Apprenticeship Levy

From today, (6 April 2017), all UK employers with annual salary bills of more than £3 million will pay an apprenticeship levy; the Government estimates that this will make around 2-3% of employers eligible. Whilst the levy does place an additional financial burden on some larger employers, businesses and Scotland more widely will benefit from this injection of young blood into their workforce says Director of Legal Services at Law At Work, Donald Mackinnon. 

“Statistics suggest that this change may come as a surprise to some employers. A recent survey conducted by Skills for Health and Justice and the National Skills Academy for Health showed that 31% of employers were completely unaware the levy was being introduced. For those that qualify, the levy will be collected through PAYE in the same way as Income tax and NI contributions. This will be 0.5% of the company’s wage bill, minus the £15,000 allowance. It is important for employers who fund their own apprenticeships to note that they will also have to pay the levy. It may therefore be worthwhile for these employers to review how they might deliver approved apprenticeships so that they can maximise their return on the levy. Further, employers who operate in both Scotland and England will have their levy split accordingly and administered separately; with employers in England receiving digital vouchers which can be used to purchase approved apprenticeship training.

“There are legal implications of delivering apprenticeships that employers should be aware of before they decide to go ahead. Apprenticeships are generally for a fixed term and cannot be terminated early except in cases of extreme misconduct. An employer therefore makes a commitment to an apprentice for a set period of time. Any apprenticeship agreement must comply with Government published apprenticeship framework and it must incorporate a training element.

Importantly, the levy will not just be about apprenticeships in Scotland. All employers will be able to benefit, regardless of whether they pay the levy. Scotland has taken a more flexible approach to the apprenticeship levy than England. Less than half of the expected £221 levy funding will actually be used for apprenticeships whilst the rest will be spent on workforce development. This is in contrast to England who will be using the entire £2.5 billion levy funding for apprentice employees. If employers choose to take advantage of this opportunity, skill gaps could be plugged and employees better trained. Employers should therefore be seeking to educate themselves on how they can make the most of this change.”

By |2017-04-06T14:02:31+00:00April 6th, 2017|Employment Law, Learning and Development, News|0 Comments

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