Flett v Matheson [2006] EWCA Civ 53

Case No A2/2005/0697[2006] EWCA Civ 53
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE EMPLOYMENT APPEAL TRIBUNAL
MR JUSTICE BURTON (PRESIDENT) PRESIDING
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate Tuesday, 7 th February 2006
Before
LORD JUSTICE PILLLORD JUSTICE WALL&LORD JUSTICE LLOYD
Between
LIAM FLETTAppellantSHARNEY MATHESONRespondent
(Transcript of the Handed Down Judgment ofSmith Bernal WordWave Limited190 Fleet Street, London EC4A 2AGTel No: 020 7421 4040 Fax No: 020 7831 8838Official Shorthand Writers to the Court)
MR E LEGARD (instructed by Student Law Office NE1 8ST) for Appellant for The respondent did not appear
Judgment
[1]This is an appeal against a decision of the Employment Appeal Tribunal, Burton J (President) presiding, whereby they allowed in part an appeal by Mr Liam Flett (the “appellant”) against a decision of an Employment Tribunal held at Newcastle-upon-Tyne on 28 April 2004. The Employment Tribunal held that there was neither a contract of employment nor a contract of apprenticeship between the appellant and Mr S Mattheson (the “respondent”). The EAT held that the appellant was employed under a contract of employment but was not employed under a contract of apprenticeship and the appeal is against the second of those findings. The EAT awarded the appellant damages on the basis that he was an “ordinary employee”: one week’s wages stated to be £112.12. There are potential heads of damage for breach of a contract of apprenticeship not available to an ‘ordinary’ employee (Dunk v George Waller and Son Ltd [1970] 2 All ER 630).[2]There were three respondents before the Employment Tribunal, first EAB Electrical (“EAB”), for whom the appellant commenced work in 2002. They were long-established electrical contractors. The second and third respondents were John Cullerton and Sons Limited and the present respondent, to one of whom it was claimed there had been a transfer of EAB’s business under the Transfer of Undertakings (Protection of Employment) Regulations 1981 (“the 1981 Regulations”). EAB ceased trading in December 2002. On 14 August 2003, a preliminary issue was heard as to whether there had been a transfer of undertaking within the meaning of the Regulations. The respondent appeared in person. In a decision dated 4 September 2003, the Tribunal found that there had been a transfer from EAB to the respondent. There was no appeal by the respondent against that finding.[3]At the substantive hearing before the Employment Tribunal, none of the respondents were represented. The Tribunal made the findings already stated and concluded that there was “no jurisdiction to entertain the applicant’s claim for breach of contract”. It was held that the appellant was entitled to compensation of £1,074.70 by reason of EAB’s failure to consult under Regulation 10 of the 1981 Regulations, liability to pay that sum passing to the respondent. The Employment Tribunal held that the contract was not within the definition in section 42(1) of the Employment Tribunals Act 1996 which provides:
“‘contract of employment’ means a contract of service or apprenticeship, whether express or implied, and (if it is express) whether oral or in writing”
[4]Before the EAT, the respondent was represented by counsel and Mr Paul Brown, of counsel, appeared as amicus curiae. The appellant was represented Ms Laura Kelly of the Student Law Office at the University of Northumbria. Before this Court, the only appearance was by Mr Legard, of counsel, on behalf of the appellant. We have the written submissions of Mr Brown to the EAT. Obviously, we would have welcomed submissions on behalf of the respondent but Mr Legard has been helpful and fair in his consideration of the evidence and the authorities. The facts[5]On 14 January 2002, the appellant, then sixteen years old, commenced employment with EAB as a labourer. As to the next stage of the relationship, the finding of the EAT was as follows:
“It is wholly clear that the appellant, Mr Flett, was working for EAB under a contract, even prior to his entering into a tripartite, individual learning plan (“ILP”), which was produced before the Employment Tribunal. The document was signed on 10 September 2002, which is stated in the body of the document to be his “learning start-date”
. It is a tripartite document, and the three parties to the agreement, the ILP, were Mr Flett, who was then aged seventeen, as apprentice, EAB, described as “the company”, and a Training Provider called JTL.” It is common ground that while the ILP was in operation, wages were paid by the employers. The appellant’s object was to become a fully qualified electrician. As recorded by the EAT, JTL is a Government-funded and supported body under the aegis of the Learning and Skills Council and the Joint Industry Board responsible for providing training in the electrical field.[6]Insofar as the background against which the appellant was in 2002 employed may be relevant, Mr Legard relies on the statement of Mrs Brass, who was the proprietor of EAB following the death of her husband in November 2001. There had been a pattern of EAB taking apprentices. The respondent himself had been apprenticed to the firm in 1987. Another apprentice, Mr Lee Jordison, was taken on in 1997. The Individual Learning Plan[7]The document signed on 10 September 2002 was on a printed form, headed ILP, with the relevant information written into the relevant sections of the form. The introduction provides:
“This Individual Learning Plan outlines a programme of training agreed between JTL and/or the company and the Apprentice, which will be carried out under Advanced Modern Apprenticeship arrangements. The apprentice shall have unrestricted access to information on the arrangements. The Apprentice is employed by the Company named in Section 2. It is underwritten by the Training Agreement and sets out what the Apprentice is aiming to achieve during his/her apprenticeship. It will also be used to review progress.”
The printed part of the document also provides that:
“This apprenticeship is funded by: Learning and Skills Council – NCS”
. The appellant answered the question whether he had a copy of his terms and conditions of employment in the negative.[8]Particulars of the parties are included (Section 1 to 3) and, in the section dealing with the appellant, the “career aim and employment objective” is stated as:
“To become a fully qualified electrician”
. The “title of apprenticeship” (Section 4 headed – Training Period) is “AMA – Electrical Installation Engineering.” The duration of training is stated to be 42 months and the “funding entitlement expiry date” is 9 March 2006. NVQ (National Vocational Qualification) to be achieved (Section 8a) is “Installing and commissioning electrotechnical systems and equipment” and the level is level 3. The anticipated achievement date is 9 December 2006. Particulars are given (Section 10) of the “Key skills to be achieved” and it is stated (Section 12 headed review arrangements) that:
“This learning plan will be reviewed regularly, a minimum of twelve weekly from the start of training”
. Under the heading “On the Job” (Section 13a), it is stated:
“Specific attendance arrangements are as laid down in the apprentice’s terms and conditions of employment”
. The “pattern of training” (Section 13b) is “off the job release training” and the college to be attended is “Gateshead”.[9]The appellant is named in the document as “an apprentice”. He twice signed it, as such, once under the following statement:
“I have also requested that I be included in the distribution of information and articles by JTL whilst I am working toward the completion of my Advanced Modern Apprenticeship.”
The document was signed on behalf of the employer who confirmed that “This Individual Learning Plan is acceptable, that it will be supported by “the employer” and the apprentice’s training began on the date shown in Section 4 (10 September 2002). It was also signed on behalf of the JTL with an equivalent confirmation. The Training Scheme for Apprentices[10]In considering the arrangement, the Employment Tribunal read with the ILP, although not expressly referred to in it, a document entitled “1983 Apprenticeship Scheme”. It described a scheme called:
“1983 Joint Industry Board Training Scheme for Electrical Installation Apprentice Craftsmen and Technicians.”
They queried whether the 1983 scheme was the current scheme and requested further information. They were assured that ‘the documentation provided to [the Tribunal] [was] the documentation under which Mr Flett was employed”.[11]It later emerged that the current JIB Training Scheme for Electrical Installation Apprentices in 2002 was a 1999 scheme, as amended in 2001. The EAT also considered, with the consent of the parties, the 1999 Scheme. For present purposes, there do not appear to be material differences between the two schemes and, as Mr Legard proposes, we consider the 1999 Scheme.[12]The relevant training scheme is described as the “1999 Joint Industry Board Training Scheme for Electrical Installation Apprentices”. It was revised on 6 December 2001. It is provided in the introduction that the employer is required to be “fully involved in, and committed to, the training and assessment process.” The purpose of the Scheme is to “define the entry, training and education of electrical installation Apprentices”. Paragraph 1 provides that: “The purpose of the 1999 JIB Training Scheme is to define the entry, training and education of electrical installation Apprentices in England, Wales and Northern Ireland”.[13]The main objectives of the Scheme are stated to be:
“(a) ensure that all training is carried out to the national standards defined by NET [National Electrotechnical Training] and accredited by the Qualifications and Curriculum Authority (QCA). (b) maintain a consistent standard of training for electrical installation Apprentices and to provide a foundation for lifelong learning. (c) provide a cost effective training scheme.”
Paragraph 5 provides that “Apprentices shall be registered with the JIB within one month of the start of their Modern Apprenticeship”. Paragraph 6 provides that “Where an apprentice is employed by a JIB Member Employer, conditions of employment shall be as laid down in the JIB National Working Rules… Apprentices employed by JIB Member Employers shall be eligible for benefits as detailed in the JIB Combined Benefit Schemes. These benefits are currently provided at no cost to the Employer”. (We do not know whether EAB were Member Employers.) Paragraph 7 provides that the “JIB Apprentice Logbook is an essential integral part of the training and assessment process”. It requires a record to be kept of the work done by the apprentice for the employer. It requires employers to “ensure that the JIB Apprentice Logbooks are correctly and accurately completed in accordance with the requirements detailed in the Logbook”. Paragraph 9 provides that “When the apprenticeship is completed, the Employer shall apply to the JIB to have the completion formally recorded”.[14]Under the heading Apprentice - General (Paragraph 11), it is provided, amongst other things:
“(e) Transfer In the event of an Apprentice not giving, or obtaining, satisfaction with the progress of the training, the employer or Apprentice shall have the right to apply to the Training Agent for transfer to another Employer to continue the training. (f) Redundancy An Employer should not normally discharge or declare redundant an Apprentice because of lack of orders. The Employer may, with the consent of the Apprentice and Guardian, apply to the Training Agent to find another Employer willing and able to continue the training but until such a transfer has been arranged and registered with the JIB, the present employer remains responsible for ensuring that all of the obligations to the Apprentice are fulfilled.”
The Scheme also provides:
“13. Termination of Apprenticeship The Scheme has no natural break points and is reliant upon progression through the various stages of assessment. Any termination of the apprenticeship is therefore dependent upon the Employer’s judgment of the Apprentice’s application and capability to complete the Scheme. The apprenticeship may be terminated by the Employer if the Apprentice is unable, due to lack of application and/or capability, to attain the required industry standard to progress through the stages of the Scheme. Satisfactory progress requires the continued completion of the JIB Apprentice Logbook. Such action can only take place if the Employer has met the requirements of full involvement in and commitment to the apprentice’s training and assessment process and after due consultation with, and warnings to, the Apprentice. Prior to making any decision to terminate the apprenticeship, the Employer must involve the Training Agent, the parent or guardian and where the Apprentice is a member of the AEEU, the local AEEU Regional Officer. 14. Discipline An Apprentice who commits industrial misconduct or otherwise misbehaves will, after due enquiry, render himself liable to suspension without pay for a period of up to 14 days or, in extreme cases, to dismissal, either with or without notice or pay in lieu of notice. Any enquiry of a disciplinary nature should involve the Training Agent and, where the Apprentice is a member of the AEEU, the local AEEU Regional Officer. In any interview which could result in the dismissal of the Apprentice every endeavour should be made to ensure that the parent or guardian should be present.”
[15]Paragraph 12 provides “All Apprentices shall attend College or other approved training establishment as required by the Training Agent. They shall be paid a normal working day’s pay.” The judgment of the EAT[16]At a preliminary hearing before the EAT, Bean J presiding, the point of law directed to be heard was “Whether the agreement under which [the appellant] worked was a contract of employment for the purposes of Section 42(1) Employment Tribunals Act 1996 [“the 1996 Act”] and if so whether it was a contract of service or contract of apprenticeship.[17]At the full hearing, the EAT referred to the “limited evidence” before the Employment Tribunal. They referred to, and took into account, the documents placed before the Employment Tribunal. They did so with the consent of the parties. The statement of facts by the Employment Tribunal and by the EAT is, with respect to them both, sparse, and we have considered whether the point of law at issue can properly be considered without a prior remission to a fact-finding tribunal. Having considered the facts available, and the agreement before the EAT as to the documents, we have decided that it is appropriate for this court to consider the point of law.[18]The EAT considered the nature of such an arrangement. They stated, at paragraph 13:
“As we have said, the Applicant started working for EAB in January 2002, eight months before his signature of that tripartite arrangement; and there is no evidence that he was then anything other than an employee of EAB. What is seemingly said to have occurred is that a contract of employment between him and EAB, if such it was, turned into something different with the signing of the ILP. This is said to have occurred by reference to what we have referred to as the traditional and ancient, medieval concept at common law of a contract of apprenticeship. Such contract can be traced back to the days of guilds and indentures; and, as it seems to us, it had three important aspects, which are not present in the modern arrangement, at any rate insofar as that modern arrangement appears before us. There has been a description of what is called a “Modern Apprenticeship”
. On the basis of the limited evidence that was before the Employment Tribunal, and is before us in this case, we cannot and do not intend to reach any conclusion about every Modern Apprenticeship; but we can certainly draw sufficient conclusions in relation to any similar arrangement to that entered into by the Applicant in this case, of a tripartite nature, such as we have described.”[19]The EAT distinguished the old common law contract of apprenticeship from the “Modern Apprenticeship for the modern training programmes”. (Paragraph 18). The tripartite arrangement was “completely different from the traditional apprenticeship agreement” (Paragraph 26). At paragraph 31, the EAT concluded:
“In our judgment it is quite clear that the modern tripartite apprenticeship arrangement, in which the employer provides the opportunity for work experience, whilst the training is done under the auspices of and/or by a training agent or provider and/or a college or council, is not a common law contract of apprenticeship. The question, in our judgment, is not what the contract is called, but, given that even a contract of apprenticeship would be covered by employment protection (see section 42(2) of the Employment Tribunals Act 1996), simply whether there is a contract of employment, and, if so, what are its terms. It is manifest that there was here a contract of employment, and not just because the Appellant was already employed by EAB before the training arrangements started. Every incident indicating employment seems, notwithstanding the paucity of evidence, to have been present and to have continued during the training period; and the relevant documents redound with employer, employee and terms and conditions of employment. There is little doubt that the Appellant was working as an employee, and receiving wages as such.”
[20]Having decided that the Employment Tribunal’s conclusion that there was no contract of employment was erroneous, the EAT stated that they were “entirely satisfied”, that the Tribunal had been correct to conclude that there was not a contract of apprenticeship (Paragraph 24).[21]The EAT went on to state, at paragraph 35:
“To conclude that there was not a contract of apprenticeship, but that this example of a Modern Apprenticeship agreement was a contract of employment, does not, however, in the ordinary case, end matters. As it happens, in this case it is, and has to be, conceded by the Appellant that if there was a contract of employment, the Appellant was entitled only to one week’s wages. This is how it was apparently argued below…”
[22]In paragraph 36, the EAT went on to consider the position in what they would regard as an “ordinary case”:
“However, in another case, there would need to be, and could be, argument as to the terms of the agreement between the employer and the trainee, which forms part of the tripartite training arrangement, i.e. its duration and terminability. Whatever may have been the position of the contract of employment in a case where a trainee was already working with the employer, does the onset of the tripartite training / Modern Apprenticeship arrangement impose its own term as to duration or terminability, to supplement or override whatever may be the position in the original contract, in this case, one week’s notice? We are satisfied that it does. Hence, in any future case where the applicant is not, as in this case, bound by the way that the matter was argued below to restrict himself to a claim in respect of the precise period of notice under what would otherwise be or had been his contract of employment, we are satisfied that the case is available to establish that there is a special context for a training contract, such as a Modern Apprenticeship arrangement, which does affect, or at any rate may affect, the terminability of what would otherwise be a simple contract of employment without the training overlay.”
[23]The EAT added, at paragraph 37:
“We are satisfied that, in the ordinary case, the imposition of a Modern Apprenticeship arrangement upon an existing employment, or the commencement from scratch of a Modern Apprenticeship arrangement of this tripartite kind, would introduce a different term from the ordinary specified terms of an employment contract”
[24]Having considered the 1983 and 1999 Schemes, the EAT stated at paragraph 43:
“Subject to what might arise in another case, we would conclude that the likeliest result would be that there would be an implied term in the contract between the employer and apprentice, that the contract of employment would be terminable on reasonable notice; such reasonable notice being geared towards the time within which it would be reasonable to expect the Training Agent or Provider, or Council or Board, in question to place the apprentice with another employer.”
[25]The overall conclusion appears at the end of the judgment: “45. It would in our judgment, obviously be much more satisfactory if this matter were expressly addressed in the future by training contracts or Modern Apprenticeship contracts, which are hereafter entered into; and, provided we have properly understood the position, we would recommend that in future there be spelled out what obligation there is upon a Training Provider to use reasonable or best endeavours to find an alternative apprenticeship, and what obligation there is upon an employer in relation to the giving to an apprentice of a reasonable period to find another employer, with the assistance of the Training Provider and/or JIB or other Board, in order to continue his or her training elsewhere. 46. However, whatever may be the case for the future, and in future cases, we have no doubt at all that in the present case, this Appellant was not employed under a contract of apprenticeship, but under a contract of employment, as varied or overlaid by the tripartite trainee arrangements. In the light of that Decision, the appeal must be, to that extent, allowed. In the light of the concession, properly made by the Appellant, through Ms Kelly, that the only sum that can thus be awarded is the sum of one week’s notice, unless there can be evidence produced that that sum has been paid (upon which we have invited the Third Respondent to address us) we would be minded to allow the appeal to that limited extent, and substitute the further award to the Appellant of one week’s wages, £112.12.” [The sum awarded for one week’s loss of earnings suggests a rate of pay well below the statutory minimum but without further information as to the terms and conditions of employment, a finding is impossible.][26]Thus the EAT found:(a) The appellant was employed under a contract of employment but not a contract of apprenticeship.(b) It had been conceded on behalf of the appellant that, if the contract was one of employment, the appellant was entitled only to one week’s wages,(c) The appellant was employed under a contract of employment, as varied or overlaid by the tripartite trainee arrangements.(d) This kind of tripartite arrangement would introduce a different term from the ordinary specified terms of an employment contract.(e) In another similar case, the likeliest result would be that there would be an implied term in the contract between the employer and the apprentice that the contract of employment would be terminable on reasonable notice, such notice being geared towards the time which it would be reasonable to expect a training agent to place the apprentice with another employer. The finding alleging that a concession has been made by Ms Kelly, on behalf of the appellant, is based, first, on the Employment Tribunal’s finding at paragraph 20:
“The status of Mr Flett determines what he can claim in damages … If he was an employee he is entitled to one week’s notice”
. It is based, secondly, on paragraph 19(ii) of the appellant’s skeleton argument for the EAT, drafted by Ms Allen: “The Tribunal is asked to (1) Substitute a decision that the claimant was working under a contract of apprenticeship and remit the case for a decision on remedies. (2) in the alternative to substitute a decision that the claimant was working under a contract of employment and an award of one week’s pay in lieu of notice”.[27]It was in my respectful opinion harsh in any event in the circumstances for the EAT to treat that submission of the law student who had conducted the case in the way they did. Be that as it may, having found that such a contract belonged to a separate species, however, namely a contract of employment as varied by the tripartite training arrangements, they were not entitled to treat a concession relating to a ‘simple’ contract of employment as concluding the matter. While remission on more general grounds is appropriate, remission would in my view be required to allow reconsideration of the appellant’s claim in the light of the EAT’s findings, even if they stand, as to the nature of a modern apprenticeship agreement. The Authorities[28]In view of the EAT’s comments upon the tripartite arrangement, it is however appropriate to consider its nature and the extent of the obligation it imposes on the employer. In Dunk, Lord Denning MR stated, at page 633e:
“The very object of an apprenticeship agreement is to enable the apprentice to fit himself to get better employment if his apprenticeship is wrongly determined, so that he does not get the benefit of the training for which he stipulated, then it is a head of damage for which he may recover”
. Widgery LJ stated, at page 634c-f:
“A contract of apprenticeship is significantly different from an ordinary contract of service if one has to consider damages for breach of the contract by an employer. A contract of apprenticeship secures three things for the apprentice: it secures him, first, a money payment during the period of apprenticeship, secondly, that he shall be instructed and trained and thus acquire skills which would be of value to him for the rest of his life, and, thirdly, it gives him status, because the evidence in this case made it quite clear that once a young man, as here, completes his apprenticeship and can show by certificate that he has completed his time with a well-known employer, this gets him off to a good start in the labour market and gives him a status the loss of which may be of considerable damage to him. It seems to me, therefore, that in this case not only must we say that the apprentice is to be compensated for the loss of wages during the remainder of his apprenticeship contract but that we must also give him something in respect of the loss of training and loss of status which has also resulted. For a time during the argument I was troubled on this aspect of the case because, like the learned trial judge, I find it very difficult to see that any positive loss of earnings (after the period of the apprenticeship) can be proved in this case to be attributable to the premature determination of the apprenticeship agreement. If I had been satisfied that such actual loss could be proved, the damages might have been significantly higher; but, even though I agree with the judge that there is really no proved loss of earnings attributable in the future after the expiration of the apprenticeship period in this case, I am satisfied that a sum, difficult though it may be to assess, is properly to be awarded for the loss of teaching, the loss of instruction and the loss of status.”
[29]In Wallacev C A Roofing Services Limited [1996] IRLR 435, Sedley J construed the contract of a claimant whose job title was “Apprentice Sheet Metal Worker” as a true contract of apprenticeship not including a term that the period of training might be terminated prematurely on the ground of redundancy. Sedley J stated, at paragraph 31:
“…by comparison with the terms of the agreement, but in a field of employment in which traditional apprenticeships are still to be found, the word ‘apprenticeship’ will in my view ordinarily carry with it the legal connotations which I have described. No doubt it is possible to create a contact which is otherwise one of apprenticeship but is subject to a provision for termination on grounds of redundancy. Indeed, it is in search of precisely such a contract that the present issue has been pursued, but it would in my judgment require clear words to produce that result once the contract had been characterised within an industrial context as one of apprenticeship.”
Of course the court was considering the traditional type of apprenticeship and not the modern tripartite arrangement but I agree with Sedley J that once a contract has been categorised as one of apprenticeship, with a specific period of training contemplated, the right to dismiss on the ground of redundancy should not readily be implied.[30]The nature of a modern apprenticeship agreement, of a tripartite nature, was considered by the EAT (Wall J presiding) in Thorpe v Dul & Ors [200] ICR 1556. In the circumstances believed by the EAT to have existed in that case, I do not find their decision to remit the case at all surprising. However, as the EAT in the present case have pointed out, the EAT had been led to believe that the employer did not pay any wages and the decision to remit and the comment upon the tripartite arrangement in that case appear to me to have been coloured by their erroneous belief. In the present case, wages were paid, though the evidence as to their size is sparse.[31]On remission to the Employment Tribunal in Thorpe, the Tribunal held that, while there was a training element in the relationship, it was “overwhelmingly a relationship of employer/employee”. The Tribunal held that, in the circumstances found to exist in that case, which included a finding that the employee was guilty of substantial default in the employment relationship, the employer was entitled to terminate the contract as that of an ordinary employee, without being bound to complete the contemplated 36 month training period. The subsequent and successful appeal to the EAT, His Honour Judge Ansell presiding (UKEAT/0041/04 and UKEAT/0042/04/SM), was on the employer’s complaint that, upon those findings, excessive damages had been awarded. Because of the difference in circumstances I do not consider comment and findings in the Thorpe decisions to be of much assistance in the present case.[32]I respectfully agree with the approach of the EAT, Mr Recorder Underhill QC presiding, in Whitely v Marton Electrical Limited [2003] ICR 495. A tripartite agreement with similarities to that in the present case was considered . At paragraph 9, Mr Underhill QC stated:
“Whether or not the pact is formally to be characterised as a contract of apprenticeship, its terms make it clears that it is very different from an ordinary contract of employment. It is a contract one of whose principal purposes, if not the principal purpose, is the training of the “apprentice”
. The employer undertakes much wider responsibilities than he would towards an ordinary employee – in return, no doubt, for perceived advantages, which presumably include … a degree of funding. In these circumstances, we see nothing inherently surprising in the contract being for so long a duration: it might indeed be argued that it was necessary for the scheme that it should be so. Nor are we troubled by the possibility that if the apprentice did not progress as expected the duration of the contract might be even longer: if the apprentice were unable to make the necessary progress, we have no doubt that sooner or later a point would come when those responsible for his training could properly bring it to an end. …”[33]Because it includes references to a contract of apprenticeship, it is necessary also to refer to Regulation 12 of the National Minimum Wage Regulations 1999 (SI 1999/584) (“the 1999 Regulations”). It is headed:
“Workers who do not qualify for the national minimal wage”
. It provides, insofar as is material: (2) A worker who – (b) is employed under a contract of apprenticeship or, in accordance with paragraph (3), is to be treated as employed under a contract of apprenticeship … does not qualify for the national minimum wage in respect of work done for his employer under that contract. (3) A person is to be treated for the purposes of paragraph (2)(b) as a worker who is employed under a contract of apprenticeship if, and only if, he is – (a) a worker within the meaning given by Section 54(3) of the Act; and (b) engaged – (i) in England or Wales, under the Government arrangements known… as National Traineeships, Modern Apprenticeships, Foundation Modern Apprenticeships or Advance Modern Apprenticeships”. The wording of Regulation 12(3)(b)(i) has been amended by SI 2004/1930 but not so as to affect the outcome of the present case, in my view. It may be argued that the need for a deeming provision in relation to Modern Apprenticeships demonstrates that an arrangement such as the present would not otherwise be a contract of apprenticeship. I doubt that. The deeming provision prevents any doubt as to whether, for the purpose is of the 1999 Regulations, the Modern Apprenticeship is a contract of apprenticeship. It does not in my view require all Modern Apprenticeships to be construed as something other than contracts of apprenticeship. If, as appears to be the case, the appellant was receiving less than the national minimum wage, it points to the agreement being one of apprenticeship. (a) a worker within the meaning given by Section 54(3) of the Act; and (b) engaged – (i) in England or Wales, under the Government arrangements known… as National Traineeships, Modern Apprenticeships, Foundation Modern Apprenticeships or Advance Modern Apprenticeships”. Analysis[34]The contract is called in the ILP an apprenticeship and is a combination of off and on the job training. What occurs at the place of work is part of the training required to obtain the qualification stated in the ILP and the employer has responsibility for the completion of logbooks for that purpose. A lengthy period of training is contemplated. Moreover, while the employer does not provide the more academic part of the training, he is required to give the apprentice time off to obtain it and to fund the cost of attendance at classes. The fact that under the tripartite arrangement, a part of the training is provided by a third party and not the employer is not in my view crucial to the analysis of the employer’s obligations under the tripartite arrangement constituted by the ILP. There is an obvious advantage to all parties in the more academic part of the training being arranged by a specialist organisation at a college. The whole thrust of the documentation in my view supports the view that the contract comes with the category of apprenticeship.[35]The EAT found, at paragraph 18, that the ILP did not constitute a fixed term contract. It did not impose obligations on the employers for the duration of the term. It was distinguishable from the common law contract of apprenticeship on those grounds. Section 4 of the ILP in the present case is not entirely clear in that the stated duration of training, 42 months, is linked with the “funding entitlement expiry date” of 9 March 2006 and not with the “anticipated completion” date of 9 December 2006. It is the 9 December date which is carried forward into the sections of the ILP dealing with the detail of standards to be achieved. There is no evidence as to why different dates in 2006 were chosen for the purpose and there is room for argument as to what would have been the obligations of the parties between March and December 2006. What is, however, clear in that a training period of considerable length was contemplated by the ILP of 10 September 2002, extending to 2006.[36]I disagree with the EAT’s conclusion that the differences in the 2006 termination dates disqualifies the tripartite arrangement from being an apprenticeship, or that (save during the relevant months in 2006), it throws light on the extent of the employer’s obligations. Any uncertainty is to when in 2006 the agreement was to terminate should not be viewed in determining its character. EAB were party to a tripartite agreement which contemplated obligations of considerable length on all three parties. By a signature on their behalf, EAB confirmed that the ILP was acceptable and would be supported by the employer.[37]The important issue in this case is as to the nature and duration of the employer’s obligation under the agreement. This court is at the disadvantage of the absence of any analysis in the decision of the Employment Tribunal of the arrangements under which the appellant did his work for EAB. The Tribunal considered themselves bound by Thorpe to find that there was neither a contract of apprenticeship nor a contract of employment. Conclusions[38]In my judgment, the use of the word “apprentice” in the documents is an important element in construing the obligations under the ILP. To decide upon the extent of those obligations it is, however, necessary to construe the particular agreement, and not rely on the label alone. On the other hand, because an agreement is described as a Modern Apprenticeship, its construction should not be approached on the basis that it is necessarily something fundamentally different from a traditional apprenticeship.[39]I agree with the EAT that the contract of employment must be treated as “varied or overlaid by the tripartite trainee arrangements” and that variation gives rise to additional obligations on the employer. The further question to be addressed is whether the employer can dismiss on reasonable notice, subject to making reasonable efforts to find another employer willing and able to continue the training, under paragraph 11 of the ILP, or whether the employer may have obligations to employ for the contemplated period of the apprenticeship.[40]In my judgment, subject to paragraphs 11(e) and the second part of 13 of the JIB scheme, which provide circumstances in which the employer may terminate the agreement, the employer is bound for the training period specified in the ILP. In the ILP, the employer confirmed that the ILP is acceptable and will be supported by the employer. The arrangement has the essential features of an apprenticeship, as stated by Widgery LJ in Dunk. The fact that some training is provided by a party other than the employer does not in my judgment deprive the relationship between employer and apprenticeship of a long-term character which persists until the end of the training period contemplated. As already stated, it is not surprising, in modern conditions, that a specialist provider is included in the arrangements.[41]The ILP sensibly makes provision for attempts to find an alternative employer if the continuation of the arrangement does not for any reason suit the circumstances of the employer who entered into the contract but I disagree with the EAT’s conclusion that the employer’s obligation is limited to making reasonable efforts to find an alternative employer. Paragraph 11(f) of the 1999 Scheme is important in this respect. It provides that until a transfer has been arranged and registered, “the employer remains responsible for ensuring that all of the obligations to the apprentice are satisfied”. That is only achieved if the employment continues. I do not consider that the presence of the word ‘normally’ in the first sentence of the sub-paragraph, when discharge for redundancy was considered, confers any right to discharge. It is only what follows in the sub-paragraph that is to be considered other than normal. Moreover, the first part of paragraph 13 provides that the scheme has no “natural break points” and any termination depends on the employer’s assessment of the apprentice’s progress and not on the employer’s interests or needs. If attempts to find another employer fail, the obligation on the employer remains and he cannot dismiss the apprentice within the period of training, subject of course to the power to dismiss under paragraph 13. Result[42]Remission is necessary for further consideration of the evidence:(a) The terms under which the appellant had worked for EAB, including rates of pay, were insufficiently explored. It appears that there had been no written contract of employment save for incorporation of the ILP.(b) Despite the Employment Tribunal’s concern that the 1983 Scheme was out-of-date, the 1999 Scheme was not placed before them. The relationship between it, the ILP and the contract of employment was not explored.(c) It may or may not be relevant but the factual matrix in which the appellant was employed, to some of which reference has been made in this court, was not considered below.[43]I would remit the case to the Employment Tribunal. It is necessary, in my judgment, and for the reasons given, to conduct a further fact-finding exercise. My comments have been based on a reading of the ILP with the 1999 scheme. The extent, if at all, to which the legal issues considered in this judgment arise will depend on the Employment Tribunal’s findings of fact. To the extent they do, the arrangement should be construed as indicated in the judgments in this court.[44]The appellant should be mindful of the difficulty of proving substantial damages in circumstances such as the present, as demonstrated in Dunk. The court has no information about the appellant’s work since 2002 or as to the respondent’s likely means. This litigation has already become protracted and the factual uncertainties are such that attempts to resolve the dispute out of court would in my view be appropriate.[45]To the extent indicated, I would allow this appeal.[46]I have had the advantage of reading Pill LJ’s judgment in draft. I agree with him that this appeal must be allowed to the extent he proposes, and for the reasons he gives. I add a short judgment of my own because I presided over the constitution of the Employment Appeal Tribunal (EAT) which decided the case of Thorpe v Dul and others (No 1) [2003] ICR 1556 (hereafter Thorpe No. 1), on which the EAT relied.[47]It was, I think, unfortunate both that the respondent was not represented on this appeal and also that, in a case which (as Laws LJ pointed out when granting permission to appeal) raises an issue of some importance, we did not have the benefit of renewed argument from the advocate to the court who had appeared before the EAT. However, as Pill LJ points out in paragraph 4 of his judgment, Mr. Legard, for the appellant, conducted the appeal with exemplary fairness, and in the result I do not feel that either the court or the respondent has been materially disadvantaged by the absence of countervailing arguments to those advanced on the appellant’s behalf.[48]It is, I think, important, to start with the proposition that, as Pill LJ records in paragraph 5 of his judgment, and as is made clear in the appellant’s Individual Learning Plan (ILP), the object of the appellant in this case was to become a fully qualified electrician. The particulars of the training required to achieve that objective are set out in the ILP, and the language, throughout, is that of apprenticeship. The critical question, it seems to me, is whether the tripartite nature of the agreement, with much if not most of the training being provided (and largely funded) by a third party, is a factor capable of denying the contract the classic qualities of apprenticeship identified by this court in Dunk v George Waller & Sons Ltd [1970] 2 QB 163 and by Sedley J in Wallace v CA Roofing Services Ltd [1996] IRLR 435.[49]In Thorpe No. 1, the facts were unclear, and in particular the EAT simply did not know whether there was a contract of employment between Mr. Dul and the appellant. The application was, accordingly, remitted to the Employment Tribunal (the Tribunal) to make findings of fact as to Mr. Dul’s employment status. As the employer’s subsequent appeal to the EAT shows, the Tribunal found that Mr. Dul was employed under a contract of employment, albeit that it had a training element.[50]There is no doubt that the EAT in Thorpe No. 1 was influenced in its decision to remit the matter to the Tribunal both by the powerful submissions advanced by the LSC and by its erroneous belief, expressed in paragraph 66 of the judgment, that “the employer did not pay the trainee: the funds for paying him came from the Learning and Skills Council (LSC) through the college” which provided the training. It is also, with hindsight, perhaps unfortunate that we expressed ourselves as broadly as we did in paragraph 63 of the judgment: - On the available evidence, it is clear to us that the modern apprenticeship in this case is not a contract of apprenticeship in the traditional sense and as described in Dunk v George Waller & Son Ltd It is, I think, plain therefore that, as Pill LJ concludes in paragraph 31 of his judgment, Thorpe No. 1 is of little assistance in deciding the present case.[51]In considering this appeal, I have been particularly assisted by two factors. The first is a reconsideration of the decision of the EAT (Mr. Recorder Underhill QC presiding) in Whitely v Marton Electrical Ltd [2003] ICR 495 (hereafter Whitely). The second is the skeleton argument from the Advocate to the Court, Mr. Paul Brown, which was prepared for the appeal to the EAT.[52]In Thorpe No 1, the EAT distinguished Whitely on the ground that the contract in the latter case:- …. explicitly and consistently used the language of apprenticeship, and was obviously intended to achieve, with some adaptation to modern conditions, the same purposes as an old-fashioned apprenticeship contract. Accordingly, the respondents were not entitled to dismiss the applicant. Like Pill LJ, I respectfully agree with the EAT’s approach in Whitely, a case which, on its facts is very similar to the instant case.[53]I am also persuaded by Mr Brown’s analysis, contained in paragraph 35 of his skeleton argument for the EAT: -35. In summary, the appellant wished to become a qualified electrician. He was given a position described as an “apprenticeship”, under which his employer undertook responsibility for training him, and allowed him time off to receive the additional training required in order to obtain that qualification. While retaining the right to dismiss him for misconduct, EAB undertook not to make him redundant for lack of orders. The appellant appears to have been under normal contractual obligations (e.g. in relation to attendance) to his employer, and to have carried out work which was of benefit to his employer, for which he was duly paid money, described as “wages” by that same employer.36. Overall, the Advocate to the Court suggests that these factors are strongly indicative of the conclusion that the relationship was that of an apprentice.[54]Mr. Brown also addresses the argument that a scheme where training is divided between the “employer” and a different training provider is inconsistent with the concept of apprenticeship since no one party undertakes to qualify the apprentice for his particular trade or calling. Mr. Brown comments: - The question here is whether it is realistic (in a modern environment) to expect an employer to be able to provide the full training required in order to be able to obtain nationally recognised qualifications. The Modern Apprenticeship recognises that it is not, and that a combination of on and off the job training is required. The employee’s contract with the employer expressly accommodates this: the employer may not provide the “college” part of the training, but specifically gives the apprentice time to obtain it. The 1983 JIB scheme requires the employer to fund the costs of attendance at classes and examinations.[55]I am, accordingly, persuaded that the ILP in the instant case is a contract of apprenticeship, although remission for further consideration by the Tribunal is necessary for the reasons identified by Pill LJ.[56]I would conclude with the following observations. I acknowledge the criticism that the EAT in paragraph 67 of its judgment in Thorpe No 1 was concerned about the policy implications arising from a possible disenchantment with the modern apprenticeship scheme were small employers to face substantial claims without realising the implications of the agreements into which they had entered. I cannot but note, however, that in the instant case, as in Thorpe No.1 remission to the Tribunal has proved necessary. In Thorpe No 1 this was because the circumstances in which Mr. Dul came to work for / was placed with the employer were wholly unclear. In the instant case, the factual matrix in which the appellant was employed were not considered in the Tribunal.[57]Contracts of apprenticeship are, self-evidently extremely important for all involved in them, notably both apprentices and employers. There needs, in my judgment, to be clarity for both. The former, who are often young and inexperienced, need to know in clear terms what is expected of them, and the benefits they are likely to obtain from their periods of apprenticeship. Their employers need to understand clearly the obligations they in turn are taking on by engaging an apprentice. Since an appropriate tri-partite agreement is capable of being a contract of apprenticeship, the obligation to achieve transparency clearly extends to the LSC and other training providers. The consequences of uncertainty seem to me to be demonstrated by this litigation. The appellant’s IT1 was issued as long ago as 16 January 2003, and the litigation is, even now, not concluded.[58]I would, accordingly, allow the appeal to the extent proposed by Pill LJ. 49. I agree with both judgments.

Cited in 2 later judgments