-term employment contracts, these relationships cannot be easily ended – and definitely not ever by simply leaning across a table and yelling, “you’re fired!” at an employee.

A standard apprenticeship will typically last around four years, and with the correct approach and an investment in time and resources, can prove to be a huge advantage for any business looking to mould its own talent.

But what should business owners be aware of to ensure they are able to benefit from the positives on offer, rather than getting trapped in a relationship that they can’t see through to the end? Here we take a look at the key considerations:

Apprenticeship agreements

The phrases ‘contract of apprenticeship’ and ‘apprenticeship agreement’ whilst sounding very similar, are in actual fact greatly different when it comes to legal implications.

‘Apprenticeship agreements’ are relevant to schemes that are governed by the Apprenticeships, Skills, Children and Learning Act 2009. These by their nature are similar to a standard contract of employment.

They generally describe an agreement between the three main parties; the employer, its apprentice, and a training provider. The agreement itself will include several specific criteria, including the qualifying apprenticeship framework and a statement of the skill, trade, or occupation in which the apprentice is being trained.

Every apprenticeship will include both knowledge and competency elements. Plus, both on and off-the-job training provided by a third-party training supplier, at the end of which, a recognised qualification is granted.

Apprenticeship agreements can be legally terminated by an employer as long as it is done fairly and in accordance with the details specified within the contract. If the apprenticeship is fixed-term, an employer might find that it will still have to pay the salary for the entire term if an agreement is ended early and the contract doesn’t include the right for early termination.

Contracts of apprenticeship

In contrast to the above, contracts of apprenticeship cover what are considered to be more traditional apprenticeship arrangements, where the principal objective will be to train the individual in a specific skill or trade, rather than to just perform work for the employer.

Choosing to end an apprenticeship contract will be much less straightforward than if you were to terminate an employee with a standard fixed-term contract.

Apprentice contracts can only ever be terminated in very particular circumstances. For example, if there was a case of gross misconduct, or the business itself ceases trading. Should an employer end a contract for another reason, it may well be liable for loss of earnings and will likely have to pay for the cost of training for the remainder of the apprenticeship.

Even in circumstances where an apprentice fails to meet expected standards for performance or behaviour, a business will still not be able to dismiss them before the end of the apprenticeship’s term without risking extensive liability. Given that a probationary period can’t be applied in the same way as it would with the rest of the workforce, it is vital that the recruitment process for apprentices is thoroughly thought through.

It’s also more problematic for apprentices to determine that their discharge was because of redundancy. This is because apprentices aren’t eligible for the same rights as other employees with fixed-term contracts when it comes to being treated less sympathetically than their comparable colleagues. Because of this, apprenticeship agreements can seem to be more appealing to businesses, as at least this way they retain the right to terminate an agreement if they feel that it’s necessary.

Funding apprenticeships

On the whole, apprentices will have similar employment rights as any other employee; even though the National Minimum Wage is lower for apprentices aged below 19 (or 19 and above, if they are still in their first year of apprenticeship.)

Funding for apprentices is normally paid straight to the training provider, with the employer then being required to contribute funds towards the cost of training and wages. Despite a Government scheme providing businesses with £3,000 cash grants to employ apprentices coming to an end back in September 2021, those who took on an apprentice after October could still apply for an incentive payment of £3,000 to supports their costs; whether that be the apprentice’s salary, travel or uniform.

Eligibility depends on apprentices having commenced employment between 1 October 2021 and 31 January 2022. Or, having begun their formal apprenticeship training between 1 October 2021 and 31 March 2022.

Along with this is the Apprenticeship Levy − a tax that is imposed on any employer with a wage bill of more than £3 million per year − which was introduced by the UK government in April 2017. This was for the specific aim of assisting smaller businesses to subsidise apprentice training expenses. Employers with a payroll of lower than £3 million are currently entitled to apply for the funding to pay for up to 10 apprentice employees, with the government contributing 95% towards training costs.

Evidently, Lord Sugar is well aware of the benefits apprentices can offer to a business, hence his involvement in the TV programme. But you can guarantee that the guidelines governing the employment of all apprentices will have received a lot of off-screen consideration from his legal advisors, long before the cameras even started rolling.