Over the past few months I have been involved in many discussions with providers around the ESFA Apprenticeship Rules regarding Associates and/or Secondees and if this is subcontracting.
According to the ESFA’s Guidance on providing external assurance on subcontracting controls (Updated 15 September 2021), a subcontractor is a separate legal entity that has an agreement with a provider to deliver any element of the education and training we fund. This includes delivery of apprenticeship training and/or on-programme assessment for new apprenticeships that started from 1 May.
According to the current ESFA Apprenticeship funding rules for main providers (August 2021 to July 2022 – Version 2) they define subcontracting and subcontractors as:
Subcontracting means any delivery of an apprentice’s programme of learning by a separate legal entity. It does not matter if this is by a third party recruited to deliver on site (travel to teach), online learning or whether the delivery is described as a service.
A separate legal entity or an individual that has an agreement (called a subcontract) with you to deliver any element of the education and training we fund. A separate legal entity includes companies in your group, other associated companies and sole traders. An individual could include a person who is a sole trader, self-employed or employed by an agency unless those individuals are working under your direct management and control in the same way as your own employees.
Within the Legal agreement for training providers, according to the latest ESFA’s agreement (Training provider agreement with the Education and Skills Funding Agency (ESFA) to pay training providers to carry out apprenticeship training) a subcontractor means a person or organisation engaged by the Training Provider to deliver on its behalf the Training or some of the Training under this Agreement.
We seem to have three (3) definitions here, within the funding rules definition of a subcontractor I have highlighted the word ‘unless’, so as long as the person is under the main provider’s direction and control, he or she will be regarded as one of their own employees and not be considered as a subcontractor.
There are many instances that I am aware of where the ESFA are informing training providers of different rules to follow and different aspects of the three definitions as above. An area of importance and one that needs to be addressed, is the use of secondees through a secondment agreement.
According to Thompson Reuters Practical Law a secondment is “The temporary assignment of an employee from one organisation to another for a specified period of time, usually to carry out a particular project. It can be an intra-company transfer within the same organisation or between two unrelated business entities.”
Some possible reasons for a secondment include:
- Career development,
- A chance to gain new skills or experience,
- To preserve specific benefits of the original employer, for example a pension or share option scheme,
- To generate income for the employer,
- Providing staff for short-term projects,
- Providing cover for short-term absences,
- Avoiding redundancies,
- Charitable aims.
The secondee will be able to maintain their statutory period of continuous employment with their employer throughout the secondment. This means that certain employment rights, benefits and prospects will be unchanged. This is likely to be an important consideration for employees when considering a secondment as they may want the reassurance of knowing that their continuity of service will be unbroken. The employee can only be requested to carry out duties as per those specified in their employment contract during the secondment.
As such, according to the rules and the definition, with the word unless, a secondee is under the main provider’s direction and control, and as such he or she will be regarded as one of their own employees and not be considered as a subcontractor.
I am aware of instances where the ESFA have informed providers that the utilization of a secondment agreement for a secondee is a subcontractor, and therefore falls under the subcontracting rules. I challenge this, as per the definition of a secondee and the ESFA definition where it informs, unless those individuals are working under your direct management and control in the same way as your own employees.
May I therefore request that the ESFA settle the confusion in the sector and have one definition that is understood by all, and add a statement in the rules regarding Associates and Secondees to answer the question I have been asked many times, which is:
If a provider uses associates or secondees to deliver training and coaching, does this fall under the subcontracting rules?
Furthermore, will the ESFA produce a template agreement/contract for the use of Associates and Secondees, to ensure a standardised procedure for all providers under the RoATP?