“We have a first-year apprentice employed on our standard contract of employment (rather than an ASCLA compliant apprenticeship agreement for England or Wales). We are thinking of dismissing the apprenticeship as he is lazy. What are the risks to our business if we dismiss here? “

If there is no written apprenticeship agreement, or where there is a written agreement, but it is not an ASCLA compliant apprenticeship agreement (e.g. an approved English apprenticeship agreement), then the individual will have the status of “apprentice” (i.e. working under a contract of apprenticeship) rather than “employee”.

A contract of apprenticeship that is not under an ASCLA compliant agreement, is not terminable for misconduct or poor performance in the same way as an ordinary contract of employment. Similarly, a contract of apprenticeship that is not under an ASCLA compliant agreement cannot be terminated on the grounds of redundancy unless your business closes entirely or undergoes such a fundamental in character that the apprenticeship is impossible.

Someone with the status of “apprentice” that is not under an ASCLA compliant agreement can only be lawfully dismissed if their conduct is so bad that it is virtually impossible for them to complete their apprenticeship.

In this situation, if the employer decided to dismiss the apprentice, then it would be deemed to be a wrongful termination in breach of contract. The apprentice may therefore have a claim for enhanced damages (uncapped) by reason of the loss of their prospects as a tradesman on completion of their apprenticeship (Dunk v George Waller & Son Ltd [1970 2 All ER 630 and Wallace v CA Roofing Services Ltd [1996] IRLR 435). In the case of Dunk, the Court held that an employer was not entitled to end the apprenticeship when the apprentice failed certain examinations and held that the employer had to pay damages representing not just lost wages but also the prospective loss of skills and enhanced earning capacity.

The case of Wallace concerned an apprentice sheet metal worker who was dismissed for reason of redundancy after 19 months and claimed damages for breach of contract, arguing that the contract was one of apprenticeship and therefore not subject to a redundancy dismissal. This was held to be the case and the matter was remitted for damages to be assessed, presumably on the basis that the contract should have been one for four years. An apprentice in this type of case could therefore be awarded significant damages to reflect both the loss of income for the remainder of their fixed-term contract and the loss of training opportunities and the consequent harm done to their chances of eventually obtaining a good job.

Conclusion

The examples of the case-law highlighted above demonstrates that is vital that RMI members use the RMI template apprenticeship agreements for apprentices in England and Wales otherwise they face the risk of significant compensation claims if the apprentice is deemed to be wrongfully dismissed. The situation is different in Scotland where the ASCLA apprenticeship framework does not apply such that they have the status of “apprentice”.

As always, this advice is general in nature and will need to be tailored to any one particular situation. As an RMI member you have access to the RMI Legal advice line, as well as a number of industry experts for your assistance. Should you find yourself in the situation above, contact us at any stage for advice and assistance as appropriate.

Motor Industry Legal Services

Motor Industry Legal Services (MILS Solicitors) provides fully comprehensive legal advice and representation to UK motor retailers for one annual fee. It is the only law firm in the UK which specialises in motor law and motor trade law. MILS currently advises over 1,000 individual businesses within the sector as well as the Retail Motor Industry Federation (RMI) and its members.