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How to employ an apprentice

Authors: Adrian Martin and Frances Bennett

Summary

Click on any of the hyperlinks to go to more detailed guidance below.

Introduction

The Government has committed to creating three million new apprenticeships by 2020 in a bid to address the UK's productivity levels and skills shortages. The biggest impact of this on employers is the introduction of the apprenticeship levy, which all employers with a paybill of over £3 million must pay. All employers regardless of their paybill size can claim funding from the levy. In addition, the "trailblazers" initiative has seen the development of new "apprenticeship standards", created by employers with the aim of improving the quality of apprenticeships. Therefore, employers that in the past have not used apprentices now have more reasons to consider doing so, or to consider using apprenticeships to upskill existing employees.

This guide provides a practical overview of the process of employing an apprentice.

Employers should note that each country in the UK has a different apprenticeship system. This guide focuses on the English system. Information for employers about apprenticeships in Scotland is available from Skills Development Scotland; in Wales, from Business Wales; and in Northern Ireland, from the NIBusinessInfo website.

Employers in England can contact the National Apprenticeship Service (a service run by the Skills Funding Agency) for assistance with setting up an apprenticeship. They should also ensure that they follow the Skills Funding Agency's Apprenticeship funding: rules and guidance for employers.

What is an apprenticeship?

Apprenticeships are in-work training programmes offered by employers under which the apprentice engages in on- and off-the-job learning and development activities that will lead to a work-based qualification. Most employers will work with a third-party training provider to deliver the external element of the training. Some employers may be in a position to provide all the training in-house and become an approved training provider. Employer-providers are outside the scope of this guide.

An employer can use an apprenticeship training agency as an alternative to employing an apprentice itself. Under this arrangement, the agency is the apprentice's employer and is responsible for placing them with one or more employers for training.

There must be a genuine job available during the apprenticeship. This means that the apprentice must:

  • have a contract of employment that is long enough for them to complete the apprenticeship successfully (unless the apprentice is employed by an apprenticeship training agency);
  • be paid for the time in work and in off-the-job learning, with the costs of the wages met by the employer;
  • have a role with a productive purpose that allows them to gain the knowledge, skills and behaviours to complete the apprenticeship; and
  • have appropriate support and supervision from within the employing organisation to carry out the role.

Apprentices are normally required to spend at least 20% of their time in off-the-job learning, with the remaining 80% in on-the-job learning, and must work towards achieving an approved "apprenticeship standard" or "apprenticeship framework", which sets out the requirements for completing an apprenticeship programme in a particular occupation or industry (see Selecting an apprenticeship).

The term "apprenticeship" is a legally protected term, so employers should advertise roles as apprenticeships only if they are linked to approved standards or frameworks.

An apprenticeship must last for at least one year, but many will take longer to complete, depending on the nature of the qualification. The usual duration is between one and four years. The minimum duration of one year is based on the apprentice working at least 30 hours per week (including any off-the-job training). Apprenticeships can be undertaken on a part-time basis but, if an apprentice works fewer than 30 hours per week, the minimum duration of the apprenticeship increases on a pro rata basis.

Although apprenticeships have traditionally been seen as being for young workers, people of any age can complete an apprenticeship, even where they already have a qualification at the same or a higher level in a different area. The only condition is that the apprenticeship must enable the apprentice to develop a new set of skills. For example, someone who has completed a degree in business may not be eligible to complete a level 6 or 7 apprenticeship in business management, but someone with a degree in engineering will be. This means that there is scope for employers to use apprenticeships to upskill their existing workforce at relatively low additional cost.

The apprenticeship levy and apprenticeship funding

The apprenticeship levy came into force on 6 April 2017. All employers with a paybill in excess of £3 million must pay the levy, regardless of whether or not they employ any apprentices. The levy is set at a rate of 0.5% of the employer's gross paybill. Each employer has an annual allowance of £15,000, which is offset against the levy. For example, an employer with a gross paybill of £20 million will pay £85,000 towards the levy each year. The levy is paid in monthly instalments via PAYE.

The total paybill of an employer is assessed only on employees who live in England, not those who work in England (although funding under the English system is available for apprentices who work, rather than live, in England). Employers should ensure that HM Revenue and Customs (HMRC) has up-to-date home addresses for all employees. The Skills Funding Agency provides a tool for employers to estimate their levy costs and the amount they will have available for funding apprenticeship training.

All employers, whether they are required to pay the levy or not, are able to access funding to cover the costs of apprentices' training (up to certain limits). Employers cannot spend the funding on work-based learning programmes that are not being completed under an approved standard or framework. They can spend levy funding only on training that is provided by a registered training provider up to the maximum funding band that has been set for the relevant standard or framework. Funding cannot be spent on other costs associated with apprentices, for example salaries, supervision, recruitment or travel.

Levy-paying employers can set up a digital account on the Government's online apprenticeship service to access funding for training and to make monthly payments to the training provider. Other elements of the online apprenticeship service are available to all employers, whether or not they pay the levy, including the tools to choose the type of apprenticeship they want to use and to find a training provider that suits their needs. The Government has said that the full apprenticeship service will be made available to all employers, including those that do not pay the levy, over the course of 2019/2020, beginning with a trial involving a group of non-levy employers in summer 2019.

Employers that pay the levy will receive their total levy contribution, plus a 10% top-up from the Government, in "levy credit" to fund their apprenticeships. This levy credit is paid into the employer's digital account on a monthly basis. The employer must spend levy credit within 24 months of it being paid into its account. Any credit that is spent will be deducted from the account on a "first in, first out" basis and any unused credit will expire after 24 months.

If an employer does not have enough levy credit to cover the full cost of training, it will be required to co-invest part of the outstanding balance for that month and the Government will cover the remainder, up to the funding band maximum for the apprenticeship. For apprenticeships that started before 1 April 2019, the amount that the employer must co-invest is 10% of the outstanding balance. For apprenticeships beginning on or after 1 April 2019, the co-investment rate for the employer is 5%.

Employers that do not pay the levy can also make use of government funding through co-investment. For apprenticeships that started before 1 April 2019, the employer must contribute 10% of the apprenticeship training costs and the Government will cover the remaining 90%, up to the funding band maximum. For apprenticeships beginning on or after 1 April 2019, the employer must contribute 5% and the Government will contribute 95%, up to the funding band maximum. Training providers will invoice employers directly for any employer co-investment.

A levy-paying employer can transfer up to 25% of its annual levy credit to other employers, for example an organisation in its supply chain or an apprenticeship training agency. The receiving employer must use the funds for training and assessment for apprenticeship standards (not frameworks). The transferring employer must agree to the individual apprenticeships to be funded.

Employers are entitled to an additional payment of £1,000 when taking on an apprentice who, on the first day of the apprenticeship, is aged 16 to 18 (or aged 19 to 24 if they have an education, health and care plan provided by a local authority or have spent time in local authority care).

Small employers with 49 or fewer employees that recruit apprentices who are aged 16 to 18 (or aged 19 to 24 if they have an education, health and care plan provided by a local authority or have spent time in local authority care) will have the full costs of training covered by the Government (up to the maximum funding band).

Selecting an apprenticeship

To access levy funding, employers must use an approved apprenticeship "standard" or "framework" for the particular job role.

Apprenticeship frameworks are gradually being withdrawn and replaced by apprenticeship standards. The Skills Funding Agency expects that only apprenticeship standards will be used from 2020. Apprenticeship standards came about as a result of the Government's trailblazers initiative, under which employers form sector-specific focus groups to design new standards. A standard sets out the knowledge, skills and behaviour required to carry out a particular occupation well. For example, standards in the construction sector include "construction site supervisor", "highways maintenance skilled operative" and "digital engineering technician".

If there is no apprenticeship standard available in an employer's industry, it can potentially become a "trailblazer" and participate in creating one. Employers can access lists of the approved standards and those in development on the Institute for Apprenticeships website.

There are four different levels of apprenticeships, covering both standards and frameworks: intermediate, advanced, higher and degree. All apprenticeship frameworks fall within the intermediate and advanced levels.

Intermediate: An intermediate apprenticeship is the equivalent of five GCSE passes and is set at level 2 (of the standard qualification levels for England, Wales and Northern Ireland).

Advanced: An advanced apprenticeship is the equivalent of two A-level passes and is set at level 3.

Higher: Higher level apprenticeships are equivalent to a foundation degree or above. They are set at levels 4 to 7. Not all level 6 and 7 apprenticeships will award a degree qualification, but the learning involved is set at an equivalent level.

Degree: Degree apprenticeships are set at level 6 (bachelor's degree) and level 7 (master's degree). Degree apprenticeships are usually linked to a university and the apprentices will be awarded a degree at the end of the programme.

When selecting an apprenticeship, it is important for an employer to consider the length of the apprenticeship. The more advanced the level, the longer it will take to complete. Many apprenticeships do not have any "jumping off" points. Therefore, it is important for the employer to ensure that it has the resources to supervise the apprentice for this period and that it recruits an apprentice who is committed to completing the programme.

Employers can use the Find apprenticeship training tool (which is part of the online apprenticeship service) to select a standard or framework.

Training providers

Once an employer has identified an apprenticeship standard or framework, it needs to select a registered training provider to deliver the training. It can use the Find apprenticeship training tool for this. When selecting a training provider, employers should consider the following questions:

  • What previous experience does the provider have in working with apprentices? For example, if an employer intends to recruit school leavers, it may prefer a provider with experience of working with this age group (although employers should be aware of the risk of age discrimination if targetting school leavers, see Recruiting an apprentice).
  • Is the provider a specialist in the employer's sector?
  • Where does the provider deliver the training: for example can the apprentices get to the venue easily by public transport?
  • How does the provider deliver the training: for example is it all classroom based, or is there some online learning or learning based at the employer's premises? If an employer is planning on recruiting only one or two apprentices, it may want to consider choosing a provider that can offer the apprentices the chance to build a peer network.
  • How flexible is the provider over the timing of study days? Flexibility could be particularly important if an employer wants to enrol members of its existing workforce on apprenticeships, so it can avoid losing several members of a team on the same day.
  • Does the provider offer assistance in the recruitment process? (See Recruiting an apprentice.)

Negotiating the cost of training

The employer must agree the costs of delivering the training with the apprenticeship provider it has selected. Each standard or framework has an assigned funding band, which sets the maximum amount that an employer can draw from the levy fund for that particular apprenticeship. Even if the employer has a surplus of levy funding available, it may not use any more than the maximum allowed in the applicable funding band.

If an apprentice has any previous learning that is related to the apprenticeship, the price of the training should reflect this. Essentially, the employer should be paying only for the apprentice to gain new skills and knowledge.

End-point assessment

The employer will need to choose an independent end-point assessment organisation, which will be responsible for ascertaining whether or not the apprentice can demonstrate the skills, knowledge and behaviours set out in the apprenticeship standard, or has met the requirements of the framework. In most circumstances, this assessor cannot be the training provider or the employer. The only exception to this rule is for "integrated degree-level standards", where the training provider can also be the end-point assessment organisation. Only organisations that appear on the Register of apprentice assessment organisations can conduct end-point assessments. Once the employer has appointed an end-point assessor it must notify the training provider and the provider will contract with the assessor for the delivery of the assessment. In some cases, the training provider will be able to assist the employer in finding an end-point assessor.

Recruiting an apprentice

Training providers can use the "Recruit an apprentice" service (which is part of the online apprenticeship service) for posting and managing apprenticeship vacancies on behalf of employers. Vacancies advertised through "Recruit an apprentice" appear on the "Find an apprenticeship" service for candidates to search.

The employer and training provider should agree the extent to which the provider will be involved in the recruitment process. Some providers will offer to manage the recruitment process from start to finish, reducing the time and resources required from the employer. However, if the process is conducted off site, the employer risks losing control of the selection process and missing the chance to "sell" the organisation to ensure that it attracts the most suitable candidates.

Employers can choose to advertise apprenticeships through the provider using "Recruit an apprentice" but to have the applications go directly to the employer, rather than being managed by the provider.

Employers need to be mindful of the age discrimination legislation. Targeting school leavers or younger age groups (for example by putting an upper age limit on applicants) could amount to unlawful age discrimination, unless the employer can justify this approach. It may be possible to justify age discrimination if the employer can show, for example, that it has a workforce with an ageing demographic or that youth unemployment in the local area is particularly high and that its recruitment policy is aimed at addressing this. Employers cannot rely on the financial advantages associated with recruiting younger workers (ie the increased funding allocated to younger apprenticeships and the lower minimum wage) as a justification for targeting younger applicants for apprenticeships.

For some employers, apprenticeships may be useful as a mechanism for upskilling existing employees. As all employers will be able to claim levy funding, it may be beneficial for them to consider if any existing training or professional study programmes could be undertaken as apprenticeships to allow them to make use of the funding.

As the entry requirements for most apprenticeships do not include any prior experience or knowledge of the subject, it is good practice for employers to use selection criteria that assess candidates' potential. Looking for existing skills could potentially discriminate against younger applicants if they are not explicitly required in the apprenticeship standard or framework. Employers should consider, for example, strengths-based recruitment with a focus on identifying what the potential recruits enjoy or are enthused by, rather than looking solely at previous experience. This is something with which a training provider may be able to assist.

Before hiring an apprentice, if it wishes to draw on levy funding, an employer needs to ascertain the apprentice's eligibility. To be eligible for funding, apprentices must:

  • have the right to work in England;
  • spend at least 50% of their working hours in England;
  • have a valid and eligible residency status, as set out in the apprenticeship funding rules (for example European Economic Area (EEA) citizens must have been ordinarily resident in the EEA for at least the three years before the start of the apprenticeship, and non-EEA citizens with permission to live in the UK must have been ordinarily resident in the UK for at least the three years before the start of the apprenticeship);
  • not start their apprenticeship before the last Friday in June of the academic year in which they have their 16th birthday;
  • be able to complete the apprenticeship within the time they have available;
  • not be enrolled on another apprenticeship, or a Department for Education-funded further or higher education programme, at the same time as any new apprenticeship they start;
  • not be asked to contribute financially to the direct cost of learning or assessment;
  • not use a student loan to pay for their apprenticeship;
  • be employed by the employer, or a connected company or connected charity, as defined by HMRC; and
  • not already hold a qualification at a level the same as, or higher than, the apprenticeship, unless the training content is materially different.

The apprenticeship agreement

Apprenticeship agreements (ie the agreement between the employer and the apprentice) must satisfy certain conditions contained in the Apprenticeships, Skills, Children and Learning Act 2009. It is important for employers to ensure that these conditions are met, as the apprentice may otherwise be employed under a traditional contract of apprenticeship, which would give them enhanced rights. In particular, it can be difficult, and potentially expensive, to dismiss an apprentice employed under a traditional contract of apprenticeship, even in cases of misconduct, as the employer may be liable to pay the apprentice in respect of the outstanding duration of the apprenticeship term, plus a sum to compensate them for future loss of earnings.

An apprenticeship entered into under an approved apprenticeship standard (as opposed to a framework) must meet the conditions of an approved English apprenticeship agreement under s.A1 of the Act. These are that the apprenticeship agreement must:

  • provide for the individual to work as an apprentice in a sector for which there is an approved apprenticeship standard;
  • provide for the apprentice to receive training to assist them to achieve the approved apprenticeship standard; and
  • satisfy any other conditions specified by the Government in regulations (although no such regulations have yet been issued).

Apprenticeships entered into under an apprenticeship framework (as opposed to a standard) must satisfy conditions set out in s.32 of the Act (which applied generally to apprenticeships in England prior to 26 May 2015 and the introduction of standards). These conditions are that:

  • the apprentice must undertake to work for the employer;
  • the agreement must contain the basic terms of employment required to be given to employees under s.1 of the Employment Rights Act 1996;
  • the agreement must include a statement of the skill, trade or occupation for which the apprentice is being trained under the relevant apprenticeship framework;
  • the agreement must state that it is governed by the law of England and Wales; and
  • the agreement must state that it was entered into in connection with the qualifying apprenticeship framework.

Separate provisions apply to apprenticeship agreements for Crown servants, parliamentary staff and the military and, as noted above, separate arrangements apply to apprenticeships in Wales, Scotland and Northern Ireland.

An apprenticeship will be for a fixed term so the agreement should include appropriate provisions relating to the fixed term and its expiry, including a clause allowing for early termination (see Termination).

Otherwise, an apprenticeship agreement should include the terms and conditions that the employer includes in employment contracts generally. It is a requirement under s.32 (for frameworks) that the apprenticeship agreement is in the form of a written statement of employment particulars, or another document, that contains the terms and conditions required under s.1 of the Employment Rights Act 1996. If the apprenticeship agreement is made in relation to a standard, while it is not a requirement of s.A1 for it to be in that form, the duty to provide the employee with a written statement of employment particulars under s.1 of the Employment Rights Act 1996 still applies. Therefore, the employer should include the relevant terms and conditions in the apprenticeship agreement, or ensure that it provides them in a separate statement, in compliance with s.1.

Our policies and documents tool provides a model Apprenticeship agreement and a model Written statement of terms and conditions of employment.

The commitment statement

The apprenticeship funding rules require the employer, training provider and apprentice to sign a "commitment statement", setting out how they will support the successful achievement of the apprenticeship. The full requirements for the content of a statement are set out in the apprenticeship funding rules. The required content includes:

  • the amount of off-the-job training that will be delivered to meet the minimum 20% requirement;
  • the planned content and schedule for eligible training, including key milestones for qualification achievements, making clear if the component has been used towards the calculation of the minimum 20% requirement;
  • a list of all organisations delivering the training and the end-point assessment organisation (when confirmed);
  • what is expected and offered by the employer, the provider and the apprentice to support the achievement of the apprenticeship; and
  • the process for resolving any queries or complaints regarding the apprenticeship, including its quality.

The commitment statement must be signed by the employer, the apprentice and the main provider. It should be updated as necessary to reflect a change of circumstances and all three parties must keep a current signed and dated version. The commitment statement must be retained with, or in, the written agreement between the employer and the main provider. Where the apprenticeship is being funded from the employer's apprenticeship service account, this should be recorded in the contract for services between the employer and the provider.

Supervision and training of apprentices

Although the levy fund covers the cost of all off-the-job training (subject to the funding band maximums), most of an apprentice's time will be spent in on-the-job learning provided by the employer. The employer must be able to identify who within the organisation has overall responsibility for apprentices and show that apprentices are working with experienced and skilled colleagues on work that is relevant to the skills set out in the framework or standard. Supervising an apprentice can be challenging and time consuming, so the employer should ensure that it has allocated budget and resources for training those who will be involved. If they are hiring school leavers, employers need to consider what additional support they may need (see Induction). The levy cannot be used to cover any of these costs.

There are additional legal obligations with which employers have to comply if they employ workers (including apprentices) who are aged under 18, in particular in relation to working time and health and safety.

Statutory rights

Apprentices have the same statutory rights as other employees, except that the Fixed-term Employees (Prevention of Less Favourable Treatment) Regulations 2002 (SI 2002/2034) do not apply to apprentices. Accordingly, they will be entitled to the usual statutory rights in relation to, for example, working time; maternity, paternity, adoption and shared parental leave and pay; discrimination; whistleblowing; and unfair dismissal.

Employers must pay apprentices at least the national minimum wage rate for their age if they are aged 19 or over and have completed the first year of their apprenticeship. These rates, from 1 April 2019, are £6.15 for workers aged 18 to 20; £7.70 for those aged 21 to 24; and £8.21 for those aged 25 and over. There is a separate apprenticeship rate of £3.90 for apprentices who are aged under 19 or who are 19 or over and in the first year of the apprenticeship.

Induction

It is sensible for an employer to put together a tailored induction programme for apprentices, particularly if it is recruiting younger apprentices who may have no prior experience of the workplace. As well as learning about the business's' systems and processes, apprentices who are beginning their first job may need sessions tailored to take account of their lack of work experience, for example on topics such as writing and telephone skills or personal presentation. Some training providers may include this type of content in their training, so the employer should liaise with the provider when designing its induction.

If an employer is hiring only a small number of apprentices, it should consider how they will fit into the business. Although apprenticeships are not only for young people, it is still likely that apprentices will earn less than and/or be younger than other employees, which could affect whether or not they can, or wish to, join in with the usual social activities. The employer could consider organising inclusive social activities as part of the induction. It could also consider making contact with other local businesses that employ apprentices to start an apprentice networking group.

Managing conduct and performance

Employers should generally treat performance and conduct issues relating to apprentices in the same way as for other employees. Apprentices have the same unfair dismissal rights as other employees, subject to attaining two years' service, and therefore have the same rights to have any disciplinary issues dealt with in accordance with a fair procedure. A tribunal might expect an employer to go further in terms of offering support, guidance and time to improve for a younger and less experienced apprentice than for other employees. In practice, in relation to a younger apprentice, it is common for the apprentice's parents to seek to become involved in a serious misconduct or performance process and, as a matter of good practice, the employer should consider allowing this, to demonstrate that it is acting fairly and reasonably.

Termination

Although apprenticeships are for a fixed term, it is advisable for the employer to ensure that the apprenticeship agreement provides for it to be able to terminate the employment early, either by giving notice or with immediate effect in the case of gross misconduct. As long as the apprentice is employed under a valid apprenticeship agreement under the Apprenticeships, Skills, Children and Learning Act 2009, rather than a traditional contract of apprenticeship (see The apprenticeship agreement), the employer can dismiss them for conduct or performance prior to the expiry of the fixed term. However, if there is no clause allowing early termination, the employer could be liable for a breach of contract.

If the apprentice resigns or is dismissed before the end of the apprenticeship, the employer will no longer receive further funding for the apprentice from the Government but can retain any incentive funding that it has already received, for example for recruiting an apprentice aged 16 to 18. The agreement between the employer and the training provider will determine whether or not the employer is obliged to make any further payments to the training provider (this should be addressed when negotiating the agreement).

Apprenticeships are set up as fixed-term contracts, so at the end of the fixed term there is no legal obligation on the employer to offer the apprentice a job. The apprenticeship funding rules previously stated that the apprentice "should" stay with the employer if a job opportunity continued to exist and they wished to remain. This guidance was removed in 2018 and the rules no longer refer to what should happen at the end of the apprenticeship. It would be good practice for the employer to look for opportunities within the organisation and, if there is nothing available, help the apprentice identify suitable opportunities elsewhere. If the apprentice has at least two years' service, the employer will need to be mindful of the risk of unfair dismissal when the contract comes to an end and will need to adopt a fair process, as the expiry of a fixed-term contract constitutes a dismissal under the law.

Reorganisation or redundancy

In broad terms, in a reorganisation or redundancy situation, employers should treat apprentices in the same way as they treat other employees. Apprentices who have two years qualifying service will have the right to claim unfair dismissal and will be entitled to a statutory redundancy payment.

However, in practice, employers with an established practice of using apprentices may decide to treat them as being outside the scope of the redundancy situation, partly on the basis that they will need to ensure a long-term pipeline of appropriate skills and resources and partly to protect the interests of the apprentices. In a unionised workforce, this is often something that the employer can agree with trade union representatives, and doing this can protect it against claims by other employees that they have not been treated fairly.

In a redundancy situation, where the employer is retaining apprentices, but losing other employees, it must ensure that it still has experienced staff who can provide the apprentices with supervision and training to the required standard.