Apprentice vs. Worker: Terminating Underperformers after the 2026 Rastogi Judgement Without Triggering a "Sham" Lawsuit

By Reetika S. Gupta, Partner at Aristo Legal

Under the Apprentices Act, 1961, managing an underperforming apprentice is a fundamentally different legal challenge than managing a regular employee. Despite the 2025 amendments aimed at "Revitalising the Apprenticeship Ecosystem," the core protection for employers remains Section 18: apprentices are trainees, not workers, and labour laws—including the Industrial Disputes Act (ID Act)—do not apply to them.

However, the 2026 Rastogi Judgement has set a high bar for how employers must maintain this distinction to avoid costly litigation.

Designation vs. Nature of Duties

The most critical nuance in 2026 is avoiding the "Sham Apprenticeship" designation. The Delhi High Court’s ruling in Raj Kumar Rastogi vs. Delhi Press Ltd (LPA 353/ 2022) provides three vital lessons for HR leaders:

• Designation is Not Conclusive: The Court held that simply labelling an individual as a "trainee" in an appointment letter is not enough; the actual nature of duties must reflect a learning environment rather than a production-first relationship.

  
  

• The Onus of Proof: In a major win for employers, the Court clarified that if an apprentice claims to be a "workman," the burden of proof lies entirely on the apprentice. In the Rastogi case, the appellant failed because he could not produce evidence (like experience certificates or proof of independent skilled work) to show he was doing anything other than learning under supervision.

  
  

• Stipend vs. Wages: The Court noted that Rastogi received a stipend of INR 400/-, not wages, which supported his status as a learner. Under the 2025 Rules, ensuring payments are made as "stipends" through the Direct Benefit Transfer (DBT) system is now a statutory requirement to maintain this distinction.

  
  

Defining "Poor Performance": The Shift to "Abandonment of Training"

In the Rastogi case, the apprentice was terminated after failing to return to work following a period of ill-health. The Court held this was a "voluntary abandonment of training," which is a valid ground for termination.

Under Section 12 and the 2025 Rules, "poor performance" is legally defined as a breach of the apprentice's duty to learn "conscientiously and diligently". This is no longer a subjective opinion but a documented failure to:

• Log Training Hours: Failure to log hours or consistent unauthorised leaves now creates a permanent digital record on the Apprenticeship Portal.

  
  

• Meet Learning Milestones: Documentation of repeated quality errors or client escalations (as seen in recent performance audits) serves as evidence that the apprentice is not fulfilling their primary obligation: to learn.

  
  

The Statutory Process: The "Adviser-First" Rule

Employers cannot unilaterally terminate an apprentice for non-performance. Section 7 mandates a tripartite process:

1. Formal Application: You must apply to the Apprenticeship Adviser and send a copy to the apprentice by post.

   
   

2. Evidence of Progress: You must produce the quarterly Record of Progress (Form Apprenticeship 3). If you haven't maintained this record of "work done and training undertaken," the Adviser may view the apprenticeship as a "sham".

   
   

3. Written Order: Termination is only official once the Adviser issues a written order satisfied that it is in the "interest of the parties".

   
   

Financial Guardrails and 2026 Benchmarks

The 2025 Amendment Rules have strictly benchmarked the costs associated with these trainees. Termination at fault has clear penalties:

• Apprentice at Fault: They (or their guardian) must refund training costs, which in states like Maharashtra is capped at one month’s stipend.

  
  

• Employer at Fault: If the employer fails to provide training facilities, they must pay prescribed compensation.

  
  

2026 Minimum Monthly Stipends:

• Graduate / Degree Apprentices: INR 12,300/-

• Technician (Diploma) Apprentices: INR 10,900/-

• Class 10 Pass-outs: INR 8,200/-

  *Note: These must increase by 10% in Year 2 and 15% in Year 3.

2026 Best Practices for HR Leaders

To ensure a legally "water-tight" termination in the current regulatory environment, employers should:

1. Differentiate Misconduct from Skill Gaps:

   
   

   Misconduct (Section 17): For behavioural issues like theft or harassment, apprentices are governed by the same disciplinary rules as regular employees. This allows employers to take immediate internal action, such as suspension or inquiry, following standard HR policies.

   
   

   Skill Gaps (Section 7): For performance issues, such as repeated quality errors, high idle time, or chronic absenteeism, use the formal Section 7 process. These issues constitute a failure to learn "conscientiously and diligently" under Section 12. Instead of a unilateral firing, you must file a termination application with the Apprenticeship Adviser to preserve your legal right to a refund of training costs.

   
   

2. Maintain the "Trainer-Learner" Reality:

   
   

   Avoid the trap famously observed in Trambak Rubber Industries Ltd. v. Nashik Workers Union and Others, (2003) 6 SCC 416, where the court held: "If there were trainees, there should have been trainers too". A core red flag for a "sham" lawsuit is an establishment where entire production activities are carried out by so-called trainees without any permanent staff or trainers present to oversee them. Do ensure your establishment maintains a healthy ratio of permanent staff to apprentices. If your "trainees" are the ones solely driving your production output, you are not running an apprenticeship program—you are running a disguised labour force, which modern courts will readily label a "sham".

   
   

3. Audit Your Portal Compliance:

   
   

   When an application for termination due to 'poor performance' or 'abandonment' reaches the Apprenticeship Adviser under Section 7, the Adviser will first review the digital history maintained on the portal. For a termination to be legally sustainable, your portal entries must reflect a behavioural pattern that clearly demonstrates a breach of the apprentice's statutory obligation under Section 12—the duty to learn their trade 'conscientiously and diligently'.

   
   

Final Thought: The 2026 Rastogi Judgement reaffirms that the law protects the "learner" status, but only for those who act as teachers. If you treat apprentices as cheap labour for production, the "sham" designation is a looming threat. But if you document their training diligently, the law provides a clear path to exit under performers.