Apprenticeships are a brilliant way of bringing new skills and talent to your business. Through this process, you are able to help fill a skill gap in your business and offer training and hands-on experience for young people in your industry.
In this guide, we are going to walk you through what apprenticeships are, what the apprenticeship levy is and some of the frequently asked questions.
If you'd like some immediate support, get in touch with one of Croner's experts on 0800 470 2708.
What are apprenticeships?
Apprenticeships are a method of training individuals. They are usually used within a skilled profession, whilst undertaking work at the same time. They are often perceived as a way into employment for younger people. However, apprenticeships are open to all who are aged over 16.
The government encourages organisations to use apprentices as a method of creating a skilled workforce.
In Scotland, apprenticeships are run under a contract of apprenticeship. This is similar to a contract of employment, including the rights afforded by one. However, it’s specialised for an apprentice. It will state how long the apprenticeship is expected to last and the training that will be provided.
In England and Wales, apprenticeships are run under an apprentice agreement.
What are apprenticeship agreements?
There are two types of apprenticeship agreements (old style and new style). This is due to the phasing out of apprenticeship ‘frameworks’ and the introduction of apprenticeship ‘standards’ in England (Wales has maintained the ‘frameworks’). The agreements structure the apprenticeship slightly differently in relation to the training you need to offer.
The old style is still used in Wales. In England, all apprenticeships begun on or after 1 August 2021 should be on an Approved English Apprenticeship Agreement under a ‘standard’. Any apprenticeships begun before that date on the old style agreement mut be completed before 31 March 2025.
Certain apprentices must receive off-the-job training, including those who are:
- Working towards both apprenticeship frameworks
- Working towards apprenticeship standard
- Under a contract of apprenticeship in Scotland
The duration of the hands-on experience must be a minimum of 20% of the duration of the apprenticeship. You can provide this training at your place of work—it doesn’t need to be done off-site.
How to hire an apprentice?
There are a few steps you can take when you are hiring apprentices. These are different if you're trying to hire an apprentice in Scotland.
The steps are the following:
- Choose what kind of apprenticeship standard you want to use. You should consider what industry you operate in while making this decision.
- There are organisations that exist that may offer apprenticeships that match the apprenticeship framework you've chosen.
- Research into if you are eligible for funding, you can check this on the government's website.
- After this you can start to put adverts out that you are hiring for an apprentice.
- From here, you can go through your normal recruitment process to find your new starter. Once you've selected the apprentice, you should make an apprenticeship agreement and a commitment statement.
Do apprenticeships need contracts of employment?
You need to ensure that you have a signed apprenticeship agreement, as an employer it is your responsibility to provide this.
In your apprenticeship agreement, you should state the skill, trade and role the individual will have.
Our HR experts can help you draft an apprenticeship agreement, get in touch with one of the team here for more advice. This can also act as the apprentices contract of employment.
Apprenticeships employment rights
As with any of your employees, your apprentices still have employment rights.
What's the apprenticeship levy?
The levy has been set up by the government to encourage more companies to take on apprentices. Here’s how it works:
If you have an annual payroll bill of at least £3 million you must pay the levy. This amounts to 0.5% of your payroll per month, which you pay to the HMRC.
They place this into a digital account. All companies falling into this category can then apply for access to their digital account. You can then use this to pay for apprenticeships.
Funds in this account expire and are paid to the Government if not used within two years of being paid into the account.
What makes up the pay bill?
Wages, bonuses, commissions, and pension contributions are paid on NICs. Benefits in kind are not included.
How do the payments work?
There is a set process that you need to follow each month. We've outlined it for you below:
- On the 19th of each month, employers are required to declare their levy to HMRC.
- By the 23rd of the month, employers will receive the funds in their accounts.
- Four days into the following working month, training providers need to supply an ILR (an individual learning record) . This document will provide the training that's going ahead.
- Near to the 5th day of the month, the funds will be released into your account.
- On the eleventh day of the month, the training provider will get their funds from the ESFA.
It's important to remember that you need to make your HMRC declaration by the 19th of each month. if you don't you could see a disruption in the usual process.
As an employer, you can stop payments if your apprentice doesn't start working with you, or if they leave after a short time of working with you.
What if you're not paying the apprenticeship levy
if you aren't paying the apprenticeship levy, you won't be able to utilise the apprentice service. Employers will have to directly contact the training providers about the framework you have decided to use.
Once you've got this set up with the training provider, you will pay them 10%, this will go towards your apprentice's training and assessments. The remaining 90% will be funded by the government to the training provider.
It's important to remember that you will need to pay your training provider directly for all the training they give you.
After you register for the apprenticeships levy
After you've registered for the apprenticeship service and are paying for the levy (if you're eligible) you can then do the following within the service.
- Add PAYE schemes to your apprenticeship funding.
- Invite co-workers to see account details.
- update training providers.
- Update your apprenticeship list.
- Search their database containing apprenticeships and training providers.
- Sign the education and skills funding agency agreement.
- Review transaction history.
- Transfer your funds.
- Request that your training provider updates your apprentice list.
What is the apprenticeship pay rate?
On average an apprentice will earn around £257 a week. The national minimum wage for apprentices is £5.28 an hour. This applies to those in the first year of their apprenticeship, and to those who are aged between 16 and 18 years old.
The minimum apprentice pay rate increases depending on what their age is.
What about apprentices over the age of 18?
As we've mentioned, the amount you pay your apprentices changes depending on what age they are. If they are above the age of 19 and not in the first year of their apprenticeship, they are entitled to the national living wage or national minimum wage.
These are the following:
- 23 and over: £10.42
- 21 to 22: £10.18
- 18 to 20: £7.49
- Under 18: £5.28
Do apprentices pay tax?
As with the rest of your employees, your apprentices will pay tax. If they are earning less than £12,501 they shouldn't pay any tax, this is the personal allowance that all your employees are entitled to.
Do apprentices pay national insurance?
Yes, your apprentices will still pay national insurance. It will most likely be between £166 and £962 (12%) per week depending on how much they are earning.
Are apprentices entitled to sick pay?
As an employer, you are responsible for providing all your employees with the same rights and working conditions.
- Apprentice sick pay.
- Support and training.
- Benefits such as childcare or vouchers.
Do apprentices get redundancy?
As with everything else we've mentioned, your apprentices have the same rights as your other employees and this is no different when it comes to redundancy.
As such you should follow your normal redundancy procedures.
Get expert help
This White Paper sets out to explain some of the issues surrounding employing apprentices, including managing apprenticeship contracts and agreements, funding, and the Apprenticeship Levy.
If you'd like additional advice get in touch with one of our HR experts on 0800 470 2708.
This template is provided ‘as is’ and Croner Group Ltd excludes all representations, warranties, obligations and liabilities in relation to the template to the maximum extent permitted by law.
Croner Group Ltd is not liable for any errors or omissions in the template and shall not be liable for any loss, injury or damage of any kind caused by its use. Use of the template is entirely at the risk of the User and should you wish to do so then independent legal advice should be sought before use.
Use of the template will be deemed to constitute acceptance of the above terms.
- Business Advice
- Contracts & Documentation
- Culture & Performance
- Disciplinary & Grievances
- Dismissals & Conduct
- Employee Conduct
- Employment Law
- End of Contract
- Equality & Discrimination
- Health & Safety
- Hiring & Managing
- Leave & Absence
- Managing Health & Safety
- Occupational Health
- Pay & Benefits
- Risk & Welfare