What are the new incentives for hiring apprentices in the UK?

Christina Nawrocki FCCA explains the new incentives for hiring apprentices that will help with your budget & provide employment opportunities.

There’s no doubt about it, COVID-19 has affected businesses and the public in more ways than originally anticipated.

With ONS stating that early June 2020 indicators revealed that the number of UK employees on payroll was down approximately 650,000 compared to March, it’s been clear that businesses are more than just worried about the possibility of cutting back their workforce...it's actually happening!

As we plan for the future outside of lockdown and move into a time with a weakening labour market, it’s imperative to know what options are available. This will not only help your team, but also add to it while maintaining strict financial discipline. .

The recently introduced apprenticeship incentives are great news with all the challenges that both employers and employees have faced in recent times. There could be a real positive outcome for those entering the employment market. Who knows, perhaps we will see a surge in training roles and apprenticeships?

Like you, our own business faces the same hurdles and as a training organisation it was a welcomed surprise when the Chancellor’s Summer Statement announced incentives for hiring apprentices to help boost employment opportunities for young people in the workplace.

The Chancellor outlined four key schemes to help boost employment moving forward:

1. “Job Retention Bonus” for organisations who bring back furloughed workers

2. The “Kickstart” job creation scheme

3. New apprenticeship incentives

4. Traineeship incentives

1. "Job Retention Bonus" for organisations who bring back furloughed workers

With the Coronavirus Job Retention Scheme coming to an end in October and 9 million people furloughed due to the outbreak, it was crucial for the government to offer an incentive to get employees back to work.

Rishi Sunak announced the “Job Retention Bonus” which offers businesses a payment of £1,000 per worker for existing staff and apprentices who are taken off of the CJRS and brought back to the workplace.

There are a few stipulations that must be met in order to qualify for this incentive:

• The employee(s) must be employed through to the end of January 2021
• Your employee(s) must be earning at least the Lower Earnings Limit (£520 per month) on average between the end of October 2020 and end of January 2021

It’s important to remember that the “Job Retention Bonus” is set to help businesses after the furlough scheme comes to an end. However, the process is not as straight forward when compared to the previous COVID-19 schemes.

Planning for several months ahead will be key to implementing this incentive efficiently and effectively. Taking professional advice could play a significant role in getting your business back on track while operating on a limited budget.

2. The "Kickstart” job creation scheme

Supporting young people in the workforce was a prominent part of Rishi Sunak’s announcements which was made particularly clear with the introduction of the £2bn “Kickstart" job creation scheme.

What are the benefits of the “Kickstart” job creation scheme?

• The wage of new employees aged 16-24 years old who are on Universal Credit will be subsidised by the government for six months.
• Funding will cover 100% of the relevant National Minimum Wage for 25 hours a week, plus the associated employer National Insurance and employer minimum automatic enrolment contributions.

The young candidates will work with Jobcentre coaches to find "the opportunity to build their skills in the workplace, and to gain experience that will improve their chances of going on to find long-term sustainable work", according to the government. Unfortunately apprentices are not eligible for this scheme.

Hiring incentives for apprentices and trainees

Whilst the two previous schemes have looked at bringing existing staff back from furlough and support for younger people in the workplace as new employees, the Chancellor also announced incentives specific to apprenticeships and traineeships.

3. New apprenticeship incentive

From 1 August 2020 to 31 January 2021, as part of their “Plan for Jobs”, the government is offering payments to employers based in England who hire new apprentices.

How does the new apprenticeship scheme work?

• Open to any age group (age will determine funding amount)
• Must be a new apprentice hire
• Can not have been employed by the employer within 6 months prior to the contract start date
• The apprentices’ contract of employment must have a start date between 1 August 2020 and 31 January 2021
• Employers will be required to make claims using the apprenticeship service, this can begin from 1 September 2020
• Incentive payments will be made directly to employers in two equal instalments
• No limit on how many incentive payments an employer can claim (assuming qualifying criteria has been met)

There is an existing £1,000 payment already provided by the government for employers taking on new 16-18 year old apprentices, the great news is that the new incentive can be used in conjunction with this benefit.

4. Trainee incentives

The government has big plans to increase the number of trainees in 2020-21 by investing £111m to offer employers payments towards traineeships.

Any employers providing work experience to 16-24 year-olds in work placements and training will be eligible to receive £1,000 per trainee.

Provision of traineeships and eligibility for them will be extended to those with Level 3 qualifications and below. This means more young people will have access to high-quality training.

Additional assistance

You may also wish to discuss with your business advisor the existing apprenticeship support available and how it can work in collaboration with the new incentives. This can include:

• Levy payments
• Training cost incentives
• National Insurance rebates

With the current gloomy economic outlook and employment remaining relatively unpredictable, it’s recommended that you work with a professional advisor to help guide you through the utilisation of the schemes and incentives available.

Our payroll team offer a comprehensive service and can manage all aspects of your payroll requirements, contact us today.

The content of this post was created on 04/08/2020 and updated on 10/08/2020.

Please be aware that information provided by this blog is subject to regular legal and regulatory change. We recommend that you do not take any information held within our website or guides (eBooks) as a definitive guide to the law on the relevant matter being discussed. We suggest your course of action should be to seek legal or professional advice where necessary rather than relying on the content supplied by the author(s) of this blog.