To celebrate the start of National Apprenticeship Week, we thought that we would treat you to a little article about the rules and regulations regarding the employment of apprentices.
► What is an apprentice?
An apprentice is someone who is training to become skilled in a particular trade or role. They combine both on-the-job work with classroom learning in order to ensure that they become experts within their field.
► What are the advantages of having an apprentice?
Companies can receive government funding to help pay for apprenticeship training; however, the amount received depends on whether the company pays the apprenticeship levy. Companies with a National Insurance contribution (NIC) bill over £3 million each year are required to pay the levy.
If a company isn't required to pay the levy, yet still want support with apprenticeships, then they are required to pay 5% towards the cost of training and assessing their apprentice.
For this to happen they must agree to a payment schedule with the training organisation and then pay them directly for the training itself.
Once this has been completed, the Government will pay the remaining 95% up to funding band maximum.
► How long do they work?
Full-time apprentices who work 5 days a week must spend at least 20% of their time towards training for their role.
► How much do apprentices earn?
National Minimum Wage Rates.
► Calculating tax & National Insurance for apprentices
If an apprentice is being paid wages or a salary then their pay is considered taxable income and therefore subject to the usual tax and National Insurance (NI) deductions, just like that of a regular employee.
► Automatic pension enrolment
Apprentices are also subject to automatic pension enrolment rules. If an apprentice falls into the category of an "eligible jobholder", then they must be enrolled into a qualifying pension scheme.
📌 An eligible jobholder is a worker who meets the following criteria:
- Aged between 22 and the state pension age
- Earns at least £833 per month
📌 A qualifying scheme is a pension scheme that meets the following criteria:
- The minimum total contribution must be 8% of which the employer must contribute at least 3%
- The contributions must be based on at least the qualifying earnings which are between the Lower Earnings Limit and Upper Earnings Limit (currently between £512 and £4,167 per month for the 2019-20 tax year).
► Apprentices & annual leave
Full-time apprentices - ie. those that work 5 days a week, are entitled to 28 days of annual leave in addition to the paid time off for training.
► Apprentices & PayFit
The PayFit app allows for apprentices to be added to a company's list of employees. The app also guarantees compliance by registering whether or not an apprentice is being paid the correct amount.
Interested in finding out more about PayFit? Why not book a demo with one of our product specialists today?
PayFit blog author