One in five employers of apprentices unsure of the rules on apprentice pay

24 November 2017

New research from Learning and Work Institute suggests one in five employers of apprentices are unsure of the rules on apprentice pay.

The findings suggest low awareness of the rules may mean too many apprentices are not paid their legal minimum entitlement. This was highlighted by the Government’s recent Apprentice Pay Survey, which suggested one in five apprentices were paid less than their legal minimum. They come after the Chancellor prioritised raising living standards in his Budget.

The survey of 2000 employers found 22% of employers hadn’t heard of an apprentice minimum wage. It highlighted that 54% of employers did not know an apprenticeship required off the job training, 43% didn’t know that this off the job training needed to be paid, and 41% did not know that minimum pay for apprentices aged over 19 increases in the second year of their apprenticeship.

A sizeable minority of those who are currently employing apprentices or have recently done so were not aware of these rules: 23% were not aware that off the job training that forms part of apprenticeships needed to be paid, and 24% were not aware apprentices aged 19+ were entitled to their age-related minimum wage rate in the second and subsequent years of their apprenticeship.

Lack of awareness of the apprentice minimum wage was lowest in London (26% unaware) and highest in the North East (17% unaware). Similarly, knowledge that off the job training needs to be paid ranged from 54% in London to 67% in the North East. A similar picture emerges by sector, with awareness of the rules highest in manufacturing and lowest in retail and hospitality.

Businesses were most likely to get information on wage rules from their HR staff where they had them, government websites, and education and training providers. This suggests a greater role for training providers in ensuring employers and apprentices are clear upfront about the rules and how they will change through the apprenticeship. While employers are responsible for ensuring compliance with the rules, providers have a responsibility to help boost awareness.

The research also shows 15% of large employers don’t plan to take on apprentices and comes after Learning and Work Institute warned the Apprenticeship Levy could raise less than hoped as a result of lower than expected earnings growth in the economy. This could mean the amount raised by the Levy is 10 per cent smaller than originally planned.

Learning and Work Institute has previously warned that the Levy risks being boom and bust, raising less money in a downturn, precisely when investment in training needs to be maintained. It has called for a protected budget over the economic cycle, with guaranteed amounts for SMEs.

Stephen Evans, Chief Executive of Learning and Work Institute, said, “The expansion of apprenticeships and introduction of the Levy are a good thing. But they will only work for people and employers if everyone is clear about the rules and investment is maintained when economic times are harder. It would be perverse to cut national investment in training when it is most needed.

Our research shows the need to boost awareness of the rules among employers, and support apprentices to know their rights. Training providers have a big role to play in this, as does the Government. We also need to make sure investment in apprenticeships doesn’t fall as we approach Brexit, and that firms of all sizes are able to benefit from apprenticeships.”

Read the full report