0370 270 6000

The apprenticeship levy is in place, but are your service contracts?

12 April 2017

As of 6 April, the controversial apprenticeship levy came into force. This is effectively a 0.5% tax on employers with a pay bill of more than £3m. The levy money flows into a centralised apprenticeship training fund. This can be recouped by employers to purchase apprenticeship training from approved providers, subject to certain requirements being met. For non-levy paying employers, or those employers who have insufficient funds in their digital account, the government will contribute 90% of the cost of apprenticeship training provided that the employer pays 10%.

There has been much debate on the merits of the new levy, but one piece of the puzzle that has yet to attract much attention is the effect the new rules will have on the contractual relationships between the parties involved.

Any employer or training provider that wishes to draw down apprenticeship levy funding will now have to enter into a mandatory contract with the newly named Education and Skills Funding Agency (ESFA). This contract allows, amongst other things, ESFA to recoup the funds given to the training provider directly from the employer’s digital account should any arrangement between employer, training provider, and subcontractor fall foul of ESFA’s funding rules.

ESFA’s funding rules also require certain issues to be addressed in contracts between employers and training providers, particularly if the training provider subcontracts any aspect of the delivery of the training to third parties.

For any employer or training provider wishing to draw down apprenticeship levy funding, it is therefore imperative that the contracts in place between them meet ESFA’s funding rules and requirements.

Related opinions

IR35 rules to be scrapped from April 2023

The Chancellor’s recent mini-budget provided a significant announcement for business as it was confirmed that the off-payroll working rules (known as “IR35”) put in place for public and private sector businesses from 2017 and 2021 will be scrapped from April 2023.

View blog

Revoking and reforming EU law

The Government has published the Retained EU Revocation and Reform Bill which, if passed, provides for the revocation of all “EU-derived subordinate legislation” (i.e. UK statutory instruments which were introduced to implement EU law) and retained direct EU legislation on 31 December 2023, unless legislation is specifically introduced to save them.

View blog

Gender equality

Randstad has published a report on gender equality in the workplace based upon survey responses from 6,000 workers within the construction, education, healthcare and technology sectors. Whilst legislation relating to sex discrimination has been around for over 45 years, nearly three quarters of female workers surveyed reported that they had either experienced or witnessed inappropriate behaviour or comments from male colleagues.

View blog

Unfavourable treatment

The Employment Appeal Tribunal’s recent decision in the case of Mr Michael Cowie & Others v Scottish Fire and Rescue Service provides a useful insight into favourable - or unfavourable - treatment in the context of discrimination claims.

View blog

Mailing list sign up

Select which mailings you would like to receive from us.

Sign up