Apprenticeship wages 2018 and funding for SMEs image

Apprenticeship wages 2018 and funding for SMEs

Staff Squared date icon18th October 2018

Tag iconOperations, Small Business

Apprenticeships are an attractive option for UK SME employers who are looking to bring in new talent.  If you’re considering hiring an apprentice (and you should be!) then you likely already know the value apprentice can bring to your SME.

Wondering what it will cost you and what government support is available?  There are two things you need to consider.  Paying their wages and paying for their training and assessment.

 What is the wage and who is affected?

Employers must pay Apprentice Wages that are at least the national minimum wage rate if they are aged 19 or over and have completed the first year of their apprenticeship.

The Apprenticeship Wage is set yearly on April 1.  For 2018, the rates are as follows:

  • £5.90 for workers aged 18 to 20
  • £7.38 for those aged 21 to 24
  • £7.83 for those aged 25 and over
  • £3.70 for apprentices who are aged under 19 or who are 19 or over and in the first year of the apprenticeship
  • Do all apprentices receive equal pay?

There are different levels of apprenticeship.

  • Intermediate Level apprenticeships are roughly equivalent to 5 GCSE qualifications
  • Advanced Level apprenticeships are roughly equivalent to two A-Level passes
  • Higher Apprenticeships can lead to a Foundation Degree or NVQ Level 4
  • Degree Apprenticeships allow the learners to achieve a Bachelor’s Degree, or a Master’s Degree, whilst receiving their on-the-job training

Most people can apply for Intermediate Level apprenticeships. If you want to work towards a higher level of qualification, then there may be some prerequisites such as existing GCSEs or A-Levels.

There are no differences in the level of pay. All apprentices receive the same apprenticeship wage, no matter which qualification they’re working towards.

How many hours will an apprentice work?

Apprentices are generally expected to work at least 30 hours a week.  They can work less, but must do at least 16 hours per week.  An apprentice attends 1 day a week of training delivered by the training provider and spends the remaining 4 days a week working in the business.  They are paid for their classroom hours by their employer.

What other rights do apprentices have?

In addition to the minimum apprenticeship wage, all apprentices are entitled to the the same statutory rights as other employees. For example, working time; maternity, paternity, adoption and shared parental leave and pay; discrimination; whistleblowing; and unfair dismissal.

They should receive sick pay and holiday pay, and will also have access to any other workplace schemes such as healthcare and childcare vouchers.

Apprenticeship funding to cover costs of training and assessment

For SME firms not paying the apprenticeship levy, the amount of funding you can get will be based on the size of your business and your apprentice’s situation.

Here’s what’s available to you as an SME employer:

  • The government pays 90% of the training and assessment costs for the lifetime of the apprenticeship, any age, any level (up to funding band maximum).
  • The Apprenticeship Grant for Employers (AGE): £1,000 will be paid to any SME who takes on a 16 to 18 year old
  • As of August 1st, apprentices between the ages of 16 – 24 who have been in the care of their Local Authority are also eligible for a £1,000 grant.
  • Businesses with under 50 staff will also see 100% of training and assessment costs paid for if they recruit an apprentice aged 16 to 18.
  • Further support is also available for those with additional learning needs.   Providers are able to claim costs from government up to an additional £150 each month for these apprentices.

Check out the Skills Funding Agency’s Apprenticeship funding: rules and guidance for employers, for more details and special cases on funding.

How to estimate your agency funding

Use this tool to estimate if your organisation will pay the apprenticeship levy, how much your organisation will have available to spend on apprenticeships and how much the government will contribute towards the cost of training. You’ll need to know your organisation’s annual UK payroll.

Where and when do you make payments

You agree a payment schedule with the training organization and pay them directly for 10% of the total cost of training and assessment.

The government will pay the rest (90%) up to the funding band maximum. They’ll pay it directly to the training organisation.

Why you should hire an apprentice in your business

Research shows that 96% of SMEs who hire an apprentice report benefits to their business. Additionally, 70% of employers report improved product quality and services after hiring apprentices. 89% say apprentices make their business more productive.

Furthermore, Brexit will no doubt affect the free movement of labour.  Many skilled EU workers are reconsidering a move to the UK.   Recently, the CIPD released figures showing a dramatic 95% decline in the number of EU-born workers moving to the UK. In the first quarters of 2017-2018, with only 7,000 compared to 148,000 over the same period last year.   There has never been a more important time for this country to invest in developing homegrown talent.

Whether your reasons are to free up existing staff, grow your team while keeping costs down or give your team new skills and energy, apprenticeships can provide many benefits to your growing business.  All while giving a young person the opportunity to kick-start a rewarding career.

For more information on hiring apprentices for your SME

The National Apprenticeship Service is a service run by the Skills Funding Agency and has a dedicated team to support small and medium-sized employers. For more information, visit www.apprenticeships.org.uk.

Written by Clarisse Levitan

Customer Care Team - Staff Squared

Clarisse works on our Customer Care Team to provide all of our customers to the very best care and guidance when using their HR software.

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