What should employers be aware of when engaging an apprentice in Scotland?

Last week marked Scottish Apprenticeship Week so it’s a good time to examine what the key employment law points of which employers should be aware when engaging an apprentice in Scotland.

Apprenticeship contracts in Scotland

Many employers will provide training to their employees/workers but the principal purpose for engaging the employee/worker will be for them to undertake work for the employer. The contract between an employer and an apprentice differs materially from a contract between an employer and an employee/worker in one key respect – the core of an apprenticeship contract is for the apprentice to learn and for the employer to teach.

In Scotland, Skills Development Scotland administers Scottish Apprenticeships on behalf of the Scottish Government. There are three main types of Scottish Apprenticeship which are: Foundation Apprenticeships, Modern Apprenticeships and Graduate Apprenticeships. You can found out more information about Scottish Apprenticeships here.

What employment law applies to apprentices?

The employment law applicable to apprenticeship contracts in Scotland derives mainly from case law. The courts and Employment Tribunals in the UK have afforded apprentices, due to the unique purpose of their engagement, special protection from dismissal. Any employer engaging an apprentice in Scotland should be aware therefore that the circumstances in which they can terminate an apprenticeship early without exposing themselves to a risk of a breach of contract claim, are limited.

Case law has established that an apprentice can be dismissed due to a fundamental frustrating event (something that makes it practically impossible for the contract to be performed) or certain repudiatory acts. Any frustrating event or repudiatory act has to have the effect of fundamentally undermining the ability to teach the apprentice. The courts have held that contracts of apprenticeship cannot be terminated on notice or simply due to a redundancy situation (other than one which involves a complete closure or an essential change in the character of the employer’s business).

The consequence of unlawfully terminating an apprenticeship contract can be significant for an employer. An apprentice who successfully pursues a wrongful dismissal claim (dismissal in breach of contract) will be entitled to compensation to reflect what they would have earned over the remainder of the contract and damages to reflect the reduction in their future prospects. In 2017 an apprentice in Scotland was awarded £25,000 in damages following the unlawful early termination of his contract (D Kinnear v Marley Eternit Ltd t/a Marley Contract Services).

For employers who engage apprentices in both Scotland and England & Wales, the position in Scotland is fundamentally different to that in England & Wales. In England & Wales the Apprenticeship, Skills, Children and Learning Act 2009 (ASCLA) permits termination of the apprenticeship arrangement in a much wider range of circumstances provided the apprenticeship contract meets certain conditions set out in legislation. ASCLA does not apply in Scotland and there is no equivalent legislation in Scotland. Apprenticeship contracts for apprentices in Scotland should not refer to ASCLA.

Apprentices are employees

Employers of apprentices should bear in mind that apprentices are also employees under the Employment Rights Act 1996 and can raise an ordinary unfair dismissal claim if they have 2 years’ service (there is no service requirement to raise a wrongful dismissal/breach of contract claim). Employers should have regard to the ACAS Code of Practice on Disciplinary and Grievance Procedures when dealing with any disciplinary or grievance involving an apprentice.

Apprenticeship Levy

UK employers with an annual wage bill of £3m or more must pay an apprenticeship levy, since 6 April 2017. The aim of the levy is funding apprenticeships across the UK.

For employers in Scotland the apprenticeship levy is available through the Scottish Government’s Flexible Workforce Development Fund (FWDF). The FWDF was significantly increased in August 2020 as a result of the Covid-19 pandemic to £20 million. The fund will now be available for both levy payers and SMEs, across the private, public and third sectors.

Employers can access the FWDF here.

Get in touch – we’re here to help

If you are an employer thinking of engaging an apprentice, our employment team can work with you to prepare an appropriate apprenticeship contract.