Springhouse Solicitors

Apprentices were actually employees

In the recent case of HMRC v. Holmescales Riding Centre 2014, the EAT held that a riding school’s trainees were in reality ordinary employees and not apprentices.

Accordingly, the trainees were entitled to receive the National Minimum Wage applicable to employees rather than the lesser rate of NMW applicable to apprentices.

Background

Although the trainees received training and funding towards recognised professional qualifications, they also undertook duties around the livery yard and conducted teaching lessons. The EAT decided therefore that the trainees were employed essentially for the commercial benefit of the employer and that the training was incidental and subsidary to that. Consequently, they were employees and not apprentices.

The EAT also held that the notice provisions, the right to dismiss for gross misconduct, and the lack of a fixed term contract were inconsistent with a contract of apprenticeship.

Implications for Employers

It is important to note that this case concerned the old style contract of apprenticeship under which employers may not dismiss the apprentice before the end of apprenticeship except in exceptional circumstances. Since 6 April 2011, employers have been entitled to dismiss apprentices for the same reasons they are entitled to dismiss other employees provided the apprentices are provided with a written modern apprenticeship agreement in the prescribed form.

To secure your right to pay the apprenticeship rate of NMW:

1. Ensure your apprentices are employed primarily to be trained rather than essentially for the benefit of the business; and

2. Provide your apprentices with written modern apprenticeship agreements in the prescribed form. Read more here.

From 1 October 2014 to 30 September 2015, the rate of NMW for apprentices under the age of 19 or aged 19 or over and in their first year of apprenticeship is £2.73. The standard adult rate is £6.50. Read the current rates of NMW here