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This paper reports on research designed to provide an insight into the key determinants of apprentice and trainee employment in Australian enterprises. Considerable research has been conducted which examines the influences on training provision but little research has investigated specific influences on employment-based training. The New Apprenticeship system incorporates both apprenticeships and traineeships and was developed to meet the needs of small, trade-based enterprises and to enhance skill formation and the employment prospects of young people. As small and medium size enterprises are playing an increasingly important role in employment, this study was undertaken to examine how these enterprises utilise the apprenticeship and traineeship system. The study involved an analysis of the Business Longitudinal Survey (BLS) which provides information on the growth and performance of Australia's employing businesses and identifies their economic and structural characteristics. Probit regression analysis was conducted to model the factors influencing the likelihood of businesses deciding to train trade apprentices and trainees. Both training and non-training characteristics were found to influence the capacity of enterprises to provide employment-based training. These characteristics are discussed and the study concludes that no single characteristic determines whether small and medium size enterprises provide trade apprentice and trainee training. Most importantly, the study revealed the significance of a training culture to an employer's capacity to provide employment-based training and identified three principal elements of a training culture in small and medium size enterprises.