Employing apprentices can be a great way for your organisation to participate early on in the training and development of your workforce. Moreover, a number of government funding options are available to support apprenticeship programmes to encourage SMEs to take on new apprentices and upskill them. This article explains the different apprenticeship funding options available to employers in the UK.
What is an apprenticeship?
An apprenticeship allows people who are 16 or older to acquire knowledge, skills and professional behaviours by working for an employer. An employer must provide on-the-job and off-the-job training to their apprentice. Apprentices will acquire off-the-job apprenticeship training from apprenticeship training providers during at least 20% of their working hours. On top of the off-the-job training, apprentices may also need to study English and Maths and the employer must allow them to do this during the working hours. Apprentices must be paid at least the national minimum wage.
What is a degree apprenticeship?
A degree apprenticeship is a new type of apprenticeship offered by some Universities which allows apprentices to gain a bachelors or masters degree by studying and working.
What are the conditions of an approved apprenticeship?
An approved apprenticeship must provide for a practical period of training that lasts for a minimum duration of 12 months. This minimum duration is based on the apprentice working at least 30 hours a week, including any off-the-job training they undertake. The apprenticeship should be extended to meet this minimum duration equivalent if the apprentice works less than 30 hours a week. At the end of the apprenticeship, the apprentice will go through an end-point assessment (EPA) by an end-point assessment organisation (EPO) to determine if they have developed the skills, knowledge and behaviours outlined in the apprenticeship standard. The apprentice will then receive a certificate if they pass the assessment.
How to employ an apprentice?
To employ an apprentice, employers will need a contract of employment and an apprenticeship agreement. Employers will need to verify the apprentice's right to work status before hiring the apprentice. The apprenticeship agreement must detail:
- the skill, trade or occupation the apprentice is being trained for
- the name of the apprenticeship they are working towards
- the dates during which the apprenticeship is expected to take place
- the amount of off-the-job training they will receive
A commitment statement must also be signed with the training provider and the apprentice to outline how the training provider and the apprentice will support the successful achievement of the apprenticeship, including through experience gained on the job. Further information on the requirements of taking on an apprentice can be found on gov.uk.
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What Government funding is available for apprenticeships?
Employers can receive funding to pay for the apprenticeship training, apprenticeship assessment costs and incentive payments for other costs. The amount of government funding available to employers depends on if they pay the apprenticeship levy or not. Employers with an annual pay bill over £3 million each year, have to pay the levy which is paid monthly and 0.5% of the annual pay bill. Apprenticeship levy payers can claim an Apprenticeship levy allowance to reduce the levy by £15,000 each year. Apprenticeship funding rules are managed by the Education and skills funding agency (ESFA).
What funding can levy payers receive?
Employers which pay the apprenticeship levy will receive funding from the government. The amount and how the employers receive funding depends on whether they are based in England, Wales, Scotland or Northern Ireland. For example, in England the amount of levy funds received is calculated using:
- the levy declared to HMRC through the PAYE process
- multiplied by the proportion of the pay bill paid to the workforce who live in England
- plus a 10% government top-up on this amount
What funding can non-levy payers receive?
Smaller employers who do not pay the apprenticeship levy share the cost of training and assessing their apprentices with the government. This is called ‘co-investment’. Non-levy payers need to pay 5% towards the cost of training and assessing their apprentice. The government pays the remaining 95% of the costs up to the funding band maximum. Employers can pay the difference from their own budget if the price of training is more than the funding band maximum.
What other funding options are available to apprenticeship providers?
An employer will receive £1000 from the government if they take an apprentice who is either:
- aged 16 to 18 years old
- under 25 and has an education, health and care plan or has been in the care of their local authority
This £1000 payment is paid to the training provider who will then pay it to the employer.
The government created additional incentives during the coronavirus pandemic to encourage employers to take on apprentices such as the incentive payment and kickstart shceme. Employers can until 15 May 2022 apply for an incentive payment of £3,000 for new apprentices whose employment start was between 1 October 2021 and 31 January 2022 and whose apprenticeship start is between 1 October 2021 and 31 March 2022. This funding can be spent on anything to support the employer's costs such as for example the apprentice's uniforms, travel or salary. This payment will be made in two equal instalments, 90 days and 365 days after the apprenticeship start.
Employers could also apply up to 17 December to the government's Kickstart scheme which provided 6 month's worth of funding to employers who created new jobs for 16 to 24 year olds on Universal Credit who are at risk of long term unemployment. Employers will receive £1,500 of funding per job to be spent on set up costs as well as funding which covers 100% of the national minimum wage for 25 hours per week for a total of 6 months, national insurance contributions and minimum automatic pension enrolment contributions.
How to claim funding?
Employers need to register for an apprenticeship service account to access funds or pay for training. The digital account can also be used to claim other funds such as incentive payments. The government kick start scheme has its own digital account portal.
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The opinions on this page are for general information purposes only and do not constitute legal advice on which you should rely.