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Employer £3,000 Cash Incentives for Hiring Apprentices

The world has changed as we knew it and continues to change as we adapt many of our personal and workplace practices and behaviours to a new normal.

Face masks are now an essential accessory, staying at home is the new going out, and working from home has become the new norm. Over the course of the COVID-19 pandemic, we have seen the government introduce schemes in an effort to rebuild the economy and support the nation with schemes like the Coronavirus Job Retention Scheme (CJRS), Eat Out to Help Out, and the incentives for employers hiring new apprentices.

So hopefully if you are an employer, you’ll have heard of the incentives on offer by hiring new apprentices. It’s a great way to develop your workforce and invest further in your people as businesses look to rebuild.

How does it work?

To support businesses, the government are offering incentive payments for newly hired apprentices.

From the 1st April 2021 – Employers who hire a new apprentice between 1st April 2021 and 30th September 2021 will receive £3,000 per new hire, regardless of the apprentice’s age.

The scheme is designed to help encourage employers to create new jobs and to develop the skills they need to recover from the economic struggles of COVID-19.

There is an additional £1,000 for employers for newly hired apprentices aged:

  • 16 – 18
  • 19 – 24 years old and has an Education, Health, and Care (EHC) plan provided by their local authority or has been in the care of their local authority

Find out how to apply and more information here.

Hire an apprentice who has been made redundant

You can also use a new service from the government to assist you in hiring an apprentice who have been made redundant.

The key here is that many of these apprentices have the skills, knowledge, and qualities that you need. Hiring a new apprentice in this way could mean you have a work-ready apprentice who can quickly add value to your business, shortening the time you’ll see a return on your investment.

It also means you will be assisting an apprentice to complete their training and achieve their apprenticeship.

If you hire an apprentice that has been redundant, you can apply for the incentive payments for hiring a new apprentice.

How much does it cost to pay an apprentice?

As an employer, it is your responsibility to pay the wages of your apprentice, for their normal working hours and any training they do as part of the apprenticeship.

You are required to pay them at least the National Minimum Wage rate depending on their age and year of apprenticeship training they are in.

As an employer of apprentices you must ensure you’re paying them at least the National Minimum Wage for all the time they’re working. Time spent in training counts as working time. Once training time is included an apprentice’s hourly rate of pay should be at least:

  • £4.30 if they are aged under 19 or in the first year of their apprenticeship.
  • £6.56 if they are aged 19 to 20 and have completed the first year of their apprenticeship.
  • £8.36 if they are aged 21 to 22 and have completed the first year of their apprenticeship.
  • £8.91 if they are aged 23 or over and have completed the first year of their apprenticeship.

For an employer’s guide to paying the National Minimum Wage correctly, go to https://www.gov.uk/government/publications/calculating-the-minimum-wage

Please see the table below which confirms the 2021 minimum wage regulations.

The rates from April 2021:

Apprentice16-1819-2021-2223 and over
In 1st Year£4.30£4.30£4.30£4.30
Have completed 1st Year£4.62£6.56£8.36£8.91

What about unused Levy funds?

Employers who pay the apprenticeship levy can choose to transfer any unused funds to another employer, using the apprenticeship service.

In August 2021, a new online matching service will be launched (on GOV.UK) whereby levy employers can advertise their intent to transfer, to other employers. This will give organisations the opportunity to reduce skills gaps, within their sector/location, by enabling them to easily identify other employers who wish to take on apprentices with transferred funds.

Other employers will be able to access the new service, this will enable them to see available transfer opportunities. Employers can then apply for a transfer from within their apprenticeship service account.

Providers and intermediary bodies will also be able to see these opportunities and will be able to promote these with their networks. More details to follow over the coming months.

The transfer of levy funds

This will support other employers to pay for apprenticeship training and assessment.

You can locate employers who may want to transfer funds by:

  • Speaking to training providers
  • Working with employers, partners or stakeholders in your supply chain
  • Getting in touch with employers in your industry
  • Working with regional partners in the community or wider area

A levy-paying employer can transfer a maximum of 25% of their funds. To gain more information and support about transferring your unused funds visit, https://www.gov.uk/guidance/transferring-apprenticeship-service-funds.

So now we have gone into the details and fine print of the incentive scheme, we hope you can make use of this support and invest good quality apprentices into your workforce.

If you are left with any further questions or would like support in finding an apprentice for your business get in touch with us.

National Insurance Breaks for Employers of Apprentices Under 25

Employers of apprentices under the age of 25 are no longer required to pay secondary Class 1 (employer) National Insurance Contributions (NIC) on earnings up to the Upper Earnings Limit (currently £43,000), for those employees.

This is up to a 13.8% saving on everything the apprentice earns over £8,424 a year for the employers of apprentices.

Example

An employer has a staff member who is under 25 and they encourage them to enrol onto an apprenticeship.

If the employee is earning £18,000 per year, at a national insurance rate of 13.8% (the first £8,424 earned is not subject to NIC) the remaining £9,576 is subject to NIC and provides the employer with a saving of £1,321 that they no longer need to pay, for the entire time the employee remains on the apprenticeship and under the age of 25.

For more information – Paying employer National Insurance contributions for apprentices under 25

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