India's enormous labour potential, if harnessed properly, will go a long way in creating a skilled workforce. The Apprentices Act, 1961 ("Act") was a step towards the creation of such a workforce. The Act, read with the Apprenticeship Rules, 1992 ("Rules"), regulates and controls the training of apprentices and is applicable to all the industries notified by the Central Government.
Although the intention behind enacting a legislation such as the Act was to provide practical training and promote skilled manpower to increase employability, the implementation may not have been as successful as envisaged due to various reasons. After considering these issues, the Act was amended in 2014 and the Rules in 2015 through a Gazette notification dated June 16, 2015, and September 25, 2019. These reforms intended to showcase a shift in the government's approach towards the concept of apprenticeship from a regulatory to a promotional one.
Some of the key changes brought about by these amendments were:
- The service sector was brought under the ambit of the Act to create apprenticeship opportunities for the youth and train such youth in upcoming and evolving job roles.
- The introduction of "optional trades" gave employers more autonomy to determine qualification, the period of apprenticeship training, and the manner of undertaking assessment and issuing certificates.
- For establishments operating in four or more States in India, the government that had jurisdiction was changed to the Central Government to ease the process of apprentice engagements for employers with establishments in multiple States.
- A dedicated web-portal was launched for streamlining and managing apprentice training, which resulted in reducing the compliance burden on establishments.
- To reduce the burden of infrastructure requirement for imparting classroom training, employers were permitted to outsource this component of basic training to fresher-level candidates.
- To create more apprenticeship opportunities, the bandwidth of engaging apprentices by establishments was raised from 2.5-10% to 2.5-15%, and the manpower threshold for mandatory category was brought down from 40 to 30.
- To remove anomalies in respect of variation in stipend rates, a fixed stipend based on education and technical qualifications and category of apprentices was prescribed.
- The penal provisions in respect of imprisonment were removed to encourage employer participation.
II. Key Issues and Challenges
Notwithstanding the reforms introduced by these amendments, certain issues and challenges continue to deter employers from engaging apprentices. Some of these issues are noted below.
- Complexity in Engaging Apprentices
The procedure envisaged under the Act and Rules for engaging apprentices is still complicated, although attempts have been made to simplify them. Further, the strict and burdensome compliance norms impede employers from engaging apprentices in their establishments.
- Additional Cost to Employers
The cost for engaging apprentices is borne mostly by employers. Although in smaller establishments employing less than 250 workers, the cost is partly shared by the Central Government, it is still a financial burden on such employers.
- Apprenticeship Prohibits Simultaneous Pursuit of Higher Education
Persons who are engaged as apprentices under the Act are prohibited from simultaneously pursuing higher education. Recently, the Madras High Court held that a student enrolled in a postgraduate course cannot claim the benefit of apprenticeship training under the Act, given that an apprenticeship itself entails full-time training and the student pursuing a post-graduation course therefore cannot attend such an apprenticeship in addition.1 As such, a sizeable number of candidates lose out on the opportunity of learning practical skills offered by apprenticeships while pursuing higher education.
- Multiplicity of Schemes
The numerous schemes introduced by the Central and State Governments and the lack of uniformity in the implementation mechanism further add to the quandary of employers, deterring them from engaging apprentices.
III. Proposed Amendment and its Impact
To tackle some of these impediments, policymakers and industry players have proposed certain amendments to promote apprenticeships while ensuring ease-of-doing-business. Some of the proposed amendments and their impact are covered below.
- Expansion of Definition of "Establishment"
The definition of "establishment" is proposed to be expanded to include educational institutions. This will not only enlarge the scope of apprenticeship opportunities, but also help in providing apprenticeship facilities required for training.
- Inclusion of Virtual Training in Apprenticeships
In many organizations, especially in the IT industry, work is conducted mainly in an online virtual environment with employees operating from various locations. As such, the introduction of an online mode for providing basic theoretical training and on-the-job training through modules in certain selected sectors/occupations would be beneficial for employers as well as apprentices, especially in apprenticeship programmes that are feasible via correspondence and do not require physical infrastructure as such. The amendment may bring about this change and permit virtual training in apprenticeship programmes.
- Part-Time Apprenticeship Programmes
One of the biggest deterrents to the success of the Act was the requirement of full-time engagement in apprenticeship programmes. To address this issue, the introduction of part-time apprenticeship has been proposed to permit students to avail apprenticeship opportunities while engaged in academic courses under the formal education system, the condition being that any such apprenticeship is not an integral part of the academic programme. This amendment is intended to improve employability and give an opportunity to students to hone their practical skills while pursuing their education.
- Overseas Opportunities for Apprentices
The proposed amendment may permit Indian companies to send their apprentices abroad to offshore sites for better international exposure. This will not only enhance the scope of apprenticeship trainings but will also attract more candidates to opt for such apprenticeship programmes.
- Multiple Venues for Trainings
Various sectors such as security, retail, and logistics work out of client and supplier locations. With the proposed amendment, the Act will permit training at multiple venues, including client and supplier locations as also premises of other companies in India. This will enhance the overall apprenticeship experience while benefiting the apprentices in these sectors.
- Third-Party Aggregators
The proposed amendment may define the roles and responsibilities of third-party aggregators, who may be permitted to support employers in all functionalities related to apprenticeship engagement. Some of the activities that third-party aggregators would undertake are, amongst others, signing of contracts, mobilization of apprentices, mapping their preferences with the demands of employers, and assisting in identifying basic training providers. This will reduce the burden on employers and facilitate the entire apprenticeship engagement.
- Improving Apprenticeship Embedded Degree Courses
The proposed amendment intends to improve apprenticeship embedded academic courses (including degree courses) and may permit stipend-free apprenticeship engagements. As such, this will not only improve candidates' employability, but will also reduce the financial burden on employers as they would not be required to pay any stipend.
- Contract Intimation instead of Contract Approval
Under the current Act, the contract of apprenticeship is required to be approved by the apprenticeship advisors. With the proposed amendment, employers would be required only to intimate the apprenticeship advisors and not seek their approval. This move towards self-governance is intended to create ease-of-doing-business.
- Alignment with the new Labour Codes
The health, safety and welfare of apprentices will be aligned with the new Labour Codes and will be a part of the whole labour law reforms which the government intends to undertake.
While increasing the workforce's employability is the need of the hour, well-defined, skill-based apprenticeships may hold the key to bridging the gap between technical education and practical, on-the-job skills. The focus of the proposed amendment is to improve the implementation of the Act by making it more efficient, enhance apprenticeship opportunities for the youth, and reduce the burden on employers. Further, a budget of INR 3,000 crore is proposed to be allocated for the promotion of apprenticeships. Industry players expect the proposed changes to be a game-changer, which will not only help the youth gain access to a wide range of apprenticeship opportunities, but also facilitate a more meaningful engagement between industry and apprentices.
1. B. Abraham Anand v. Board of Apprenticeship Southern Region (2017 SCC Online Mad 31159); Decided on October 10, 2017; Single Judge Ruling
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