Apprenticeships provide invaluable experience for those who take on apprentice roles, giving them a taste of a certain industry or type of role, which may shape their career for years to come. For employers, apprentices serve as a valuable part of any team, providing support and new ideas – and occasionally an apprentice may choose to spend the rest of their career with the company and work their way up to senior positions.
This is why National Apprenticeship Week serves as a reminder of the great work apprentices do and the value they bring, but from a legal and tax perspective, what are the rights of apprentices? Our experts take a look.
Employment laws protecting apprentices
An apprentice can be engaged under a contract of apprenticeship, an apprenticeship agreement or an approved English apprenticeship agreement as an employee. Generally speaking, the vast majority of the employment rights of an apprentice are the same as those that permanent employees benefit from.
This includes, therefore, the right under the Employment Rights Act 1996 not to be unfairly dismissed. Currently, that claim requires two years’ service although the Labour government’s Employment Rights Bill proposes to make the right to claim unfair dismissal a “Day 1” right. This change is not expected to come into force before Autumn 2026.
Apprentices, whether employed under a contract of apprenticeship or an apprenticeship agreement, are covered by the definition of ‘worker’ under the Working Time Regulations 1998 so benefit from all rights that workers are entitled to under those regulations. Apprentices under the age of 18, but over compulsory school age, have additional rights as young workers, such as restrictions on ‘night work’.
Organisations employing apprentices must comply with all aspects of discrimination law under the Equality Act 2010. But with the majority of apprentices being younger workers, there is a particular risk of age discrimination. Government funding for apprentices’ training is generally tiered according to age, with higher funding for younger apprentices. There are so-called ‘incentive payments’ for recruiting a young apprentice (aged between 16 and 18), but it is risky for employers to put an upper age limit on applicants for their schemes based on funding eligibility, as unless the employer can show that the upper age limit is objectively justified this could dissuade persons above the age limit from applying for an apprentice position and could lead to complaints of direct and indirect age discrimination.
Employers should also ensure that terms of employment offered to apprentices are consistent with those offered to other employees of similar status and length of service. If, as is likely, apprentices are younger than the rest of the workforce, any differences in their terms and conditions may need to be objectively justified to avoid the risk of indirectly discriminating against apprentices on the grounds of their age. Note though, that it is not unlawful age discrimination to pay an apprentice less than the adult rate for the National Minimum Wage.
All apprentices will also be entitled to the full time equivalent of 20 days’ annual leave plus bank holidays, statutory maternity, paternity, adoption, shared parental pay and sick pay (subject to the usual qualifications).
Wages
Apprentices on an approved apprenticeship scheme are entitled to the Apprentice Minimum Wage, currently £6.40 per hour (£7.55 from 1 April 2025). Where this rate is paid, care is needed to ensure that those apprentices aged 19 and over, and who have completed the first 12 months of their apprenticeship, are moved onto the appropriate age-related National Minimum Wage band.
Taxes
The apprenticeship levy is a ‘tax’ employers need to pay if their total payroll costs exceed £3m in a tax year (aggregated for group companies).
However, there are tax benefits to employing apprentices. Separately, an advantage of employing qualifying apprentices under the age of 25 is that the employer does not pay any Class 1 NIC on the salary of qualifying apprentices under the age of 25 (provided that the apprentice earns under £4,189 per month) and so long as they are on an approved UK government apprenticeship standard or framework.
Training
Any training time that is a part of the apprenticeship should be paid and must account for at least 20% of the apprentice’s normal working hours. The training time can be every week, every month or in a separate block of time.
Before the apprenticeship levy was introduced on 6 April 2017, any training costs not met from government funding could be made subject to a repayment clause if the apprentice left before the end of the apprenticeship. There was always a risk that such a provision would be unenforceable as a penalty clause, but if the amount that needed to be repaid reduced over time to reflect the amount of service the employer has benefitted from, this would be likely to be proportionate. Since the introduction of the apprenticeship levy, however, the position has been different, and apprentices should not be asked to contribute financially to the ‘eligible costs’ of training, on-programme or end-point assessment. Section 109 of the Finance Act 2016 provides that an employer or deemed employer is not permitted to recover the levy charge from payments made to a worker.
Conclusion
According to the latest government figures, over 736,530 people were participating in an apprenticeship in England in 2023/24, which shows the size and scale of this employment type. As such, it’s clear to see that this is a popular and successful route to attracting young talent into an organisation and with the legal obligations being relatively straightforward to manage it is something that all employers should consider.
This article was co-authored by trainee solicitor, Keeley-Joanne Hodgson.