NEWS - APPRENTICES - 23.03.2006

Apprentice contracts - modern or traditional?

Current law

With traditional apprenticeships, the contract is for a fixed-term. This means it can’t lawfully be terminated before the expiry of the fixed-term, except in highly exceptional circumstances. If it is wrongfully terminated early, a dismissed apprentice can claim damages not only for loss of earnings for the remainder of the fixed-term but also a sum representing the value of his loss of future prospects as a qualified person. Until now, this extra protection was thought only to apply to traditional apprentices, not to Modern Apprentices.

Employee or apprentice?

In Flett v Matheson, Flett (F) was engaged under a tripartite Individual Learning Plan (ILP) with the aim of him becoming a fully qualified electrician. The parties to the agreement were F, his employer and an external government-funded training provider (JTL). JTL provided training under the aegis of the Learning and Skills Council. The ILP was carried out under a Modern Apprenticeship arrangement, under which Matheson provided on the job work experience and JTL provided off-site training for F. When F was dismissed without notice before the end of his training, he brought a claim for breach of contract.

The Employment Appeal Tribunal (EAT) held that F was employed under a contract of employment and not under a contract of apprenticeship, so didn’t have the extra protection afforded to traditional apprentices on termination of their employment. This meant that his contractual damages were limited to one week’s pay. The EAT stated that the difference with a Modern Apprenticeship was the absence of an obligation on the employer to train the employee himself, which they held was an essential part of a contract of apprenticeship.

Court of appeal thinks otherwise

However, when the case came before the Court of Appeal, it held that an ILP carried out under a Modern Apprenticeship arrangement can, depending on the facts of the case, constitute a contract of apprenticeship. The Court stated the fact that a Modern Apprenticeship allows for training to be provided by a third party doesn’t prevent it coming within the definition of a contract of apprenticeship.

Major change. The Court was persuaded by the repeated use of the word “apprentice” in the ILP and by the fact that Matheson had agreed to be bound for the duration of the training period specified in the ILP. The arrangement therefore had the essential features of a contract of apprenticeship. This meant that, unless an alternative employer was found, the obligation on Matheson remained and he should not have dismissed F within the training period.

Take care

There’s no good news ending here. The plain fact is, that in light of this case, you need to be aware of the obligations you take on by engaging an apprentice. Even if you’ve entered into a tripartite training agreement with the Learning and Skills Council, it may still be a contract of apprenticeship, thus exposing you to a significant compensation claim should you terminate the agreement before the training period has been completed.