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Apprenticeships are currently a top priority for the Government and are a rapidly developing area of law. With the introduction of the apprenticeship levy in 2017, set to compel larger businesses to contribute to a financial pot from which their apprenticeships will be funded, more employers may start to consider hiring apprentices than ever before.

The law on employing apprentices has changed over recent years with the single aim of boosting employer confidence in investing into them. This was arguably a necessity as, before the law was changed, there was very little room for manoeuvre with an apprentice that was not performing well. This meant that employers were not keen to take the risk of bringing an apprentice into the workforce.

There are some key considerations involved in employing an apprentice to ensure that the employment relationship works to the employer’s advantage. It is important to note that one set of rules apply in England and Wales; a different set of rules apply in Scotland.

Contractual documents

Apprentices in England and Wales must be engaged on an ‘Apprenticeship Agreement’. In Scotland, apprentices will be engaged on a ‘contract of apprenticeship’ (the contract type which used to apply in England and Wales). The fundamental difference is the employer’s flexibility to dismiss an underperforming apprentice. Apprenticeship agreements allow for the same dismissal procedure that applies to ‘regular’ employees; contracts of apprenticeship do not. A contract of apprenticeship requires considerably more investment in improving the apprentice and an early dismissal on general grounds of unsuitability would generally not be a fair dismissal.

In order to be a valid apprenticeship agreement, three pieces of information must be included in addition to the information normally required in a contract. These include; a statement of the skill/trade/occupation; details of the apprenticeship framework; and a statement to the effect that the agreement is governed by the law of England and Wales.

Whilst the same added requirements do not apply for a contract of apprenticeship, it is advisable to include information on the apprenticeship framework involved and the learning provider.

Contractual provisions

All contracts of employment should contain disciplinary rules setting out the framework of acceptable behaviour. Unique provisions should be included in an apprenticeship agreement that apply directly to the nature of the arrangement, for example, rules surrounding failure to attend college and failure to pass examinations would enable you to consistently manage their contribution to your organisation.

The same provisions would not normally be valid in a contract of apprenticeship. In the case of apprenticeship agreements and contracts of apprenticeship, a reference to the end date of the contract and the fact there is no guarantee of work once the apprenticeship is over would also give the employer utmost flexibility.

Employment rights

Both contracts of apprenticeship and apprenticeship agreements are considered to be contracts of employment and so employment rights apply as they would to ‘normal’ employees. This includes the law around annual leave, statutory sick pay, discrimination; rest breaks; unfair dismissal etc. Whilst the rules you apply to them may be different to those of a ‘normal’ employee, the method of dealing with a breach of the rules is the same in England and Wales. In Scotland, the method would need to be adjusted in terms of sanctions applied for rule breaches because a normal disciplinary procedure is not appropriate.

Pay

Apprentices are entitled to the national minimum wage which will differ depending on age and circumstances. Apprentices under the age of 19, or aged 19 and over but in the first year of their apprenticeship, are entitled to receive £3.30 per hour. Those who are 19 or over and not in the first year are entitled to their age appropriate rate as set by the national minimum wage. This is currently £5.30 per hour for 19 year olds, increasing to £6.70 per hour for those aged 21 and over. Apprentices who are aged 25 and over who are not in the first year of the apprenticeship will be entitled to the national living wage rate (£7.20 per hour) from April 2016.

As the area of apprenticeships is constantly developing, it is wise for all employers to keep an eye on the situation whether or not they employ apprentices, and especially if the requirement to pay the apprenticeship levy will apply to them.

By Alan Price, Employment Law & HR Director, Peninsula