The controversial new legal agreement, that employers will have to sign with the Skills Funding Agency to run new apprenticeships, has been unveiled.

FE Week exclusively revealed last September that businesses would for the first time have to sign strict contracts with the SFA – rather than just with providers, as the sector had expected.

The ‘sensitive’ document has now been published on

The key paragraph states: “The SFA reserves the right to recover from the employer any funding paid to a training provider from the employer’s digital account, where the payment of funding or any arrangement between the employer and the training provider does not comply with the funding rules.

“The SFA will act reasonably and proportionately in exercising its discretion to recover any sum from the Employer under this clause.”

This will come into affect with the launch of the new apprenticeship levy, when larger employers made to pay will take responsibility for deciding how they should spend resulting funds stored in their digital account.

Having read the new contract, Association of Employment and Learning Providers boss Mark Dawe said: “While the overarching principles of the levy and delivering apprenticeships are relatively straightforward, the contractual relationship between the SFA, employer, provider and learner is significant.

“This guidance makes clear that the funding is government money with government requirements. 

Mark Dawe

“We are working with AELP member providers to support them in understanding the key elements and also helping our members support and explain to the employers that they are delivering training to. 

“As we have previously said, the separate contract between the employer and the provider is equally important and we have already invested in making sure all parties understand their obligations.”

The need for the new contract with the SFA and the employer only came to light when FE Week asked about  about an unrelated matter – whether providers paying to access employer levy pots would break bribery laws, an issue which had been worrying the AELP.

In the SFA’s response, they let slip that there would be “agreements between the SFA and the employer” – a condition that has never previously been mentioned publicly.

The SFA spokesperson said: “In the contractual arrangements between the SFA and the employer this practice will be prohibited. This will be mirrored in agreements between the SFA and providers.”

These contracts came as a shock to many involved with FE and skills, given that the government’s message up until then had been that the only financial relationship for employers would be with the provider.

Pippa Morgan

Pippa Morgan, head of group at the CBI, told FE Week at the time: “We are concerned this is only coming to light now… as company procurement process are complex and time consuming to change.

“The outcome of all this needs to be something that enables firms to buy the training they need, while avoiding gaming of the system.”

The levy, first announced by the government in July, is set at 0.5 per cent of an employer’s paybill.

As outlined in the new guidance, all employers will receive a £15,000 allowance to offset against the levy.

This means only businesses with a paybill of more than £3m will pay.

The money raised will be ring-fenced, so it can only be spent on training apprentices and all levy-paying companies will receive a 10 per cent top up on monthly levy contributions.

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  1. I’m concerned the Employer Agreement will not stop:

    Employers pulling people out of EPA sessions at the last minute (operational priorities, sick etc..) and hence driving up high re-sit/re-booking costs. We need to appreciate that an EPA session is typically £500 to £2000 per apprentice as compared to a qualification which is typically £20-100 per learner – big difference. AAOs will not be able to absorb such high costs without charging; and

    Employers undertaking the training and then not putting apprentices forward for the EPA which results in low completion rates. This has been an historic issue in certain sectors such as construction and social care. The Employer Agreement appears to fail to address this.