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The Apprenticeship Levy
In May 2014 the Government produced a BIS Report on Employer Investment in Apprenticeships in the Health Sector and reported that there were 52,000 apprentices commencing work based training within the Health and Social Care sector in 2010 and 2011. In 2014/15 there were around 500,000 apprenticeship starts across England generally. The statistics are indicative of the Government’s plan to increase the quality of work based training to secure a skilled workforce and a productive economy for the future of the country.
However, the rules around apprenticeships are changing. The Government plan is to replace all current Apprenticeship Frameworks with Approved Apprenticeship Standards in line with the introduction of the new Apprenticeship Levy and is inviting all employers to contribute to the development of the new standards.
The Apprenticeship Levy
From May 2017, the Apprenticeship Levy will come into force which will require some employers to contribute to an apprenticeship service account.
Employers will pay monthly in their apprenticeship service account through the PAYE system, which will then form the pool of money available for that employer to spend on training their apprentices. The funds can only be used towards the cost of training from an approved training provider and assessment organisations.
The Levy will apply to all employers but it will only be payable by employers who have a wage bill of over £3m per year. The Levy is charged at 0.5% of the employer’s annual wage bill less the Levy Allowance of £15,000 which every employer will be entitled to. For more information on how the levy will be calculated and collected, click on the following link: https://www.gov.uk/guidance/pay-apprenticeship-levy.
Whether or not the levy applies to your business, the changes are still important as a reminder to ensure you have the correct agreement in place with your apprentice.
If your wage bill is less than the £3m threshold then the levy will not apply. In any event, the new changes are a welcome reminder to all businesses which employs apprentices, to ensure that they have a well written contract in place and are complying with the relevant approved apprenticeship standards or framework if a standard has not yet been developed.
Employers’ who do not have a written apprenticeship agreement risk being caught by the common law apprenticeship principles. This can have an effect on the employer’s ability to terminate the agreement unless there has been a serious issue of misconduct.
Employers’ should note that for an agreement to be deemed an apprenticeship agreement it must:
- Be in writing;
- Containing the minimum terms of employment required by law;
- Include details of the skill/trade which the apprentice is working towards;
- Confirm that it is governed by the law in England and Wales; and
- Confirm that it is entered into pursuant to the relevant approved apprenticeship standard or if none exists, the relevant qualifying apprenticeship framework.
If an apprenticeship agreement does not meet the above criteria the apprentice will be considered a common law apprentice. Apprentices who are common law apprentices are afforded additional rights including the right not to have their agreement terminated until the end of the fixed term unless there has been “extreme misconduct”. Extreme misconduct is deemed to be circumstances where it is impossible to carry on teaching the apprentice. Dismissing a common law apprentice for any other reason can be a costly consequence for an employer as they would be entitled to bring a claim for breach of contract and may be entitled to enhanced contractual damages to compensate for the effect on future career prospects and earning potential as well as damages for the remainder of the fixed term. Apprentices who are engaged under a valid apprenticeship agreement have no more rights than an employee which is particularly important should it be necessary to consider dismissal during the apprenticeship term.
You should take the time to carefully consider what agreement you have in place with an apprentice to ensure your business is protected.
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