20 July, 2017
The apprenticeship levy ('the levy') is now in force. The levy will affect employers with a salary bill over £3 million per year. The employer is required to pay 0.5% of their total salary bill (in most cases this will be basic pay including any additional allowances) less a £15,000 allowance.
This will depend on the type of school and who the employer is?
An online digital apprenticeship service account is set up for each organisation affected by the levy. The online account shows the amount of money paid in by the employer, it will provide access to a number of apprenticeship providers in your area and a search tool to assist in finding a suitable course to meet your specific requirements.
You may not be aware that apprentices do not have to be in the form of young people. There is no age restriction on becoming an apprentice. As such, it has become apparent that some organisations are also using the money available to them via the levy to fund courses for current employees i.e. management courses which aim to achieve the same outcomes as an apprenticeship. This will be considered on a case by case basis but it is food for thought for some educational establishments.
It is likely that there will be a single person or small group of employees that are responsible for the levy within the employer's HR or finance departments who will also have access to the online account. It would be useful for the School Business Manager/Senior Leadership Team to familiarise themselves with this individual so as not to miss out on available funds.
It is important to note that the employer is not required to ring-fence the funds for any particular school. This will impact on those schools where there is more than one school i.e. Maintained schools where the employer is the local authority or MAT's. Therefore, if a school fails to put forward a business case for an apprentice or use of the funds it is likely that their 0.5% will be absorbed by another department/school.
In our experience, consensus differs between work type on whether the levy is viewed as a tax or a burden. Generally speaking, educational establishments do not engage apprentices and the levy does not appear to be incentivising them to use the scheme thus far. Therefore, I have set out below arguments for and against the levy in an attempt to assist your organisations strategic management of the levy.
Apprentices can be a valuable asset to any school, they often bring new ideas and are keen to progress. Apprentices can avoid the requirement to invest significant recruitment costs and if a school is directly involved in the development of the employee then it is more likely to retain them. In addition, a school is more likely to be able to mould an apprentice to fit the School's culture.
In addition the minimum rate of pay for an apprentice is £3.50 per hour for the first year or if they are under the age of 19 as opposed to £5.60 for an employee aged 18 to 20.
The law governing apprentices' contracts can be confusing and may present problems if it is not followed correctly. This is because the apprenticeship has evolved over time, and now no longer applies only to trades such as plumbing or joinery.
Young people previously undertaking an apprenticeship in a trade for example, would be employed under a Contract of Apprenticeship, which is more commonly referred to as a 'common law apprentice'. Such apprenticeships were often for a fixed term period for the duration of the college course, which could be for a number of years. Apprentices on these types of contracts have enhanced rights. They can only be dismissed in the event of very serious misconduct meaning they are effectively untouchable. In addition to ordinary unfair dismissal rights they were afforded enhanced rights namely the right to claim breach of contract for the remaining period of their apprenticeship and in addition losses for damage to their career prospects.
The law surrounding apprenticeships was modernised in 2009, with the introduction of the Apprenticeships Skills Children and Learning Act 2009. The Act gave rise to what is referred to as the 'statutory apprentice' and the modern 'Apprenticeship Agreement' which governed apprenticeships in England and Wales.
Apprenticeship Agreements have clear requirements under the Act, which must be satisfied in order to distinguish them from Contracts of Apprenticeship. In the event an Apprentice is simply placed on your contract of employment then this will not satisfy the requirements and a Contract of Apprenticeship will arise automatically.
The real benefit of this is that apprentices working under a proper Apprenticeship Agreement can be treated the same as normal employees then the normal rules for dismissal will apply.
In summary, those Local Authorities, Governing Bodies, MAT's, Academies and Independent Schools required to contribute to the levy will surely reap the benefits of apprentices as a valuable asset. This being said, in order to avoid costly mistakes, a carefully drafted, fully compliant Apprenticeship Agreement is certainly a necessary burden to bear in order to reap those benefits.