• National Minimum Wage and the apprentice
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National Minimum Wage and the apprentice

31 March 2022

Whilst companies can obtain certain ‘tax’ reliefs for engaging apprentices, and utilise some of the apprenticeship levy duty to pay for some of the training, the rules regarding the National Minimum Wage (NMW) payments that individuals should receive come with a list of conditions that have to be followed. Otherwise, businesses could be deemed to have infringed the NMW rules, and find themselves on the ‘Name and shame’ list.

All apprentices must be paid at least the minimum wage for the time they spend training or studying as part of the apprenticeship, in addition to the time they spend working.

Apprentices under the age of 19, or aged 19 or over and in the first year of their apprenticeship, are entitled to the apprentice rate. All other apprentices are entitled to the relevant rate for their age.
 

What is a qualifying apprenticeship?

All apprenticeships must incorporate structured training for the purpose of equipping an apprentice with at least one of the following: a skill, a profession or a trade. This would typically include work-based training, a course of study, or a combination of the two. However, a worker is unlikely to be considered an apprentice if the sole purpose of training is to perform a specific job or to perform a specific role in their current job. The training should lead to transferable skills that can be applied with different employers or in different sectors.There are various government schemes available, in addition to the engagement of workers under a contract of apprenticeship.
 

Contract of apprenticeship

It is good practice to have a written contract of apprenticeship, which should include as a minimum:

  • A statement setting out the rights and obligations of the employer and the apprentice
  • What training will be provided, and to what level
  • The length of the apprenticeship
  • The pay rates.

It is also important to note that the start and end dates of the apprenticeship may not necessarily be the same as the start and end dates of a contract of employment, which could result in an underpayment if the business chose to pay the apprentice rate.


Common errors that can lead to underpayment

Apprentices not being paid correctly for their off-the job training is a common occurrence and this can range from a mixture of incomplete or poor record keeping of training time through to scenarios such as the employer being unaware a training provider was running additional study courses.  The following are also common and often cited by HMRC in their educational briefings:

  • Employers paying the apprentice rate before a worker actually starts their apprenticeship, or after it ends. Once an apprentice completes their apprenticeship, they are entitled to the minimum wage rate for their age from the first day of the pay reference period that begins on or after the start date
  • Employers paying the apprentice rate to a worker who is not an apprentice. Simply calling somebody an apprentice is not enough. If a worker does not qualify as an apprentice, they are entitled to the minimum wage rate for their age
  • Employers continuing to pay the apprentice rate to apprentices who are aged 19 years or over after they have completed the first year of their apprenticeship.


Protecting your organisation

The overriding message is that for any organisation which engages apprentices, an awareness of both the training scheme/apprenticeship contract and how it might be construed for NMW purposes is key. An independent review and risk assessment can help in identifying not only inherent problems but also appropriate steps that can be taken to avoid future problems.

If you have any questions regarding your NMW position and require assistance, please do not hesitate to get in touch us.

Further guidance on apprenticeships