Employers will have to start paying the apprenticeship levy from 6 April 2017. Recent commentary has suggested that many employers still don't know about this new regime so...
Do all employers have to pay it?
Yes, the levy will apply to all employers, irrespective of their sector and regardless of whether they have or intend to have any apprentices.
How much does an employer have to pay?
The levy will be 0.5% of the employer’s total payroll bill (which includes basic salary but also things like bonus, commission and pension contributions). However, each group of employers will receive an allowance of £15,000 to offset against their liabilities. This effectively means that only those with a wage bill of more than £3million will be liable to pay the new levy.
Can an employer recoup any of this money?
The good news is that if the employer has or takes on apprentices, they are likely to be able to clawback at least some of the amounts they have paid.
The levy payments can be put into an online account and those funds will also be topped up by 10% by the Government. Additional top-ups may also be available, for example to employers who employ 16 to 18 year olds. The funds in the account can be used to pay for approved training for apprentices. However, the funds need to be used within 24 months of being deposited.
What is an apprenticeship?
Essentially, it is formal relationship where the individual undertakes a combination of work and training. In many cases, an apprentice must not only be given on-the-job training but spend a proportion of their time (usually around 20%) doing approved off-the-job training too.
There are many different types of apprenticeship, from the traditional roles of plumbing and construction work to professional services (such as an accountant or solicitor).
Are there special rules on employing an apprentice?
In many ways, an apprentice is just like any other employee. However, in some situations they can have additional rights, for example enhanced dismissal protections (namely that the employer cannot dismiss the apprentice unless there has been a very serious breach or some form of frustrating event meaning that the employer’s ability to teach the individual is fundamentally undermined).
From the employer’s perspective, it is therefore very important to correctly categorise and document the form of apprenticeship to ensure that such enhanced protections are not inadvertently given.
Skills minister Robert Halfon has urged organisations to register early in preparation for the forthcoming apprenticeship levy, but new research suggests a lack of awareness about the levy remains widespread. A recent poll of senior decision-makers by City & Guilds revealed a third (33 per cent) of UK employers that will be eligible to pay the levy are not aware of its existence. Worryingly, nearly a quarter (23 per cent) of heads of apprenticeships are not aware of the new apprenticeship system.