Employing an Apprentice: Requirements, Obligations and Incentives
There are many benefits in employing an apprentice for your business, for both the apprentice and for the employer. For the apprentice, it is an opportunity to obtain training and qualifications ‘on the job’, while still earning a living wage. For the employer, taking on an apprentice brings an opportunity to train, develop and tailor the apprentice’s skills to suit the business. Further, taking part in training the future generation of skilled workers is beneficial for both the employer’s business and the industry by potentially reducing skill shortages and ensuring the availability of qualified and productive staff.
Developing the capacity for a business to grow is a key consideration for employers. From this perspective, employing an apprentice represents an efficient medium through which the business can meet its demands and increase productivity. Consequently, investing in an apprentice can also represent an investment in the future of the employer’s business.
In addition to the potential increase in capacity for skilled work production and growth in the long term, there are also a number of significant immediate financial incentives provided by the Australian Government that accompany the employment of an apprentice.
However, choosing to employ an apprentice does not come without obligation. Accordingly, an outline of the requirements, obligations, and incentives of bringing an apprentice onto your team will be provided below.
There are a number of financial incentives available when taking on an apprentice. Firstly, their wages may be less than those of their skilled counterparts. This lower wage obligation is implemented to offset the fact that the apprentice is likely to be inexperienced, less productive, and required to spend time undertaking formal training.
In addition to a lower wage obligation, the Australian, State and Territory Governments provide incentives for employing apprentices. These potential incentives can vary according to the skill level of the apprenticeship qualification and other factors such as location, skills shortage occupations and age. An outline of these incentives is provided below.
The ‘Incentives for Australian Apprenticeships (IAA)’ Program
As a result of the impact of the COVD-19 pandemic on employers, the Australian Government has revised the previously planned implementation schedule of the IAA. Accordingly, the IAA will now commence from 1 October 2021. Following the introduction of the IAA, employers claiming incentives for an apprentice (or trainee) who commenced prior to 1 October 2021 will be grandfathered under the IAA.
Under the IAA, an eligible employer may be able to claim the following financial payments:
$1,500.00 base commencement incentive for all eligible employers of apprentices undertaking a Certificate III or higher, paid once the apprentice reaches the six-month point, and a further $2,500.00 when they complete their apprenticeship.
A $750.00 recommencement incentive will also be available for eligible employers in the same category as above (to ensure that employers are not discouraged from employing apprentices who have has to leave their previous employer part way through their apprenticeship).
In addition to these incentives, eligible employers can also access the following incentives:
A further $1,500.00 over the life of an apprenticeship if the apprentice is an Australian School-Based Apprentice or working in a rural or regional area.
A further $4,000.00, paid at the twelve-month point, if the apprentice is aged 21 years or older and working towards an occupation on the National Skills Needs List.
A further $1,500.00 over the life of an apprenticeship if the apprentice is a disadvantaged worker aged 45 years or over.
Further financial support for eligible employers and apprentices may be available through the Additional Identified Skills Shortage (AISS) payment introduced on 1 July 2019.
Boosting Apprenticeship Commencements Subsidy
In addition to the incentive payments referred to above, the Boosting Apprenticeship Commencements Subsidy (the Subsidy) provides that a business which employs an apprentice between 5 October 2020 and 21 March 2022 may be eligible for a subsidy of 50% of the wages paid to a new or recommencing apprentice (or trainee) for a 12-month period from the date of commencement, to a maximum of $7,000.00 per quarter.
The Subsidy is available to employers regardless of size, industry, or geographical location. Final claims for payment must be lodged by 30 June 2023.
In addition to the above subsidy, an eligible employer of an apprentice may also be able to claim the following:
The Additional Identified Skill Shortage Payment;
The Support for Adult Australian Apprentices incentive; and/or
Assistance for Australian Apprentices with Disability.
In light of the many benefits to employing an apprentice, implementation of this decision does not come without obligation. Taking on an apprentice involves significant commitment to induct, train, and supervise the new apprentice. Accordingly, employers will have to assess whether they have the resources, time, and capacity to adopt this approach to skill/team development.
In addition to training on the job, each apprentice must undertake formal training during work time through a Registered Training Organisation. This may be at a training organisation or at the relevant workplace. Time spent training must be paid as ordinary work hours.
As well as the commitment to the apprentice’s training and development, it is the responsibility of the employer to ensure they are paying the apprentice (or trainee) correctly, and that other aspects of the conditions of employment are met, including providing a workplace compliant with Workplace Health and Safety requirements and the correct payment of entitlements as specified in the relevant industrial award.
To sign up an apprentice, a business needs to provide an appropriate range of work, facilities, and level of supervision. A Registered Training Organisation will carry out an assessment of the workplace to determine whether these training requirements can be met, and the employer must negotiate with the apprentice an appropriate training contract. In addition to the development of a training contract, employing an apprentice will also require the employer to utilise an appropriate employment contract, clarifying aspects of the working relations and accurately setting out the terms and conditions of the employment.
Once engaged, there are also additional ongoing obligations on the employer, including to maintaining accurate training records and complying with compulsory reporting requirements.
Thinking of employing an apprentice? Get tailored advice and guidance in relation to the viability of introducing an apprentice to your workplace, and how to meet your obligations in relation to their engagement from Saines Legal, a full-service employment law firm.
We have also developed a small business retainer package designed to provide complete employment support at a fixed weekly fee, affording our small business clients complete peace of mind regarding workplace legal obligations and insurance against the costs of any unexpected issues. Do not hesitate to contact us via firstname.lastname@example.org or (07) 3324 1055, to organise a consultation.
The contents of this article are general in nature and is for information purposes only. The content of this article does not constitute legal advice and should not be used as such. Should you require assistance with a specific legal matter, it is recommended that you seek appropriate advice.
Authors Emma Marshall (Lawyer) and Nigel Saines (Principal).