End of National Living Wage for Job Seekers
Does the introduction of the Apprenticeship Levy and reforms mean the end of the Living Wage for Job Seekers?
You’re probably aware by now that the apprenticeship reforms finally began in April 2017 with changes to the funding rules and the introduction of the Apprenticeship Levy. Whilst there are obvious positives for employers and employees alike, we can’t help asking whether their introduction will mean the end of the National Living Wage for Job Seekers?
Up until April 2017, funding to cover the cost of training adult workers through apprenticeship schemes was severely limited. If you already had at least 5 GCSEs (let alone A Levels & above), you would find yourself not eligible for many of the funded schemes. This has now changed. Provided it can be evidenced that an employee is learning new skills, the government will pay 90% of the training costs in many cases so when you pull the various pieces of legislation together, apprenticeships now offer a low-risk recruitment option for employers.
The National Living Wage
Current legislation says that anyone over 25 is entitled to £7.50 per hour, whereas in the first 12 months of an apprenticeship an apprentice can be paid from £3.50 per hour (the current National Minimum Wage for Apprentices).
Apprenticeships are now grouped into one of 15 funding bands, ranging from £1500 to £27000, which means the employer contribution towards the cost of the training would range between £150 and £2700 and in addition to this, if you’re an employer who employs less than 50 employees and the apprentice is aged either 16, 17 or 18 you will also be entitled to a grant of £1000 per apprentice.
So, let’s say you have an entry-level job available. Anyone over 25 would be entitled to £7.50 per hour. A typical 38 hour a week job would cost an employer £14820 per annum in wages alone. By offering the same role as an apprenticeship, the wage cost could drop to £6916 per annum so even if the qualification attached attracted a 10% contribution of £2700 the cost drops to £9616 in the first 12 months.
Of course it remains to be seen how employers react to the changes over the months and years to come. If you would like to understand the benefits and cost implications of apprenticeships, please contact us on 01484907080 or by writing to firstname.lastname@example.org. Further information on our services to employers can be found here.
We look forward to working with you.