Knowing the difference between apprentices and employees

Published: 5 May 2015 09:30

Employers need to consider the legal aspects of youth employment initiatives, says specialist Finlay McKay

WHILE politicians debate the theories around increasing youth employment, the practicalities of meeting these targets fall on the shoulders of individual employers. And with more young people rejecting further education because of concerns around rising debts, apprenticeships are increasing in popularity. Yet when it comes to employing apprentices, interns or taking on work experience students, employers should be aware that different legal obligations apply.

Finlay McKay, CMS

Whereas in the past apprenticeships tended to cluster in trades and manufacturing, in recent years there has been a move towards a wide range of sectors with modern apprenticeships now being offered in financial services and IT. Other sectors, such as the media, fashion and law are still more likely to hire interns. Meanwhile work experience tends to be more altruistically motivated and, for many companies, falls under the banner of corporate social responsibility as opposed to human resources.

Out of these different types of youth employment initiatives modern apprentices are the most heavily regulated, perhaps unsurprising given how highly politicised they’ve become. Employers not only benefit by receiving funding (normally for 16-24 year olds), but by having energetic and committed staff. In the last 20 years the concept of the modern apprentice, currently managed by Skills Development Scotland, has evolved from its origins in the Youth Training Schemes of the 1990’s. A modern apprentice in Scotland is employed directly by their employer, but receives training from a third party in order to work towards a qualification: a Scottish Vocational Qualification (SVQ). The employer receives funding for the training element, and employers are obliged to pay their apprentices at least the National Minimum Wage rate for apprentices, which for 16-18 year olds is currently £2.73.

Employment law treats both the traditional type of apprentice and modern apprentices in a different way to employees, particularly in relation to dismissal and redundancy. Unless the business itself is closing, an apprentice cannot be made redundant, while dismissal for misconduct or underperformance would only apply in very extreme cases. If an employer terminates an apprentice's contract unfairly, they may be liable to pay damages for wrongful dismissal to compensate for loss of wages, training and status. In the 1970 Dunk v George Waller & Son case, a company dismissed its apprentice half way through his four year programme because he had twice failed his exams at technical college. The Court of Appeal awarded him his salary that he would have earned for the outstanding period of his apprenticeship and a reduced amount for future loss for a two year period after that.

Internships have, conversely, had little in terms of regulation applied to them, although the situation has improved in recent years. A few years ago concerns were raised about the lack of protection for some interns who were working for free and being exploited by unscrupulous employers. Following campaigning on this issue, the government produced a Common Best Practice Code recommending payment of the National Minimum Wage for interns. According to the code, an internship is ‘where an individual works so as to gain relevant professional experience before embarking on a career’ and states that ‘well managed, high quality internships should be beneficial to both employer and intern.’

Although unpaid internships still exist, this is hopefully becoming the exception now rather than the norm. It is vital for employers to note that where they fulfil the definition of a ‘worker’ (e.g. - where an individual agrees to a contract for personal service which has mutual obligations and is expected to come into work every day, perform tasks and comply with instructions), an intern should legally be entitled to the National Minimum Wage and statutory holiday entitlement.

Meanwhile taking on students undertaking a work experience placement tends to be less onerous in a legal sense. Companies are not required to pay individuals on work experience for less than one year, providing that their placement is a prerequisite for their university or college course. National Minimum Wage regulations also contain a specific exemption for voluntary workers if they work for a charity, voluntary organisation, associated fundraising or statutory body.

Apprenticeships, internships and work placements all play an important role in helping companies develop talent and give young people an opportunity to get important hands-on experience. While continuing to embrace the value of these HR routes, Scottish companies should also be aware of and take advice on their potential legal implications on a business.

Finlay McKay is a partner and employment specialist at Edinburgh-based law firm CMS.

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