Background
Although figures show unemployment is at a 10 year low, the government is attempting to address questions about UK productivity and the ‘skills emergency’ that faces many UK businesses by pledging to create in excess three million more apprenticeships by 2020.
This week is National Apprenticeship Week and the additional apprenticeships pledged by government will be part-funded by a new apprenticeship levy to be introduced in 2017. Less than 2% of UK employers will pay the levy as it will only be paid on annual paybills in excess of £3 million. The levy will be charged at a rate of 0.5% of an employer’s paybill, however, each employer will receive an allowance of £15,000 to offset against their levy payment. This means smaller employers will receive a credit of £15,000 to their apprenticeship account to be used for training but without any cost to them. The funding must be used within 2 years or it will be lost.
The levy will support the government’s commitment to increase the quantity and quality of apprenticeships and increase quality training by putting employer requirements at the centre of the system.
Taking on an Apprentice
Apprenticeships usually last between one and four years on a fixed term basis and given the increasing level of university debt are seen as a genuine alternative for many young people. Apprentices can be taken on under a traditional contract of apprenticeship or a statutory apprenticeship/approved apprenticeship agreement. However, the type of apprenticeship can affect the relationship between an apprentice and their employer and consequently the risk of employment tribunal claims.
An Apprentice’s Rights
Both forms of apprenticeship are likely to see apprentices engaged as employees for statutory employment purposes which will entitle them to statutory sick pay, maternity, paternity, adoption and shared parental pay rights. However, an apprentice employed under a traditional contract of apprenticeship will benefit from enhanced protection against dismissal with the potential to claim significant compensation. This is likely to see employers preferring to engage apprentices under a statutory apprenticeship agreement.
Recruitment
Age discrimination is a key risk in recruiting an apprentice. Unless ‘objectively justified’, employers are strongly advised against putting an upper age limit on applicants for the schemes inspite of the fact that funding eligibility is tiered with greater funding allocated to younger apprentices. Employers should also ensure the terms of employment to an apprentice are not less favourable than those offered to another employee with a similar status and length of service.
Termination of an Apprentice’s Contract
Should the apprenticeship not go according to plan, employers should be mindful of terminating a traditional contract of apprenticeship before the end of the term due to the limited right of dismissal. Unless the apprentice’s conduct is sufficiently extreme that they are considered unteachable, misconduct or poor performance in an employment context will not be sufficient grounds for a fair dismissal.
Additionally, early termination of a traditional contract of apprenticeship carries the further risk of a potentially valuable breach of contract claim, based on the balance of the term of the contract and loss of future career prospects.
In contract, it is lawful to dismiss an apprentice engaged under a statutory apprenticeship agreement according to the principles relevant to an ordinary employee. Employers should be aware that protection under breach of contract, unfair dismissal and discrimination will apply.
To discuss engaging an apprentice under either form of apprenticeship or for more details on the new apprenticeship levy, contact Tom Evans, Associate, Employment & HR Team on 0151 230 1217 or by email tom.evans@dtmlegal.com.
