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Hiring an apprentice

Apprenticeships provide an opportunity for people embarking upon a new career to combine hands on experience with related study, in order to gain specific skills and knowledge of a certain job or industry.
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An apprentice is someone aged 16 or over who is carrying out a work-based training programme (an 'apprenticeship') which offers on-the-job training together with nationally recognised qualifications. Apprenticeships can last for 1 to 5 years and are available in 1,500 occupations across 170 industries.

Aside from helping to train the workforce of the future and improving their credentials as an employee, running an apprenticeship programme can provide businesses with a bespoke recruitment drive, allowing them to assess potential new employees while more experienced staff pass down their skills so these are retained within the business. Organisations which provide off-the-job training (eg colleges and universities) can work with the business to ensure that the study element is more relevant for the particular job.

Although employers must pay their apprentices (at the current rate of the national minimum wage), certain government funding is available (see below). Furthermore, there is no requirement for National Insurance Contributions for apprentices under the age of 25 on earnings below the higher tax rate. For further information, read Minimum wage.

All apprenticeships are arranged through the government’s apprenticeship service. For more information on this, see the government’s guidance.

In England and Wales:

Employers with an annual pay bill of over £3 million (or employers are connected to other companies/charities for Employment Allowance which in total have an annual pay bill of more than £3 million) must pay a levy towards an apprenticeship fund. Levy-paying employers will receive funding for training and assessing apprentices, with the government contributing 10%.

Non-levy paying employers need to pay 5% towards the cost of training and assessing their apprentice. The government will then pay the remaining 95% (up to the funding band maximum) directly to the training provider. Depending on the employer’s and the apprentice’s circumstances, extra funding may be available.

If the apprentice started before 1 April 2019, non-levy paying employers can claim 90% of training costs from the government. This rate continues until the apprentice completes their training.

All employers receive £1,000 for each apprentice they take on who is:

  • between the ages of 16 and 18, or 

  • under 25 if they have previously been in care or have a Local Authority Education, Health and Care Plan

In addition to this, all employers can claim up to £2,000 as an incentive payment, if their apprentice started between 1 August 2020 and 31 March 2021. Such claims need to be made by 31 March 2021.

For apprentices who start between 1 April and 30 September 2021, all employers can claim £3,000. Such claims can be made from 1 June 2021. 

For more information on the levy system, see the government’s guidance on incentive payments. For more information on funding, see the government’s guidance on funding.

In Scotland:

If you’re an employer paying the apprenticeship levy in Scotland, you can apply for up to £15,000 towards the cost of training your workforce, under the Scottish Government’s Flexible Workforce Development Fund (FWDF).

The FWDF is available to employers across the private, public and third sectors subject to the UK Government’s Apprenticeship Levy.

For apprentices between the ages of 16 - 19, the Scottish Government will provide full training funding. Once the apprentice is over the age of 20, the Scottish Government will pay a proportion of the training cost and the employer will meet the remainder.

The first step to hiring an apprentice is to choose the appropriate apprenticeship framework (old system) or standard (new system) to suit the particular industry and the level of qualification (eg equivalent to GCSE, A-Level, degree etc); this is done using the online service in England. If you’re an employer in Wales and Scotland, you should contact the apprenticeship authority in the devolved administration in Wales and Scotland. Employers must then find an appropriate apprenticeship training provider.

Once funding has been determined, the apprenticeship can then be advertised via the relevant training organisation. Following selection of the apprentice, an apprenticeship agreement must be formed and a commitment statement signed.

An apprenticeship agreement (for England and Wales) must be signed prior to the start of any apprenticeship. Amongst other things, it should:

  • include a statement of the skill, trade or occupation for which the apprentice is being trained
  • confirm the individual employment arrangements between the apprentice and the employer
  • state the relevant apprenticeship framework or standard and level
  • the expected length of the apprenticeship

A commitment statement should also be signed which details the planned content and schedule for training, and what is expected and offered by all relevant parties (ie apprentice, employer and training organisation).

The apprenticeship agreement is not a substitute for an employment contract and it must be incorporated into the Employment contract.

Employers must pay apprentices at the apprenticeship rate of the national minimum wage (£4.30 from 1 April 2021). These NMW rates change every April. For further information, read Minimum wage.

An apprenticeship contract is what governs the relationship between the employer and the apprentice in Scotland. In Scotland, the nature of the apprenticeship contract is different from that of an employment contract, as apprenticeship contracts are of a ‘special character’. Most importantly, apprentices in Scotland have enhanced rights against early termination.

An apprenticeship contract should be in writing and should, amongst other things:

  • include the fixed term of the apprenticeship

  • describe the apprentice’s role

  • confirm the individual employment arrangements between the apprentice and the employer

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