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Apprenticeship ruling adds to employers' risk

NEWS - 16-year-old who was made redundant entitled to loss of future earnings

EMPLOYERS could be forced to shell out thousands in compensation if they axe young people taken on under Modern Apprenticeship schemes, following a court ruling last week.

The decision leaves apprentices free to sue for loss of future earnings if they are dumped before completing their courses.

The Court of Appeal overturned the decision of an employment appeals tribunal, which previously ruled that a 16-year-old taken on by a Durham electrical contractor on a Modern Apprenticeship scheme was working under an employment contract rather than an apprenticeship contract.

Liam Flett began work for electrical firm EAB as a labourer in 2002 before being transferred under TUPE to John Cullerton & Sons and Sharney Matheson, which took over contracts when EAB failed later that year. He was made redundant with one week’s wages of 112.

But last week Lord Justice Lloyd ruled Mr Flett was employed as an apprentice. This leaves the employers open to claims for damages for breach of contract for not completing Mr Flett’s four-year Modern Apprenticeship period and loss of future earnings based on the skills he could not learn.

Jack Harrington, a partner at Manchester solicitor Pannone, said: ‘If a traditional contract of apprenticeship is terminated within the fixed term, the amount of damages available to the employee far exceeds those available to an ordinary employee.

‘The impact cannot be underestimated. Many employers of modern apprentices will now find themselves forced to continue the apprenticeship to the end of the fixed term.

He added: ‘Only in exceptional circumstances could an apprenticeship of this nature be terminated early. The financial consequences are potentially high, even where a good reason arises.’

John Cullerton said: ‘We thought this case was done and dusted but now I’m going to have to discuss it again with our solicitors.’ The Learning and Skills Council’s director of work-based learning, Stephen Gardner, said: ‘It is clear that following this case, providers and employers will need to take care with the terms of learning agreements they put in place with apprentices to avoid creating an arrangement that could be construed as a traditional apprenticeship.’ A spokesman from the Department for Education and Skills said: ‘We are considering the implications of the ruling.’