This week, 6 – 10 March, is National Apprenticeship Week. With the advent of the apprenticeship levy just round the corner (it comes into force on 6 April 2017), now is a good time to be thinking about apprentices and apprenticeship programmes.

It is essential that employers understand the Apprenticeship Levy and how it will impact on their businesses. All employers in the UK are potentially subject to the levy, which is payable from the start of next financial year. The levy is 0.5% of an employer’s pay bill. However as each employer has a £15,000 allowance, only employers with a pay bill of more than £3 million have to pay the levy.

In England, the levy is to be made available to employers to spend directly on apprenticeship schemes through an online apprenticeship service account. There will also be a 10% top-up payable by the Government. More information about how the scheme works can be found here.

In Wales, employers cannot access the levy payments in the same way. Learning and training is devolved to the Welsh Government which has adopted a different approach. The Welsh Government launched its updated policy on Apprenticeships in Wales in February 2017 which includes additional funding for apprenticeship programmes. The new policy and associated information can be found here.

Employers that operate in both England and Wales will have to get to grips with the two different approaches and work out how best to access government money to deliver their apprenticeship programmes. The critical factor is where a particular apprentice works. The funding regime depends on where the apprentice spends 51% of their time. If that is in England, the English system applies – if in Wales, Welsh funding can be accessed.

Meanwhile, for employers that are excited about creating new apprenticeship opportunities, there is a very important employment law consideration, which is the nature of the relationship that is created.

A common law contract of apprenticeship is very different from a normal contract of employment. It was stated in Dunk v George Waller & Sons [1970] 2 QB 163 that the common law contract of apprenticeship is of a special character and a distinct entity from other contracts of employment; its essential purpose is training, the execution of work for the employer being secondary. This means that it can only be terminated in very limited circumstances.

In contrast, apprentices engaged under apprenticeship agreements provided for in legislation, can be dismissed in the same way as ordinary employees. We therefore recommend that employers adopt the apprenticeship agreement route. To do this they need to understand which legislation they are relying on and ensure this is expressly stated in their contractual documentation. For assistance, please contact the Employment & HR Services team on 029 2039 1002.