Apprenticeship programs provide a valuable opportunity for individuals to gain hands-on training and skills in a specific trade or industry. Apprentice recruitment can also benefit employers by providing a pipeline of skilled workers and helping to address skills gaps in the workforce. However, to ensure that apprentices receive high-quality training and that employers fulfil their responsibilities, there are specific apprenticeship rules for employers to follow when participating in an apprenticeship program.
Understanding and complying with these rules helps employers avoid penalties and legal consequences. It also contributes to the success of their apprenticeship program and the development of a skilled workforce.
In this article, we’ll:
- Review how apprenticeships work in the UK, the types of apprenticeships, funding rules, and other key elements
- Discuss what grants are available for employers in the UK
How do apprenticeships work in the UK?
In the UK, the government regulates apprenticeships and they offer various training opportunities across a wide range of industries. Let’s discuss the different types of apprenticeships, apprenticeship funding rules, age limit for apprenticeships, apprentice holiday entitlement and apprenticeship costs.
Types of apprenticeships
There are four levels of apprenticeships in the UK, ranging from Level 2 (intermediate) to Level 7 (degree). Each level corresponds to a different type of apprenticeship.
| Level | Description |
| Intermediate apprenticeship/Level 2 | These apprenticeships are equivalent to five GCSEs and provide a foundation in a specific trade or profession. |
| Advanced apprenticeship/Level 3 | These apprenticeships are equivalent to two A-levels and provide higher training and expertise in a particular trade or profession. |
| Higher apprenticeships/Level 4-5 | These apprenticeships offer training at a higher level, equivalent to a foundation degree or bachelor’s degree. |
| Degree apprenticeships/Level 6-7 | These apprenticeships offer degree-level training, with the apprentice studying towards a master’s degree while also gaining work experience. |
Within each level of apprenticeship, a wide range of industries and professions offer apprenticeship opportunities, including construction, healthcare, engineering, finance, and many more.
Apprenticeship funding rules
Apprenticeship funding rules in the UK are designed to ensure apprentices receive high-quality training while also supporting employers in covering the costs associated with their apprenticeship programmes.
The funding rules apply to both levy-paying employers and non-levy-paying employers. They are subject to regular review and update to reflect changes in government policy and priorities.
Levy-paying employers
Levy-paying employers are those with a payroll of over £3 million per year. They must pay an apprenticeship levy to the government, which is calculated at a rate of 0.5% of their annual payroll. This levy is collected through the PAYE system and paid into a digital account that the employer can use to fund employee apprenticeship training.
The employer can use the funds in the digital account to pay for apprenticeship training and assessment for any apprentices, up to the amount of funding available in their account. Levy-paying employers also receive a 10% top-up on the funds in their account from the government, which they can use to cover the cost of training and assessment.
Non-levy paying employers
Non-levy paying employers with a payroll of less than £3 million per year can also access government funding to support their apprenticeship programmes. These employers must contribute towards the cost of training and assessment for their apprentices, which is set at 5% of the total cost of the apprenticeship.
The government then provides the remaining 95% of the funding for the apprenticeship training and assessment up to the funding band maximum for that apprenticeship. The government sets the funding band maximum for each apprenticeship and reflects the cost of delivering the training and assessment.
Find out more information on funding apprenticeship rules on the gov.uk website.
Age limit for apprenticeships
In the UK, there is no upper age limit for apprenticeships, meaning that people of all ages can undertake an apprenticeship programme. Apprenticeships are a flexible and accessible form of training, and they offer a range of benefits for people looking to develop new skills or change careers.
However, employers must note that to be eligible for an apprenticeship in the UK, individuals must be 16 years old or over and not in full-time education. So while there isn’t an upper age limit, employers must follow a lower age limit.
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Apprentice holiday entitlement
Apprentices are entitled to holiday pay and time off in the same way as other employees. The amount of holiday entitlement for apprentices is set out in the Apprenticeship Agreement, a legally binding contract between the employer and the apprentice.
Apprentices are entitled to a minimum of 20 days paid holiday per year, plus bank holidays. This is in line with the legal minimum entitlement for most employees in the UK. However, some apprenticeship agreements may offer additional holiday entitlement, so the recruitment team needs to consider company values and goals and decide whether or not they want to offer these. For example, some employers may offer 20 days of paid holiday per year, not including the apprentice’s birthday.
It’s worth noting that holiday entitlement for apprentices may be pro-rated, depending on the length of the apprenticeship and the hours worked. For example, if an apprentice works part-time or joins the apprenticeship part-way through the year, you can adjust their holiday entitlement to reflect their working hours.
Employers can calculate holiday entitlements using the gov.uk holiday entitlement calculator.
Apprenticeship costs
While hiring apprentices can bring numerous benefits, it’s essential to plan and budget accordingly to ensure a successful and sustainable apprenticeship program.
We can divide the costs of apprenticeships into two main categories: training and wage costs.
Training costs
Training costs include the fees the training provider charges for delivering the apprenticeship training and assessment. The exact price varies depending on the level and type of apprenticeship and can range from several thousand pounds to tens of thousands per apprentice.
Wage costs
In terms of wage costs, companies must pay apprentices at least the national minimum wage for apprentices. However, some employers may pay their apprentices more, providing additional incentives and reflecting the value they place on the apprenticeship program.
Note: For levy-paying employers, you can offset the cost of apprenticeships using funds from their apprenticeship levy account. Employers fund this account through the levy payments. Then, they can use the payments to cover apprenticeship training and assessment costs.
To help further alleviate costs, the UK government provides financial incentives for hiring apprentices. These incentives vary depending on the apprentice’s age and the apprenticeship level, but they can provide valuable financial support to companies recruiting apprentices.
Understanding and carefully managing apprenticeship costs is vital for companies recruiting apprentices. By planning and budgeting effectively, companies can invest in high-quality training, provide competitive wages, and maximise the benefits of apprenticeships for both the apprentices and the company’s long-term growth and success.
Apprentice grants for employers
Apprentice grants for employers in the UK are financial incentives provided by the government to encourage businesses to hire and train apprentices. These grants help offset the costs associated with running an apprenticeship program and incentivise employers to invest in their workforce development.
They can vary based on factors such as the apprentice’s age, level of apprenticeship, and the employer’s specific needs. Let’s discuss some of the key apprentice grants for employers.
Apprenticeship levy
This levy applies to large employers with an annual payroll of over £3 million. These employers must pay a levy of 0.5% of their annual payroll into a digital account. Employers can then use the funds in this account to cover the costs of apprenticeship training and assessment.
Furthermore, the government provides a 10% top-up on the funds in the digital account, offering additional financial support for employers.
Apprenticeship hiring incentive
This grant is available to employers who hire new apprentices aged 16 to 24. It provides a financial incentive of £3,000 per apprentice, with additional support for employers who recruit 16 to 18-year-old apprentices or those under 25 with an Education, Health and Care (EHC) plan.
Additional payments
Employers who effectively use early careers recruitment strategies and hire apprentices aged 16 to 18 may receive additional funding to cover the costs of training and support. The exact amount can vary depending on the apprenticeship level and duration.
Sector-specific grants
Various grants are available in specific industries or sectors to address skills shortages and promote apprenticeships. These grants aim to support employers operating in industries such as construction, engineering, healthcare, and more, to encourage the recruitment and training of apprentices.
It’s important for employers to regularly check government websites, such as the official apprenticeship website, for up-to-date information on available grants and incentives. These grants can provide significant financial support to employers, helping to offset the costs of apprenticeship training and making apprenticeships an attractive option for businesses seeking to develop their workforce and bridge skills gaps.
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