Sections 5 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 5 deals with what happens when an employer cannot fulfil a contract of apprenticeship: with the approval of the Apprenticeship Adviser, the apprentice can be taken over by another employer for the unexpired part of the training. Section 5A leaves the regulation of an optional trade to the rules, and section 5B says an employer may engage apprentices from other States. If you are the employer that cannot continue, or the one asked to take over trainees, our employment and labour law advisory team can help you document the three-way agreement.
This article is based on the consolidated text of the Act consulted (amended up to Act 29 of 2014). Later amendments should be checked before you rely on it.
If an employer is unable to fulfil its obligations under a contract of apprenticeship, the apprentice (or guardian), that employer and a new employer can agree, with the approval of the Apprenticeship Adviser, that the apprentice is engaged by the new employer for the unexpired portion. On registration with the Apprenticeship Adviser the agreement is deemed to be the new contract and the first contract terminates. Section 5A and section 5B were inserted by Act 29 of 2014.
Section 5: novation of contracts of apprenticeship
In ordinary contract language, novation means replacing one contract with another. Section 5 gives the Act's own version for apprenticeship. Its parts are:
| Step | What the section says |
|---|---|
| Trigger | An employer with whom a contract of apprenticeship has been entered into is "for any reason" unable to fulfil its obligations under the contract |
| Approval | The Apprenticeship Adviser approves the arrangement |
| Agreement | It is agreed between the employer, the apprentice or his guardian and any other employer that the apprentice shall be engaged under the other employer for the unexpired portion of the period of apprenticeship training |
| Registration | The agreement is registered with the Apprenticeship Adviser |
| Effect | On registration, the agreement is deemed to be the contract of apprenticeship between the apprentice (or guardian) and the other employer |
| First contract | From the date of registration, the contract with the first employer terminates and no obligation under it is enforceable at the instance of any party against the other |
Three features deserve attention. The trigger is wide: "for any reason", so the section is not limited to closure or insolvency. The new employer takes only the "un-expired portion" of the period, so the apprentice's training does not restart. And the first employer's contract ends from the date of registration, with no obligation enforceable at the instance of any party, which is a clean break.
The section does not print any time limit, form or fee for the approval or the registration, and it does not say who bears the cost of the transfer. Whether the details go through the portal-site is not stated in section 5. Section 4 contains the registration timelines for a contract; see our article on section 4 (contract of apprenticeship and registration). For stamp-duty questions on an apprenticeship deed, our post on stamp duty on apprenticeship deed is general reading; section 5 prints nothing on duty.
Section 5A: regulation of optional trade
Section 5A reads: the qualification, period of apprenticeship training, holding of test, grant of certificate and other conditions relating to the apprentices in optional trade shall be such as may be prescribed. The section is marked as inserted by Act 29 of 2014 and the wording matches the Gazette copy of the Apprentices (Amendment) Act, 2014.
An optional trade is one "as may be determined by the employer" (section 2(ll)). The Act itself prints none of the five items listed in section 5A, so everything comes from the rules. Rule 7A of the Apprenticeship Rules, 1992 fills the gap; our article on Rules 7A and 7C of the Apprenticeship Rules, 1992 explains it. Rule 7A is printed in the copy of the Rules consulted inside a square bracket with a mark that has no matching footnote, so no notification is attributed to it here.
Section 5B: apprentices from other States
Section 5B reads: the employer may engage apprentices from other States for the purpose of providing apprenticeship training to the apprentices. It is a permission, not a duty, and it prints no condition, quota or procedure.
Two points of wording are worth flagging. The consolidated copy prints "The employer my engage", a slip: the Gazette copy of the 2014 amending Act has "may engage". The contents page of the copy calls section 5B "Apprentice from other States", while the heading in the body is "Engagement of apprentices from other States".
How the three sections fit together
- Section 5 protects the apprentice when the employer fails: the training continues for the unexpired period with another employer.
- Section 5A recognises that employers can determine optional trades and leaves their rules to the prescribed regime.
- Section 5B confirms that an employer can look beyond its own State for apprentices. It is read with the definition of "State" in section 2(n), which includes a Union Territory.
An example
Metro Auto Works, which has three apprentices, announces that it cannot continue its training shop. Its manager, Sanjay, approaches Riverside Motors, which agrees to take over one apprentice, Deepak, for the unexpired portion. Deepak's guardian, Metro Auto Works and Riverside Motors agree in writing, seek the Apprenticeship Adviser's approval, and register the agreement with the Adviser. From the date of registration, Deepak's contract with Metro Auto Works terminates, and the registered agreement is deemed to be his contract with Riverside Motors. Nothing in section 5 allows the period to be restarted.
Printing points
- Section 5 prints "un-expired" and "fulfill". We quote it as printed.
- Sections 5A and 5B are enclosed in one square bracket, closed after section 5B, with the footnote "Ins. by Act 29 of 2014" shown above the opening bracket.
- Section 5B's slip "my" is discussed above.
The four Labour Codes are in force from 21 November 2025; check the current position before relying on any other labour law.
Need help with transfers and optional trades?
A transfer under section 5 touches the apprentice, two employers and the Adviser, and each needs the paperwork in order. Our employment and labour law advisory service can help you plan the documents and the order of steps.
Key takeaways
- Section 5 lets an apprentice move to another employer for the unexpired period, with the approval of the Apprenticeship Adviser and registration with the Adviser.
- The trigger is that the employer is unable to fulfil its obligations "for any reason".
- On registration, the first contract terminates and the agreement is deemed to be the new contract.
- Section 5A leaves qualification, period, test, certificate and other conditions for an optional trade to the rules.
- Section 5B lets an employer engage apprentices from other States; the copy's "my" is a printing slip.
Read next
- Section 4: contract of apprenticeship and registration
- Sections 6-8: period of training, termination and number of apprentices
- Rules 7A and 7C: optional trade and inspection
- Employment contract draft key clauses
Disclaimer: Based on a consolidated text of the Apprentices Act, 1961 amended up to Act 29 of 2014, on the Gazette of India copy of the Apprentices (Amendment) Act, 2014, and on a consolidated copy of the Apprenticeship Rules, 1992 in which the latest amendment marked is dated 20 January 2017, as consulted on 2 October 2026. Stipend rates and other figures are as printed in those texts and may have been revised; later amendments and the position under the Labour Codes in force from 21 November 2025 should be checked. This article is general information, not legal advice; check the official text before acting.