Employment Law Update - June 2008

Published: 30th June 2008

The expectations of employers by the Government seems ever increasing. It looks as though training has moved higher up the agenda. Recently the Government's proposal that employees should have the legal right to request training from their employer was announced. Further evidence of the Government's enthusiasm for training is the recent launch of the consultation "World-Class Apprenticeships: Unlocking Talent, Building Skills for All". The results of this are to be fed into the proposed Education and Skills Bill.

If this Bill is enacted then it will mean that suitably qualified young people will have a statutory entitlement to an apprenticeship. This is all part of the Government's plan to increase the age for school leavers up to 18. It is expected, and hoped by the Government, that more school leavers will take up apprenticeships.

Whilst apprenticeships can be of great value both to the employing organisation and to the apprentice there are legal issues that can arise in relation to such arrangements that can lead to problems for the unwary. Many employers are not aware of the special legal protection that apprentices enjoy.

In this update we touch on just a few of these issues. Please be aware that this update is not intended to provide full advice on these issues but it is to highlight, in broad terms, some of the potential pitfalls.

Although an apprenticeship is normally offered for a fixed period of time or until a set qualification has been gained by the individual the apprentice will still be classed as an employee under the Employment Rights Act and they are entitled to all of the legal rights contained in this Act. These rights include the entitlement to claim unfair dismissal, a redundancy payment, maternity leave and statutory maternity pay.

Many employers do not realise that dismissing an apprentice can actually be more risky and potentially more expensive than dismissing an employee on a standard permanent contract because of the three elements for which they can claim compensation.

It was back in 1970 in the case of Dunk v George Waller & Son Limited that the Court of Appeal stated that the key elements of an apprenticeship were to provide the apprentice with the following: -

1. Wages for the period of the apprenticeship;

2. Training that would allow the apprentice to acquire valuable skills; and

3. Status in the labour market following successful completion of the training.

A contract of apprenticeship can only be terminated at the conclusion of the agreed period of training. If the contract is terminated prior to that point then the apprentice could bring a claim for wrongful dismissal. In such a claim they could be compensated for each of the 3 elements that they have lost as a result of the contract being terminated early. These are wages, training and status. Compensation can take into account both the apprentice's actual and their future losses. Employers may find, to their cost, that dismissing an apprentice can prove to be more expensive than dismissing an employee on a 'standard' permanent contract because the apprentice's potential losses can be greater.

Employers should be aware that the rules that apply to traditional contracts of apprenticeship can also apply to the Government-funded Modern Apprenticeship Scheme. This was shown in the Court of Appeal case of Flett v Matheson in 2006. In this case an apprentice took up an "individual learning plan" under the Modern Apprenticeship training scheme in the electrical industry. The scheme he entered was a tripartite agreement between him, the employer and a Government sponsored training provider. This training scheme had an academic element to it which was not provided by the employer but they were required to give the apprentice time off to attend the academic element and also to fund the cost of their attendance. It was found that the apprentice was engaged under a traditional contract of apprenticeship. In its judgment the Court of Appeal warned employers that these tripartite agreements can amount to contracts of apprenticeship and if they are ended prematurely substantial damages may be payable to the apprentice.

An illustration of this was the case of Lloyd v Federal Mogul Sintered Products Limited (in administration) which was an Employment Tribunal case. In this case an apprentice had entered a "modern apprenticeship pledge". He was dismissed before the end of the contract due to his poor attendance. The Employment Tribunal noted that his career had been prematurely destroyed by the employer who had not appreciated the special protection that the claimant enjoyed as an apprentice. The Employment Tribunal's view was that if it had not been for the employer's inherently unfair absence policy the apprentice could probably have completed the apprenticeship and then gone on to become a skilled engineer. The Tribunal awarded the apprentice compensation of £20,000 for his breach of contract claim.

Government policy is to increase the number of apprenticeships offered and taken up in the future. Apprenticeships can be very valuable to the employing organisation, to the apprentice and to the economy. However, employing organisations need to be aware of the legal liabilities and risks that can arise in relation to apprenticeships and take appropriate legal advice to address these.

If you would like to discuss the potential impact of any of these changes on your organisation , please speak to your usual contact in the Mace & Jones employment and HR team