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Do I have to pay my apprentices the National Minimum Wage?

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Apprenticeships are one of the most common ways for employers to effectively train skilled workers for the future. When deciding whether to take on an apprentice there are many considerations you must make, one of which is what to pay them. Apprentices are entitled to the National Minimum Wage (NMW) and in this article our Employment Law team detail how much you have to pay your apprentices according to their age or how long they have been an Apprentice with you, how to hire an Apprentice and how to make sure your Apprenticeship Agreements are compliant. 

How much should I pay my apprentice?

Apprenticeships are work-based training programmes, which lead to nationally recognised qualifications and allow individuals to develop skills by combining work with day release training.

You are required to pay Apprentices the NMW, which is currently £3.90 per hour, but will increase to £4.15 from 1 April 2020 under new legislation. The Apprenticeship rate applies to workers who are aged under 19, or are in the first 12 months of the Apprenticeship and are employed under a contract of Apprenticeship, or under a specified Government Apprenticeship arrangement.

Apprentices who are aged 19 or over and not in the first 12 months of the Apprenticeship are entitled to the relevant rate of the NMW depending on their age:

  • £6.15 per hour for those aged 19 or 20;
  • £7.70 for those aged 21 or over but under 25; and 
  • £8.21 for those aged 25 and over.

From 1 April 2020, these rates will increase to:

  • £6.45 per hour for those aged 19 or 20;
  • £8.20 for those aged 21 or over but under 25; and
  •  £8.72 for those aged 25 and over.

These are the minimum rates, but you can choose to pay your Apprentices more if you wish to do so.

You must also pay your Apprentice for time spent training or studying for their Apprenticeship, whether they are at work, college or a training organisation.

You cannot recover the training costs of the Apprenticeship from the Apprentice. Only training costs unrelated to the Apprenticeship could potentially be recouped and you should have an agreement which clearly states what costs may be recovered. This should be separate to the agreement for the Apprenticeship. 

How do I hire an Apprentice?

The main methods of engaging an Apprentice include the “traditional” contract of Apprenticeship, governed by common law, and an Apprenticeship Agreement or an Approved English Apprenticeship Agreement, introduced in 2011. 

If your documentation is not compliant, or the Apprentice has not signed the Apprenticeship Agreement from the first day on which they commence their apprenticeship with you, it is likely that you will have inadvertently created an old-fashioned contract of apprenticeship.

Having a contract of Apprenticeship means that the Apprentice has employee status, so they have the usual employee rights and benefits. It also means that the training element of the Apprenticeship is the primary purpose and focus during their time as an Apprentice, whilst their work duties and obligations are secondary. Under the contract of Apprenticeship, the Apprentice also has enhanced rights which protect them from dismissal during their Apprenticeship. Misconduct in the normal employment context will not be sufficient for you to dismiss. The Apprentice's actions will need to be so extreme that they are effectively unteachable. This is a very high threshold to meet and so you should always seek legal advice before dismissing an Apprentice. 

The Apprentice also has enhanced rights to damages if the Apprenticeship is terminated early and they could be entitled to damages for loss of earnings and training during the remainder of the term and for loss of future career prospects.

The more modern Apprenticeship Agreement and Approved English Apprenticeship Agreements are different to the contract of Apprenticeship as any work they are required to carry out is the primary factor and the apprentice does not have the enhanced rights against dismissal. 

How do I make my Apprenticeship Agreements compliant?

To be a compliant Apprenticeship Agreement, the contract must:

  • State that the essential purpose of the contract is for the apprentice to work, rather than just to receive training; 
  •  Specify the skill, trade or occupation for which the Apprentice is being trained. 

The agreement must follow a set form and contain the basic written terms and conditions of employment required under Section 1 of the Employment Rights Act. If the Apprentice is on a compliant modern Apprenticeship Agreement then you will be able to terminate the agreement in the same way you would do for any other employee. The Apprentice will not be entitled to enhanced damages if they are on a compliant agreement. 

Apprenticeships can be a productive way to create a dedicated and loyal workforce, but getting them right can be difficult. Before recruiting an Apprentice, or trying to dismiss one, you should always seek legal advice to help you avoid any issues. If you would like more advice on any of the subjects raised in the above article, or you would like us to review any Apprenticeship Agreements you currently have, you can contact a member of our Employment team on 023 8071 7717 or email employment@warnergoodman.co.uk.

ENDS

This is for information purposes only and is no substitute for, and should not be interpreted as, legal advice. All content was correct at the time of publishing and we cannot be held responsible for any changes that may invalidate this article.