Apprenticeship levy 'will be unfair to contractors'

George Osborne has been urged to amend his 2017 Apprenticeship Levy so it only affects permanent staff, thereby avoiding discriminating against temporary workers and contractors.

In an open letter to the chancellor, the Recruitment & Employment Confederation said that while it backed the aims of the levy, it would be “unfair” to impose it in its proposed form.

The levy will force firms with a £3m-plus annual pay bill to fund UK apprenticeships by paying 0.5% of their total ‘payroll expenses’, so not just those relating to permies.

The REC says that ‘payroll’ under the levy should exclude the wages of agency workers who, due to their short assignments, are unlikely to ever qualify for a “quality apprenticeship.”

Moreover, charging the levy beyond a firm’s “permanent, substantive” payroll will risk “employers seeking to move workers off-payroll,” warns the letter, signed by 14 agencies.

Instead, agencies and government should develop the levy together so that it grants temporary workers access to training, say the signatories, who include IT recruiters Hays and Randstad.

"We’re simply asking George Osborne to be reasonable, and to only require recruiters to pay the levy on their own permanent, substantive staff who work in recruitment,” said REC’s CEO Kevin Green.

“[They shouldn’t have to pay the levy on] the millions of agency workers who don’t work in their businesses but are placed into assignments in all the other sectors of the UK economy.”

Of the letter, Mr Green also said: “Over one third of adults in Great Britain work as a contractor, freelancer or agency worker at some point in their careers.

“The government needs to recognise that it is a mainstream part of the labour market and work with us to build ways for people to work flexibly without sacrificing access to training and development.”