I have been in the apprenticeship sector for over 20 years, and the commercial / legal sensitivities around contracts/agreements are not fully understood by many providers, and they fail to lack the full legal grounds to enforce said contracts. Recently I have been supporting an employer that signed an agreement that had an exclusivity clause within the agreement of services as well as a payment clause for the recruitment of potential candidates/applicants for the apprenticeship.
The learner and employer wanted to use a different training provider, which is their right, however the provider came back to the employer and was going to charge them circa £1000 as a recruitment fee. Within the agreement for services was a clause that informs the provider will comply with the Funding Rules before the Apprenticeship commences, however, the agreement for services and the provider did NOT offer the employer the option of using the free recruit an apprentice tool for all new recruits into their business, which is a Funding Rule (P21) and also could not evidence a record that the employer was offered the option of the free recruit an apprentice service (P353 and P353.2).
Due to this the provider was in breach of the ESFA Apprenticeship Funding Rules, which voids any agreement already signed, the provider agreement / contract is subject to interpretation, and the question of the ESFA Funding Rules does insert implied terms, accordingly, that makes the providers agreement / contract which seeks to bind an employer illegal and unenforceable. A contract has to be read in line with all relevant rules/guidance, in this case the full ESFA Apprenticeship Rules, therefore it is not a wholly private contract. It has implied terms given the provider is utilising public funding via the ESFA and the provider must comply with said regulations and the provider must comply with the law.
Many providers are also not aware of Competition Law which promotes or seeks to maintain market competition by regulating anti-competitive conduct by companies, an exclusivity agreement / clause which is watertight from a contractual perspective can still be challenged if it infringes Competition Law. An exclusivity clause can protect both parties involved with a contract, but they are not helpful in a customer centric relationship when using Public Funding, as such Providers must adhere to arrangements for upholding ethical standards of conduct across public life in England. The use of exclusivity clauses / agreements for apprenticeship provision to bind employers / learners into a provider or an EPAO / Awarding Organisation is in my opinion unethical and is open to legal challenge.
For employers – If you are being asked to sign an exclusivity clause / agreement for a Training Provider (or to agree to such a clause which is buried in a lengthy contract) the first question you should be asking is whether this is something that you really want to agree? Is it legally right against the ESFA Rules, Competition Law and any other Government Rules (a contract/agreement/clause has to be read in line with all relevant rules/guidance)? Also, does it meet with ethical standards and how you as an employer expect to be treated by a provider you have appointed to serve your training needs/requirements?
Exclusivity can be used in a very positive way, during business acquisitions by preventing the selling party from negotiating or entertaining bids from competitors. Exclusivity agreements can be helpful and reassuring in many commercial contexts, including sales or distribution contracts or where a deal is too good to lose and where competitors are also interested.
However, as I have pointed out, providers are enforcing agreements/clauses without fully understanding the full legal context behind them, and in my opinion, they are unethical as employers are the customer, this provider in the live example given clearly does not understand or realise this, and is damaging not just the apprenticeship brand, but all other Providers brands.
I am raising this to bring this to a clear debate/discussion around fully understanding what being customer centric is, and to stamp out poor practice which in my opinion is damaging to the apprenticeship brand through not adhering to ethical standards as well as how such clauses / agreements infringe Competition Law.
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