Apprenticeships: what employers need to know

Lesley Grant. Image credit: Chris Watt

Apprenticeships have become more common in recent years with around 37,000 modern apprentices engaged in Scotland across a wide range of sectors. Traditionally, apprenticeships were confined to roles within manufacturing, construction and skilled crafts sectors, but they are increasingly being used across other areas including healthcare, software development, finance and professional services.

The core purpose of an apprenticeship contract is for the apprentice to learn and for the employer to teach. It is a form of paid employment whereby the apprentice gains hands-on work experience combined with training which may lead to a formal qualification.

Despite the rise in apprenticeships in Scotland, there remains a common misconception that apprentices can be treated in exactly the same way as other employees, particularly when it comes to termination of their employment. That is rarely the case. Employers should exercise caution before taking any steps to terminate this type of contract before the natural expiry of the fixed term, as failure to do so could result in claims being brought against them and substantial damages being awarded by a court or employment tribunal. 

In this article, Lesley Grant, associate at BTO Solicitors LLP, considers what employers need to think about when employing an apprentice in Scotland.

What is an apprenticeship in Scotland?

In Scotland, while apprentices are employees, an apprenticeship contract is not a ‘normal’ contract of employment. It has a special character, providing apprentices with ‘day one’ enhanced rights protecting them against early termination.

Apprentices are commonly employed for a fixed term (typically between one and four years or until a qualification is reached), they usually work around 35 hours a week and are entitled to a minimum hourly wage rate. The primary focus of the contract is training rather than the work performed by the apprentice.

In Scotland, many people associate apprenticeships with the Scottish Government scheme administered by Skills Development Scotland. These are commonly referred to as Modern Apprenticeships, of which there are three different types: Foundation Apprenticeships (which are aimed at school pupils), Modern Apprenticeships and Graduate Apprenticeships (which are both aimed at those 16 and over).

Does a contract of apprenticeship require to be in writing?

No, there is no legal requirement to have a contract of apprenticeship in writing, however, it is advisable to do so. In any event, given that apprentices are employees for the purpose of the Employment Rights Act 1996, a Section 1 written statement of particulars of employment is required and must be in place on Day 1 of the apprenticeship.

Can a contract of apprenticeship be lawfully terminated?

Yes, a contract of apprenticeship can be lawfully terminated, but there are extremely limited grounds on which this can be done prior to the natural expiry of the fixed term. Dismissal during the probationary period will only be justified where the poor behaviour or performance is at such a low level that the apprentice is essentially ‘untrainable’. This is a very high standard to meet. General issues with performance, poor attendance and/or conduct will not be sufficient.

Apprentices employed under a contract of apprenticeship also cannot be dismissed by reason of redundancy in the usual way unless there is a business closure or the business undergoes ‘a fundamental change in its character’. This is a higher threshold than a normal redundancy situation where headcount can be reduced if there is a downturn in trade.

A contract of apprenticeship may be terminated early lawfully by frustration (where something makes it practically impossible for the contract to be performed) or by mutual consent (albeit an employer may wish to have the comfort of a settlement agreement as an apprentice has certain rights that can only be compromised in this way should a dispute arise).

Employers should remember that the expiry of a contract of apprenticeship by virtue of its fixed term amounts to a dismissal in law. To avoid any claim of unfair dismissal, employers should show a potentially fair reason for dismissing the apprentice, demonstrate that they followed a fair procedure and that the decision to dismiss was fair in all the circumstances.

Employers should also have regard to the ACAS Code of Practice on Disciplinary and Grievance Procedures when dealing with any disciplinary or grievance involving an apprentice and comply with all aspects of discrimination law.

Is an apprentice entitled to enhanced damages for early termination?

Potentially yes. If a contract of apprenticeship is terminated early, the apprentice may be able to claim compensation for breach of contract. No qualifying period of service is required for this type of claim. Damages can be substantial and could include wages for the remainder of the contract of apprenticeship, damages for loss of training, damages for a loss of status and damages for a reduction in future employment prospects. An apprentice may also be able to raise an automatic unfair dismissal claim and/or unfair dismissal claim, depending on their length of service and the reason for their dismissal.

Is the legal position the same for apprenticeships in England & Wales?

No. The legal position in England & Wales is fundamentally different and employers are able to terminate the apprenticeship arrangement in a much wider range of circumstances provided the apprenticeship contract meets certain conditions set out in legislation.

Final thoughts…

  • A contract of apprenticeship has a special character, with enhanced employment protections for the apprentice that are not afforded to other employees.
  • Dismissing an apprentice lawfully is only possible in very limited circumstances – the apprentice has to essentially be untrainable. This is a high standard.
  • Unlike unfair dismissal claims, there is no requirement for the apprentice to have a minimum period of service to bring a breach of contract claim (for early termination of their apprenticeship). This can be brought on or after their first day of employment.
  • The compensation that can be awarded by courts and Employment Tribunals for unlawfully terminating a contract of apprenticeship can be relatively significant.
  • A written contract of apprenticeship is not essential, but is recommended.

Please get in touch with BTO’s specialist employment law team if you would like to discuss any aspect of this blog, or would like assistance with drafting/reviewing an apprenticeship agreement/contract.