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Focus on – Apprenticeships

Welcome to our regular "focus on ..." series. This month - apprenticeships.

Apprenticeships: the past, the present and the future

The popularity of apprenticeships has risen sharply in recent years. Government data shows that 860,000 new apprenticeships commenced in 2012/13, up from approximately 500,000 in 2009/10.

Recent reforms to the apprenticeship system have undoubtedly been a major factor in the increased popularity, as they have helped make the recruitment of apprentices much more straightforward for employers.

The relationship between apprentices and employers has traditionally been governed by case law. Apprentices have historically worked under contracts of apprenticeship, the primary purpose of which is training, while working for the employer is secondary. As a result, apprentices employed under a contract of apprenticeship benefit from enhanced protection from early termination of their contract as compared to ‘ordinary’ employees. This means that an apprentice engaged under a contract of apprenticeship can be awarded significant damages if their contract is terminated early.

Recent reforms

The Government sought to change this position with the Apprenticeships, Skills, Children and Learning Act 2009 (ASCLA), which came into force in 2011. The ASCLA introduced the concept of an “apprenticeship agreement”. Such an agreement is deemed to be an ordinary contract of service, rather than a contract of apprenticeship. Apprentices employed under an apprenticeship agreement therefore have the same rights as ordinary employees and they can be dismissed in the same manner.

While a contract of apprenticeship remains a valid way to engage an apprentice, an apprenticeship agreement under the ASCLA is clearly the more attractive option for employers.

The future

The Government recently announced further reforms to the apprenticeship system to build on the progress achieved to date.

The draft Deregulation Bill, which was published in July 2013, introduces the concept of an “approved English apprenticeship”. Approved English apprenticeships will take place under an “approved English apprenticeship agreement” and will eventually replace apprenticeships under the ASCLA in England. It is hoped these changes will simplify the regulation of apprenticeships. The draft Bill has recently been scrutinised by a Joint Committee of both Houses and we await further developments in that respect.

New apprenticeship standards will also be devised as part of the reforms. The standards will be designed by employers, rather than government, to ensure that apprentices meet the needs of their employer and their sector. The Government is aiming to fully implement the new standards from 2017/18.

The Government is also examining the way in which apprenticeships are funded. Currently, training providers work with employers and it is the training provider’s responsibility to claim funding and administer the apprenticeship programme. A consultation on this issue closed in October 2013 and the Government is currently analysing the feedback.

What this means for you

Apprentices are an increasingly popular option for employers as they represent an opportunity to develop a skilled and qualified workforce at a generally reduced cost. The introduction of apprenticeship agreements under the ASCLA was a welcome development from an employer’s perspective, but care should still be taken when recruiting an apprentice. The ASCLA sets out a number of conditions that are required in order for an agreement to qualify as an apprenticeship agreement. If any of those conditions are not complied with, the agreement may constitute a traditional contract of apprenticeship instead.

It is pleasing that employers will be at the forefront of the forthcoming reforms to the apprenticeship system. It makes sense that employers will play a key role in designing the standards that will develop the workers of tomorrow.

If you have any questions on any of the issues raised in this article, please do not hesitate to contact Ryan Stringer.

Practical considerations

Many employers are embracing the use of apprentices and viewing them as a valuable part of their workforce rather than cheap labour. Lots of these employers are reaping the benefits with greater employee engagement, employee development and a long term commitment.

When employing apprentices, employers should be aware that the apprentice rate of pay is only appropriate up to a certain point. Apprentices under 19 years or 19 years and over and in the first year of their apprenticeship are entitled to the apprenticeship rate of the National Minimum Wage. Once they are 19 years of age and have completed the first year of the apprenticeship they are entitled to the full National Minimum Wage appropriate for their age.

Employers should research the training providers operating in their area and find a training provider to work with which suits the organisation in order that they will be able to build a good relationship from the outset. This will make the whole process of employing apprentices a lot smoother.

It is important to note that there are specific parts of the Working Time Regulations that apply to young workers under 18 and they will apply to apprentices.

Employers should ensure they fully understand the legal framework and that the contractual documentation i.e, the apprenticeship agreement, if it is an ASCLA apprenticeship, meets all of the necessary conditions.

The Chartered Institute of Personnel and Development (CIPD) provides detailed guidance on apprentices which is useful for employers considering employing apprentices.

If you have any questions on any of the issues raised in this article, please do not hesitate to contact Lynn Scope.