The government are introducing the apprenticeship levy on 6 April 2017. The levy requires all employers operating in the UK, with a pay bill over £3 million each year, to invest in apprenticeships.
Also for SMEs like us the way you recruit and pay for training for your new apprentice is changing!
This guidance provides information on how the apprenticeship levy will work. It also explains the principles that apprenticeship funding will operate on from 1 May 2017, whether you pay the levy or not.
WHAT IS AN APPRENTICESHIP?
An apprenticeship is a genuine job with an accompanying skills development programme. Through their apprenticeship, apprentices gain the technical knowledge, practical experience and wider skills they need for their immediate job and future career.
The main rules governing apprenticeships are:
- the apprentice must be employed in a real job; they may be an existing employee or a new hire
- the apprentice must work towards achieving an approved apprenticeship standard or apprenticeship framework
- the apprenticeship training must last at least 12 months
- the apprentice must spend at least 20% of their time on off-the-job training this will be in-house with us either at Engineering works or Cityworks/Constructionworks offices
Employers that don’t pay the levy but with a payroll of LESS than 50 Employees
If you are an employer that is not a levy payer and you employ less than 50 employees on your payroll the government will fund these at 100% for 16 to 18 year old apprenticeships. This is not based on turnover it is just payroll based.
However if your new apprentices is 19+ you as the employer will need to pay 10% towards the cost of their apprenticeship.
Employers that don’t pay the levy but with a payroll of MORE than 50 Employees
When the new funding system begins in May 2017, you can choose the training you’d like your apprentices to receive, an approved training provider and an assessment organisation. Engineering Works hopes to be on the register so we can train your apprentice.
As your apprentice training provider we will ask you to make a 10% contribution to the cost of this training and the government will pay called co-investment of the other 90%, up to the maximum amount of government funding available for the apprenticeship you choose. This 10% contribution to the apprenticeship training costs is applicable across all apprentice age groups.
The actual apprenticeship you choose for you apprentice is allocated to a funding band. The upper limit of the funding band caps the maximum price (90%) that government will ‘co-invest’ for you so we’ll make sure you stay within the funding band maximum.
As your training provider we will ask you to make a 10% contribution towards your new apprentices training at the start of their apprenticeship. We can arrange for the further 90% payment for the training that you receive from the government to be paid to us over the lifetime of the apprenticeship and agree a payment schedule such as a DD or SO with you.
We would need to show the government your 10% contribution to kick start you 90% that is paid direct to you.
What the service will offer
Through the online apprenticeship service all employers will be able to:
•select an apprenticeship framework or standard
•choose the training provider or providers you want to deliver the training
•choose the organisation that will assess your apprentices
•post apprenticeship vacancies
If you are an employer who pays the levy, you can also use the apprenticeship service to:
•set the price you’ve agreed with your training provider
•pay for apprenticeship training and assessment
•tell us to stop or pause payments (for example, if your apprentice stops their training, your apprentice takes a break from training or you haven’t received the service you agreed with the provider)
What can you spend your apprenticeship funding on – all employers
Funds in your apprenticeship service account, and funding provided by the government through co-investment, can only be used towards the costs of apprenticeship training and end point assessment. This must be with an approved training provider and approved assessment organisation.
Funds can’t be used on other costs associated with your apprentices or wider training effort. For example wages, statutory licences to practise, travel and subsidiary costs, managerial or brokerage costs, traineeships, work placement programmes or the costs of setting up an apprenticeship programme. You can find more detail of what can be funded in the ‘apprenticeship funding rules’.
Choosing whats right for your business
You can only spend funds in your apprenticeship service account on training from a government-approved training provider – see the register of apprenticeship training organisations.
There are 2 different types of apprenticeship training you can choose from:
- apprenticeship standards – each standard covers a specific job role and sets out the core skills, knowledge and behaviours an apprentice will need to be fully competent in their job role and meet the needs of employers, standards are developed by employer groups known as ‘trailblazers’
- apprenticeship frameworks – a series of work-related vocational and professional qualifications, with workplace and classroom based training
We will phase out frameworks between now and 2020, as we move over to the employer-led apprenticeship standards.
For further information on employing an apprentice click here.
If you are not sure how your business will be effected with the new changes then speak to our manager – Ashley Crooks at Engineering works who will be happy to explain this – 01482 308728 or email firstname.lastname@example.org.