Taking on an apprentice - the full details

Apprenticeship schemes are often in the news - and not always for the right reasons. We’ve had a look at what they are and where you can find out more details about them.‍

Many UK businesses find that skills shortages and recruitment difficulties are a big problem. Apprenticeships can be an answer as they combine working with studying that leads to nationally recognised qualifications.Apprenticeship schemes can ensure companies have the right practical skills and qualifications in their workforce and ensure the company keeps up to date with the latest technology and practices.

Apprentices must work with experienced staff, learn job and specific skills and study during their working week (study at college or a training organisation, for example).

The apprentices themselves tend to be more motivated and loyal to the company that has invested in them, as they’ve made a choice to learn about a specific job at work.

What is an apprentice?

Apprentices are full employees employed on an apprenticeship agreement, which is a contract of service, so the apprentice undertakes to work for the employer and is treated as a normal employee. The agreement must be in a prescribed form (from 6th April 2012 following the Apprenticeships, Skills, Children & Learning Act 2009).

The apprentice is either employed directly by the employer under an Apprenticeship Agreement, or the apprentice will come via an Apprenticeship Training Agency (ATA), who employs the apprentice directly. The employer would pay the ATA a fee for the apprentice in this scenario. There is a national register of ATA’s which you can check here.

Employers can use apprenticeship schemes to train both new and existing employees and funding is available from the government to train apprentices.To start an apprenticeship, an individual needs to be aged 16 or over (by the end of the summer holidays) and cannot be in full-time education.

For further help, you can contact The National Apprenticeship Service by email, nationalhelpdesk@findanapprenticeship.service.go.uk, or by telephone on 0800 015 0400.

Apprenticeship law

If you’re thinking of hiring an apprentice, there are certain obligations you and your apprentice will need to meet before you can take them on:

• The National Minimum Wage for apprentices is £4.15 per hour from 1st April 2020. However, many employers pay more. However, many employers pay more. This minimum wage applies to all apprentices aged under 19 and apprentices aged 19 or over in the first year of their apprenticeship. It must be paid for all the time the apprentice spends working or training (that is part of the apprenticeship). After this, the apprentice must be paid the normal National Minimum Wage for their age
• Apprentices must be offered employment for at least 30 hours per week (including off-the-job training time), except in some circumstances where the learner can’t complete the full 30 hours (for example if they have caring responsibilities or are disabled)
• Off-the-job training should be at least 20% of their working hours
• Apprentices are fully covered by the Working Time Regulations (so that they are entitled to normal holiday and rest breaks, as employees are) and the Equality Act 2010
• Depending on the role, an apprenticeship contract will be for a fixed period of time that is needed to acquire the skills and qualifications for the job. This can take anything between one and five years (one year is the minimum).
• Apprentices have the same dismissal rights, and can be dismissed for the same reasons, as other normal employees. If an apprentice’s employment isn’t renewed when their training ends, they will be treated as having been dismissed. The apprentice will be entitled to receive a written reason for dismissal and the ACAS Dismissal Code will apply (as for all employees). There’s no need to provide a notice period of dismissal because they were employed on a Fixed Term contract
• There is no legal requirement to provide employment at the end of the apprenticeship but an employer may agree to do this; there’s no duty on the employer to redeploy the apprentice into suitable alternative employment
• Employers may legitimately ask for an apprentice to repay the employer for all or part of the employers expenditure on training if the apprentice leaves the organisation before the end of the apprenticeship, where this forms part of the original agreement. Details about how this should be done are available in our article (under ‘unauthorised deductions from pay’).

Hiring an apprentice

In order to complete an English apprenticeship under an apprentice agreement, an apprentice must meet the standard completion conditions (or the alternative completion conditions, which we have not covered here). The standard conditions require an apprentice to have entered into an apprentice agreement relating to a recognised apprenticeship framework.

They must also have completed a course of training for the qualifications identified by the framework and met all the requirements specified in the apprenticeship framework to be awarded the apprenticeship certificate.

A framework is a document that’s used by colleges, employers and training providers to make sure apprenticeships programmes are delivered consistently and includes the name of all qualifications, and how long the apprenticeship will take.

The details on how to hire an apprentice are available here, including:

• Choosing an apprenticeship framework or standard for an apprenticeship in your industry
• Finding an organisation that offers training for the apprenticeship framework or standard
• Checking what funding is available
• Advertising your apprenticeship
• Selecting your apprentice and making an apprenticeship agreement and commitment standard with them.

Apprenticeship levels

There are four levels of apprenticeship available:

• Intermediate Level 2 Apprenticeships (equivalent to five good GCSE passes)
• Advanced Level 3 Apprenticeships (equivalent to two A level passes)
• Higher Apprenticeships 4, 5 and 6 and 7 (foundation degree level and above).

Degree Apprenticeships, levels 7 and 7 (Bachelor’s or Masters degree level)More details are available from the Education and Skills Funding Agency (ESFA) website here.

Apprenticeship vacancies

Apprenticeship vacancies are found, in England, on the EFSA website here. Details of apprenticeships and vacancies (for employers and individuals) in Scotland is here.

Details for Wales are here, and Northern Ireland here.

Apprenticeship funding

Apprenticeship funding is available for employers from the government. The size of the funding you will receive varies depending on whether you pay the apprenticeship levy or not. Prior to 1st April 2019, non-levy paying companies had to pay 10% of the cost of training and assessing each apprentice.

However, from 1st April 2019, this was reduced to 5% of the cost. The government funds the remaining 95%. Companies need to agree a payment schedule with a training organisation and pay them directly. Companies may be eligible for extra funding depending on their and the apprentice’s circumstances - you can read more here.

In August 2020, the government announced incentive payments for employers hiring a new apprentice between 1 August 2020 and 31 January 2021. You can read the details at gov.uk.

Apprenticeship levy

The apprenticeship levy was introduced on 6th April 2017 and requires employers with pay bills of more than £3million to pay 0.5% of their annual pay bill to the levy fund. A levy allowance of £15,000 pa can be offset against the levy.

The levy charge is paid through the PAYE process to HMRC and it must be paid by all companies, with pay bills of more than £3million, even if they do NOT employ apprentices.

Once the levy has been paid employers can access funding for apprenticeships through an online account. However, the funds expire after 24 months if they have not been spent by the employer.

The fund must be spent on apprenticeship training using approved providers. The government adds a 10% top-up to the employer’s fund.

Doing a quick calculation, if you have 300 employees earning £15,000 gross per annum, then your pay bill will be 4.5 million. The levy sum of 0.5% is £22,500, less £15,000 allowance. So the annual levy to be paid is £7,500. The government tops this up with £750 so you have £8,250 to spend.

The apprentice, for the purposes of the levy, can be any employee who wishes to receive training to provide them with new skills – but they must be released for 20% of their time for off-the-job training.

The government had set a target (in 2017) of achieving an additional 3 million apprenticeship ‘starts’ by 2020. However, since the introduction of the levy, apprenticeship ‘starts’ have fallen significantly. Many employers are critical of the scheme as they regard it as another tax on business, or think it’s too complicated and inflexible (and many employers find the 20% off-job-training time a major problem).

However, it was reported, in April 2019, that there has been an increase in 2017/18 of higher-level and advanced apprenticeships being introduced by businesses, but overall the number of apprenticeships are still lower than before the levy was introduced.

With regard to the allegation that the levy is another business tax: between April 2017 and November 2018, the levy paid by all employers was in the region of £4.5billion.

In the period from April 2017 to September 2018, only £370million had been paid out to providers. One commenter estimated that in April 2019, the government will absorb all the payments that were made into the levy fund in April 2017, which remain unspent (as the funds expire after 24 months) – and this could see £200million per month being transferred from training funds to government funds, with the same happening each month afterwards!

If you are an employer and need ongoing professional help with any staff/freelance issue then talk to Lesley at The HR Kiosk – a Human Resources Consultancy for small businesses – our fees are low to reflect the pressures on small businesses and you can hire us for as much time as you need.

Please note that the advice given on this website and by our Advisors is guidance only and cannot be taken as an authoritative or current interpretation of the law. It can also not be seen as specific advice for individual cases. Please also note that there are differences in legislation in Northern Ireland.