Careers & Training - Under contract

A contract of employment is an agreement between an employer and employee. All contracts should contain details of pay, holidays and working hours, and can be varied only with the say so of both parties. When it comes to apprentices, however, standard employment contracts are not appropriate.

‘One of the things we see a lot is that apprentices have been employed on the wrong employment contract,’ says Jacqui Mann, director of HR4 Nurseries. ‘They should be employed on an apprenticeship agreement.’

Simon Whitehead, employment lawyer at HRC, agrees. ‘The nursery sector is quite poor at understanding the importance of contracts. Time and time again we see that everyone is given the same contract without really thinking about whether it’s the right contract for that particular employee. If you get it wrong with an apprentice, you’ll be in breach of the national minimum wage, you’ll be named and shamed and you’ll get a penalty.’

The current apprenticeship rate is £3.50 per hour (this applies to anyone on the first year of an apprenticeship), compared with the National Living Wage, which is £7.50 for a 25-year-old.

The modern apprenticeship agreement, introduced in 2009 and updated in 2015 in England, is given the formal name Approved English Apprenticeship Agreement. It has the status of a contract of service, which means that an apprentice on one of these agreements is only entitled to the same statutory protections granted to ordinary employees. This is in contrast to the status of an apprentice working under the old-style contract of apprenticeship, who would receive enhanced protection against dismissal.

Employment lawyer Rebecca Ireland says that getting the detail right on an apprenticeship agreement is crucial. ‘If the modern apprenticeship does not comply with certain formalities, it can be seen to revert to the old common law kind [the contract of apprenticeship, which dates back to the 1800s], and all the difficulties that presents regarding termination, including enhanced protection against being sacked.’

This, adds Ms Ireland, can leave the employer ‘in the unenviable position of having to retain the apprentice or having to pay compensation equivalent to their salary for the whole or rest of the apprenticeship agreement length, and potentially for loss of future career prospects.

‘It should be noted that a tribunal can be brought if there is a breach of contract or if an apprentice is unfairly dismissed, as with any employee. Care needs to be given to comply with the Working Time Directive and National Minimum Wage Act.’

Not seeing an apprentice through the contract, even when the type of contract is not at issue, has landed employers in hot water. A recent case to hit the headlines was an employer fined £25,000 – the maximum that can be awarded for breach of contract – to tiler Daniel Kinnear whose apprenticeship was terminated early when he was made redundant.

Mr Kinnear became an apprentice with Marley Contract Services in October 2014 under a contract due to run until November 2018. But he was told in July 2016 that a ‘downturn in workload’ for the company meant his services were no longer required. His appeal against the dismissal was rejected and he brought a claim for breach of contract in an employment tribunal. He had 122 weeks left to run on his apprenticeship, and the tribunal assessed that he would have been paid £24,217 for this. According to the ruling, ‘It seemed clear to the tribunal that the claimant was an apprentice and as such was entitled to be trained by the … company and employed by them until the apprenticeship finished.’

The tribunal also acknowledged that the lack of a roofing qualification might disadvantage him in the labour market for a number of years to come.

CLAWBACK?

The current recruitment crisis makes holding onto existing staff all the more important. Mr Whitehead says, ‘A lot of nursery owners feel aggrieved spending a long time training nursery staff only to have them poached by a competitor down the road. There’s a shortage of qualified staff in nurseries, so here again is where contracts are becoming more important – they give protection to owners and managers. They are basically saying, “If we are going to invest this big sum of money in training you up, and you decide to leave before we get a decent return on our investment, then we would like to see that you pay some of that money back.”’

Clawback arrangements can be a separate agreement with a repayment schedule, so the employee will repay all, or a proportion, of the money depending on how long they stay following any in-work training. Standard training contracts stipulate all the money is paid back if the employee resigns within three months.

However, Ms Ireland warns that some clawback provisions will be unenforceable if they impose a ‘detriment on the worker which is out of proportion to the interest the employer is trying to protect’. The low pay of the employee may mean that ‘recovering the amount spent is not worth it’ – and such recovery could be illegal if any deductions effectively take the worker’s pay below the National Minimum Wage.

Mr Whitehead adds that, from 1 April 2017, companies wrongly advertising work as a statutory apprenticeship can be fined under section 25 of the Enterprise Act 2016. He says, ‘The Government’s reasoning for introducing this new offence was to protect the term “apprenticeship” from misuse – which suggests that the term was being misused and being used for schemes which weren’t apprenticeships as defined by the law.

‘To qualify for the lower National Minimum Wage pay rate, it has to be a “statutory apprenticeship”, and those employers who thought they had a statutory apprenticeship but didn’t would have been in breach of the NMW regulations if they were paying the lower amount.’

The key is ‘not to see apprentices just as cheap labour, but ensure they are engaged and valued, with prospects for progress and better pay’, adds Ms Ireland. ‘Having invested training and time, it’s a shame for employers to lose an apprentice who realised that the skills they have learned are more highly valued by a competitor.’

TIPS FOR DRAWING UP AN APPRENTICESHIP AGREEMENT

By Ruth Lewin, director at The Nursery HR People

Apprenticeships, which are open to all ages, are a combination of a job and training, so the agreement must state that the apprentice will be taking an apprenticeship in a particular skill, trade or occupation.

All apprentices start on an apprentice rate – £3.50 per hour currently. After their first year, adult apprentices are entitled to the minimum wage for their age.

An agreement should:

• be between the nursery, training provider and the apprentice
• confirm the qualifying apprenticeship framework or standard that the apprentice is following, and at which level, and adhere to this
• include a start and an estimated completion of learning date (this is not the same as a fixed-term contract)
• outline what will happen if the apprentice leaves early, or doesn’t reach the desired level
• state details such as the probation period, and details of mentoring
• allow for a minimum of 30 hours’ work at the nursery and 20 per cent off-the-job training, such as studying theory or writing assignments
• contain the signatures of employer and apprentice
• adhere to ASCLA and Employment Rights Act
• be treated as a contract of service, not a contract of apprenticeship.

To ensure that you can dismiss the apprentice lawfully and fairly – and ensure there is no guarantee of a job offer after their training has finished – you need to make sure they are on an apprenticeship agreement.

The Government’s agreement template is at: https://www.gov.uk/government/publications/apprenticeship-agreement-template