THE INDUSTRIAL TRIBUNALS

CASE REF:	1782/10

APPELLANT:		King Security

RESPONDENT:		HM Revenue & Customs

DECISION
The unanimous decision of the tribunal is that the appellant’s appeal is dismissed.

Constitution of Tribunal:
Chairman:			Mr Patrick Kinney
Members:			Mr Robert Hanna
				Ms Marie Mallon

Appearances:
The appellant was represented by Mr S King and Mr M Burns of the respondent company.
The respondent was represented by Mr P McAteer, Barrister-at-Law, instructed by Crown Solicitor’s Office.

1.	This is an appeal brought by the appellant under the provisions of the National Minimum Wage Act 1998.  The respondent served a Notice of Underpayment on the appellant on 30 June 2010.  The appellant contests the Notice of Underpayment on the basis that it was not under an obligation to pay the worker, Mr McComb, the national minimum wage.  The appellant asserts that Mr McComb was employed under a contract of apprenticeship and therefore the appellant was exempt from having to pay the national minimum wage.

Facts

2.	Mr McComb commenced work with the appellant on 1 February 2010.  He had replied to an advertisement placed in the local Job Centre, this was headed ‘Alarm Installer or Trainee – (full-time/permanent)’.  The job card then showed under the heading of salary ‘16 and 17 - £3.57, 18 – 21 - £4.83, 22 plus - £5.80’.  These figures reflected the national minimum wage in force for those age groups.  Under the heading job duties the description said ‘planning, installing and repairing security and alarm systems’.  Under the heading qualification/experience the job card said ‘experience not necessary as training will be given’.

3.	Mr McComb attended for an interview with Mr King.  Mr McComb asserted in his evidence that he was never told that the post was an apprenticeship nor was the word apprentice used in that first interview.  In his evidence Mr King accepted that he could not be sure he used the word although he was sure of his understanding of the position.  The tribunal is satisfied that Mr McComb was not told at that first interview that he was embarking upon an apprenticeship.  Mr McComb started work on a weekly sum of £75.00 per week.  Although there was some conflict of evidence the tribunal is satisfied, from the evidence it has heard and also by reference to the contemporaneous documents and, in particular, the notes of interview taken between Mr Breslin of the respondent company and Mr King of the appellant company which Mr King has signed and accepted in his evidence were accurate, of the following facts:-

(a)	Mr McComb was told that he would work on a trial basis at the rate of £75.00 per week during the trial period.

(b)	There was no reference to any specific training course or training required.

(c)	There was no identification of the qualification to be obtained on foot of his contract.

(d)	There was no fixed period of apprenticeship.

(e)	Although Mr McComb was never shown and nor did he sign a written contract, the draft contract put forward by the appellant company is a general contract of employment, the template coming from the National Security Inspectorate.  This document confirms that employment is on a trial basis and provides that the employee will continue with his one day release woodwork course and complete same.  The woodwork course was a course in which Mr McComb had already started and had no relevance to the work that he was carrying out for the appellant.

(f)	The rate of pay did not constitute the appropriate rate of pay for an apprentice.  The rate was subsequently adjusted but only after the investigation conducted by the respondent.

4.	There was no evidence as to what qualification the apprenticeship was leading to.

5.	Mr King, when interviewed by Mr Breslin, conceded that he in hindsight considered Mr McComb to have been a trainee and not an apprentice.  Although Mr King subsequently retracted this statement in a telephone conversation with Mr Breslin, he was unable in giving evidence to explain why he had made the comment or why he had signed the notes other than to say that he was elderly and that he found the interview process gruelling.  Mr King did not deny making the comment.  

The law

6.	In this case the appellant seeks to argue that it was not under an obligation to pay Mr McComb on the basis that he was employed under a contract of apprenticeship.  Under the provisions of the National Minimum Wage Act 1998 the burden of proof is on the appellant to establish that the worker did not qualify for the national minimum wage and therefore the burden of proof is on the appellant to establish that Mr McComb was working under a contract of apprenticeship at all relevant times.  

7.	It is clear law that a contract of apprenticeship is a special type of contract.  A simple trainee is not an apprentice.  Training of an employee on the performance of his work does not create a contract of apprenticeship.  It is normal that a contract of apprenticeship should be in writing although the absence of a written contract is not in itself determinative of the issue.  In Edmonds  v  Lawson & Others [2000] IRLR 391 Lord Bingham said:-

“A contract of apprenticeship or any equivalent contract is in our judgment a synallagmatic contract in which the Master undertakes to educate and train the apprentice (or pupil) in the practical and other skills needed to practise a skilled trade (or learned profession) and the apprentice (or pupil) binds himself to serve and work for the Master and comply with all reasonable directions.”

	In Wallace  v  CA Roofing Services Ltd [1996] IRLR 435, Sedley J said:-

“Where an employee might expect to be dismissed for misconduct, an apprentice can expect to be punished, though today not physically.  The difference in treatment reflects the difference in the nature of the relationship.  Most particularly, although a contract of apprenticeship can be brought to an end by some fundamental frustrating event or repudiatory act, it is not terminable at will as a contract of employment is at common law.”

8.	In deciding whether or not a contract of apprenticeship was in existence, the tribunal looked for those terms which might be expected to appear in such a contract.  The tribunal also took into account the burden of proof that fell upon the appellant to rebut the presumption that the national minimum wage was not payable.  In reaching this conclusion the tribunal has taken into account the following facts:-

		(a)	There was no written contract of apprenticeship.

(b)	The advertisement for Mr McComb’s position was clearly not an advertisement for an apprentice.  The advertisement indeed offered the national minimum wage rates of pay depending on the age of the applicant.

(c)	There was no evidence that there was a particular period of apprenticeship set out, no stipulations were made as to the requirement for formal training, there were no express instructions in relation to the training to be provided at work.

(d)	There was no reference made to any qualification that Mr McComb might gain.

(e)	The appellant considered that Mr McComb was on a trial period which was terminable by them with again no reference to an apprenticeship.

(f)	Mr McComb was paid at a rate of pay of £75.00 per week which did not at that time represent the payment due to an apprentice.

(g)	Mr King accepted, in his interview with the respondent, that Mr McComb was a trainee rather than an apprentice.

9.	In taking those matters into account the tribunal is satisfied that there was no contract of apprenticeship between the appellant and Mr McComb.  Mr McComb was entitled to the national minimum wage applicable at the time.  Whilst no criticism is made of the general working practices of the appellant by any of the witnesses, it is clear there was at best a fundamental misunderstanding by Mr King as to the nature of the legal relationship to be created when employing someone under a contract of apprenticeship.  The tribunal accepts that when the appellant discovered that the appropriate rate of pay for an apprentice was £95.00 they took immediate steps to rectify the situation, albeit that it was still a mistaken position in the circumstances.

10.	The Notice of Underpayment contains a calculation of the sum due to Mr McComb and of the fine.  Mr McAteer, however, has accepted that as further payments have been made by the appellant to Mr McComb a further calculation may be required.  However, that can only be done on the basis of further information to be provided by the appellant to the respondent.  This is a decision on liability only.  If the parties cannot resolve the correct amount of the underpayment then a further hearing on quantum will be arranged.  

Chairman:

Date and place of hearing:	25 November 2010, Belfast

Date decision recorded in register and issued to parties: