Apprenticeship schemes are often in the news (and not always for the right reasons), so we’ve had a look at what they are about and where you can find out more details about them.
[Updated for 2017]
Many UK businesses consider skills shortages and recruitment difficulties a big problem. Apprenticeships can be an answer as they offer work-based training programmes to employees that lead 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. The apprentices themselves tend to be more motivated and loyal to the company that has invested in them, as they have made a choice to learn about a specific job at work. See our separate article her about interns.
- Apprentices are employees and some can have with slightly different rights to normal employees (see below).
- There are currently 3 types of apprenticeship in the UK.
- First: A Contract of Apprenticeship is the traditional 2-party arrangement for the primary purpose of being trained in the necessary skills for their job (or attaining a relevant qualification) and employers carry the responsibility to facilitate their training (including work experience to enhance their training). Normal employee contracts do not usually provide this provision for training, as a normal employee is there only to undertake work for the employer.
- Second: Employers can appoint an apprentice on an Apprenticeship agreement, which is a contract of service (rather than a contract of apprenticeship), so the apprentice undertakes to work for the employed 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).
- Third: Modern Apprenticeships (introduced in 1994 and rebranded as simply ‘apprenticeship’s in 2004) – which can be one of the above but are tri-partite agreements involving the employer, the apprentice and a third party training provider.
- The Government intends to simplify the law governing apprenticeships. In 2015 the DeRegulation Bill was given royal assent which proposes a new “approved English apprenticeship” to replace the Apprentice Agreement (although it is believed this will also be based on a contract of service, rather than a contract of apprenticeships, so additional dismissal protections – see below – will not apply)! Watch this space for more information as it becomes available – this is not expected to be fully implemented until 2017/18.
- Latest Government figures suggest there were 921 people doing apprenticeships in England in 2014/15. The Government has set a target of 3 million apprenticeship starters by 2020!!!
- Employers can use Apprenticeship schemes to train both new and existing employees and funding is available to train apprentices – see below.
- Apprenticeships are available across a wide range of industries and in over 1,200 job roles and are available to anyone over the age of 16 (no upper age limit).
- Apprenticeship schemes are designed by the relevant Sector Skills Councils, while the National Apprenticeship Service (NAS) helps to fund the training.
- The Government announced plans to improve the quality / standards of apprenticeships and NAS are developing a plan to ensure apprenticeships are of a sufficient quality for both the employer and the employee.
- The National Minimum Wage for apprentices is £3.30 per hour, rising to £3.40 per hour from 1st October 2016, however many employers pay more. This minimum wage applies to all apprentices (employed on a Contract of Apprenticeship) 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 and all their time spent training. 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, except in some circumstances where the learner cannot complete the full 30 hours.
- 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 four years to complete and will include on-the-job training, work experience and recognised qualifications. From August 2012 all apprenticeships for those aged 16-18 years must last for at least 12 months.
- Apprentices, although they may be employed for a limited period, are not regarded as being employed on Fixed Term Contracts and are excluded from the regulations covering Fixed Term Contracts.
- Apprentices have rights in terms of dismissal as all other employees, but those on employed on a Contract of Apprenticeship can only have their employment terminated early by the employer in cases where the apprentice has committed an act of serious misconduct (where it is impossible to teach them) or serious incapacity if the apprentice contract cannot be delayed. They cannot be made redundant unless the business completely closes or is fundamentally changed (i.e. if the employer is no longer able to fulfil the agreed training and work programme, this is a breach of contract and the apprentice will be entitled to receive pay and benefits to the end of the apprenticeship, and also compensation for the employer’s failure to train and the loss of their prospects). An apprentice who has their contract terminated early will receive higher than normal damages for wrongful dismissal and can also claim unfair dismissal if they have the relevant service required. However, apprentices working under an Apprenticeship Agreement have the same rights, and can be dismissed for the same reasons, as other normal employees, and do not have this extra protection.
- 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. And also they must 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 award the apprenticeship certificate.
- A Framework is a document that is used by colleges, employers and training providers to make sure Apprenciteships programmes are delivered consistently and includes the name of all qualifications, and how long the Apprenticeship will take.
- Ending the Apprenticeship at the end of the training? If an apprentice’s employment is not renewed when their training ends then 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). Because an apprenticeship contract is for a specific purpose – training – the contract will end on the completion of that training and the dismissal will therefore be for ‘Some Other Substantial Reason’ (SOSR). There is no need to provide a notice period of dismissal. There is no legal requirement to provide employment at the end of the apprenticeship but an employer may agree contractually to do this; and there is 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 here (under ‘unauthorised deductions from pay’).
There are three levels of Apprenticeship available:
- Intermediate Level 2 Apprenticeships (equivalent to 5 good GCSE passes)
- Advanced Level 3 Apprenticeships (equivalent to 2 A level passes)
- Higher Apprenticeships 4, 5 and 6 – in March 2015 the Government announced 9 new Degree Apprenticeships, where employers, universities and professional bodies design a degree to meet full competency for an occupation. The first degree Apprenticeship is expected in the digital sector in September 2015.
More details are available from the NAS website.
Information for employers about available Funding
Apprenticeship funding is available for employers from NAS. The size of the funding you will receive varies depending on your industry sector and the age of the candidate. If the apprentice is aged 16–18 years old, you will receive 100 per cent of the cost of the training; if they are 19-23 years old, you will receive up to 50 per cent; if they are 24 years old or over you may get a contribution depending on the sector and area in which you operate.
The Government previously announced that Employers will not need to pay National Insurance Contributions for apprentices under 21 from April 2015. And in their 2014 Autumn Statement announced the extension of this to apprenticeships under 25 from April 2016 (this was confirmed in December 2015).
In the March 2015 budget a new funding scheme using Apprenticeship vouchers was announced, which is expected to be fully implemented by 2017.
Employer Incentive Scheme (AGE 16 to 24)
The ‘AGE 16 to 24’ year olds scheme helps eligible employers to offer young people employment through the Apprenticeship programme, by providing grants to assist employers in paying their first apprentice.
NAS will provide up to 40,000 Apprenticeship grants of £1,500 to small / medium sized employers (with less than 50 employees) recruiting 16 to 24 year olds – until December 2015. Each Employer can claim for up to 5 apprentices. This is in addition to the training costs of the Apprenticeship scheme which are met in full for young people aged 16 to 18 and 50% for those aged 19 to 23.
In July the Government also launched consultation on protecting the term ‘apprenticeship’ from being diluted by unauthorised training providers who provide apprenticeships that meet only narrowly focused job needs.
On 21st September 2015 the government published the outcome of the consultation and announced they are to introduce a clause in the Enterprise Bill protecting the term ‘apprenticeship’ – it will be an offence for training providers to use the term ‘apprenticeship’ or ‘apprentice’ in relation to any course or training in England unless it applies to a government-funded apprenticeship. The new summary offence would be punishable by fine as a maximum penalty. The level of fine is currently unspecified. The offence would not apply to schemes run by employers.
Apprenticeship Training Agencies (ATA’s) – are organisations who directly employ apprentices and act as their day to day workplace and Manager and coordinate their training. A ‘host’ employer pays a fee to the ATA based on the wages and training cost of the apprentice (but is relieved of all administration surrounding the apprenticeship).
Following Theresa May becoming Prime Minister, the Department for Business, Innovation and Skills (BIS) was split up and the Government’s skills and apprenticeship policy now falls under the Department for Education (DfE).
The Government have announced they will introduce an apprenticeship levy on all large firms. In his Autumn Statement (November 2015) the Chancellor announced that the levy would come into force from 6th April 2017 – the levy will only be paid by employers’ who have pay bills of more than £3million and a charge of 0.5% of the annual pay bill will taken as a levy. There will be a levy allowance of £15,000 per year to offset against the levy that must be paid. The levy will be paid through the PAYE process to HMRC and must be paid by all firms regardless of whether or not a business is already employing apprentices. Once an employer has paid the levy to HMRC via PAYE they will be able to access funding for apprenticeships through a new digital apprenticeship service account (although the funds will expire after 24 months if they are not spent). The funds must be spent on apprenticeship training and they will have to used approved providers. The Government will apply a 10% top-up to Employers funds (of the monthly contributions to the levy funds).
In August 2016 the Government announced that smaller firms with less than 50 employees taking on a 16-18 year-old apprentice will not be required to make any financial contribution towards the cost of the levy.
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.
Employers that don’t have to pay the apprenticeship levy will, by 2018, have to use the new digital apprenticeship service to pay for apprenticeship training and assesment.
You can read the latest Government Guidance on the Apprenticeship Levy here.
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.