Apprenticeships work as a bridge between education and employment, offering a hands-on approach to learning that benefits both apprentices and employers.
But do employers get paid for hiring an apprentice?
The simple answer is no, however employers do benefit financially through a variety of government incentives and grants.
In this blog post, we'll discuss the financial side of hiring an apprentice and explain how employers can get government funding.
What government funding is available for employers who hire apprentices?
The UK government has set up several apprenticeship funding schemes to encourage businesses to take on apprentices. Employers that hire apprentices may not directly receive "payment," but they might be eligible for financial support through grants to reduce the cost of training and help ease the financial burden on employers.
Cost of apprenticeship training
Employers that don’t pay the Apprenticeship Levy (those with an annual payroll of less than £3 million) are still eligible for government funding, where the government funds 95% of the apprenticeship training costs.
This makes apprenticeship programmes more accessible for smaller businesses, which might otherwise struggle to afford the associated expenses.
To qualify, employers must:
-
Hire an eligible apprentice.
-
Work with an approved apprenticeship training provider that meets the government’s standards.
The remaining 5% of training costs is paid by the employer. This contribution is to make sure there is a commitment to the development and success of the apprentice. It’s important to note, apprenticeship funding bands vary depending on the apprenticeship programme.
Apprenticeship grants
The government also offers apprenticeship grants to employers who hire apprentices. These grants are designed to encourage employers to take on young people or individuals with particular needs.
The Apprenticeship Grant offers a payment of £1,000 for every apprentice who falls into one of the following categories:
-
16 to 18 years old.
-
15 years old (if their 16th birthday is between the last Friday of June and 31 August).
-
19 to 24 years old with an Education, Health and Care (EHC) plan.
-
19 to 24 years old and previously in local authority care.
These grants are in place to support vulnerable groups and incentivise employers to offer opportunities to young people and those who may face barriers to employment.
How will employers receive apprenticeship funding?
Apprenticeship funding is distributed through the training provider, not directly to the employer. If an employer is eligible for the £1,000 grant, they will receive two instalments through their apprenticeship provider.
-
£500 after the apprentice has been employed for 90 days.
-
Another £500 at the one-year mark.
Employers can access government funds for training by working with approved apprenticeship training providers. The grant payments are meant to help businesses offset the costs of onboarding new apprentices.
Does the government pay apprenticeship wages in the UK?
No, the government doesn’t pay apprenticeship wages - this responsibility falls on the employer. The wage structure for apprenticeships in the UK is regulated by national minimum wage laws, but it's up to employers to pay their apprentices based on agreed-upon wage rates.
For apprentices:
-
Under 19 years old or in their first year of apprenticeship, there is a national minimum apprentice wage, which is lower than the standard minimum wage.
-
Apprentices aged 19 and over, and in the second year of their apprenticeship, must be paid at least the national minimum wage for their age group.
The wage limit for apprentices is lower than regular minimum wage to incentive employers to recruit apprentices and develop new talent.
How can employers apply for funding for apprenticeships?
To reserve funding for your apprenticeship, speak to your apprenticeship provider for support. A government-approved apprenticeship provider will be able to guide you through the funding process and reserved apprenticeship funding for you.
Improving financial gain by hiring an apprentice
Hiring an apprentice can lead to a net financial gain for an employer during the apprenticeship’s training. Data shows that apprentices often contribute more value to a business than their associated costs, resulting in a positive ROI.
In fact, businesses in the UK can see an average gain of £2,500 to £18,000 per apprentice during their training period.
This net gain happens because apprentices develop valuable skills on the job, which translates into increased productivity and reduced recruitment costs - their contributions to the company also relieves burdens and pressures in other areas.
Choose Total People as your apprenticeship provider
Choosing the right apprenticeship provider is important if you want the apprenticeship process to run smoothly and to get the most out of your apprentice.
Here at Total People, we are one of the UK’s leading apprenticeship providers, offering unrivalled support for employers, including assistance with funding, recruitment and tailored apprenticeship training programmes.
With years of experience in various industries, we help employers maximise the benefits of apprenticeships.
Contact us today for tailored guidance on hiring apprentices, accessing government funding, and developing a skilled, productive workforce that meets your business needs.
