The Education and Skills Funding Agency has finally confirmed that the national minimum wage requirement for a furloughed apprentice applies to just the “training hours during the furlough period”.

In an email from a senior manager in the funding policy team, seen by FE Week, an explanation with two worked examples is provided (see below the line).

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A furloughed employee can take part in volunteer work or training, as long as it does not provide services to or generate revenue for, or on behalf of the employer.  Training in this context includes apprenticeship off-the-job training. Where their provider can continue to deliver training remotely, a furloughed apprentice can therefore continue their apprenticeship whilst furloughed.

Where training is undertaken by furloughed employees, at the request of the employer, they are entitled to be paid at least their appropriate national minimum wage for this time. In most cases, the furlough payment of 80% of an employee’s regular wage, up to the value of £2,500, will provide sufficient monies to cover these training hours. However, where the overall time spent training, during the furlough period, attracts a minimum wage entitlement in excess of the furlough payment, employers will need to pay the additional wages. This is because time spent training is treated as working time for the purposes of the minimum wage calculations and therefore must be paid at the appropriate rate, taking into account the increase in minimum wage rates from 1 April 2020.

Employers should consider the hours that an employee is expected to train during the period of the furlough (which must be a three-week minimum). Employers will need to ensure that the furlough payment provides sufficient monies to cover these training hours. Where the entire furlough payment equates to less than the appropriate minimum wage entitlement for the training hours during the furlough period, the employer will need to pay the additional wages to ensure at least the appropriate minimum wage is paid for the time spent training.

Our worked examples show how to calculate whether the furlough payment equates to less than the appropriate minimum wage entitlement for time spent training.

Example 1:

18 year old first year apprentice is on a 37 hours per week contract and has been furloughed.  They are continuing to training for 1 day per week (7.5 hours per week).

In terms of the National Minimum Wage Regulations they are entitled to £4.15 for every hour they train. (Note that the NMW legislation does not apply to time not in work or training).

Over the 3 week furlough period (the pay reference period) this amounts to a NMW entitlement of £93.38 (£4.15 x 7.5 hours x 3 weeks).

The 80% furlough payment that they have received from their employer is £368.  This furlough payment provides sufficient money to cover these training hours.

Example 2:

22 year old second year apprentice is on a 37 hours per week contract and has been furloughed.  They have agreed, with their employer and provider, to train for 4 days per week (7.5 hours per day) (to cover as much off-the-job training as possible during this period).

In terms of the National Minimum Wage Regulations they are entitled to £8.20 for every hour they train.  (Note that the NMW legislation does not apply to time not in work or training).

Over the 3 week furlough period (the pay reference period) this amounts to a NMW entitlement of £738 (£8.20 x 7.5 hours x 4 days x 3 weeks).

The 80% furlough payment that they have received from their employer is £728.16.  This furlough payment does not provide sufficient money to cover these training hours and the employer would need to top up the difference (£9.84).

*Note is both cases above the apprentice, prior to furlough, was paid at/close to the National Minimum Wage. 

FE Week was joined by apprenticeships minister Gillian Keegan on Monday for our latest webinar on the response to the coronavirus pandemic for the FE and skills sector.

Here were the main takeaway points.

 

‘Anomaly’ leaving majority of apprenticeships ineligible for ESFA supplier relief

The majority of apprenticeship providers are not eligible for supplier relief from the Department for Education because of the Cabinet Office’s “very specific” policy notice, Keegan said.

She described the support as an “anomaly”, which is “over and above” what almost all other businesses are receiving across the country, and explained that her team worked closely with Treasury to see what parts of the FE sector could use the coronavirus supplier relief scheme.

When asked why apprenticeships funded through the DfE’s digital system, mostly those with large levy-paying employers, are excluded, she said: “I will be honest, it did take us a little bit of time to come out with this. That was because the original purpose of that Cabinet Office notice was actually more for critical suppliers to government in terms of direct services to government, so people maybe operating prison services and all that kind of thing.

“So we had to work with Cabinet Office and Treasury to see if it related to this sector, and that is what resulted in that guidance on Friday. It really is only for those covered under that very specific Cabinet Office notice PPN 02/20.

“You need to look at this as quite specific, quite special under this Cabinet Office notice that has allowed a bit of extra support that goes to those where it has more of an impact, on small and medium-sized business apprenticeships and providers.”

She stopped short on the webcast of expanding on the contractual issue, which many in the sector have queried and on which the Association of Employment and Learning Providers is seeking legal advice.

 

It was tougher for ESFA to launch supplier relief than MCAs

The minister said some in the sector were concerned the ESFA was “deliberately trying not to” launch supplier relief for providers after mayoral combined authorities announced theirs within days of Cabinet Office’s guidance.

“None of that’s true,” she claimed. “We were trying to do as much as we possibly could, but it’s more difficult sometimes for the department to do it.

“You know we have to obviously get everything agreed through Treasury as well.

“We’re dealing with an awful lot of stuff, quite frankly, so it does make it a little bit more challenging.”

 

Starts pipeline is the ‘biggest worry’

Keegan said her “biggest worry” is the recruitment of new apprentices and how to keep the “whole pipeline going, with all this uncertainty” during the pandemic.

She claimed that the next “peak” for many apprenticeship starts is September, so “between now and then we really have to make sure that everybody is aware that furloughed and existing employees can start apprenticeships”.

She added that it will be crucial to inform school leavers of apprenticeships as a potential next option.

 

Minister ‘shocked’ at ‘rubbish’ apprenticeships in early stages of the levy

Keegan expressed concern at historic “low quality” apprenticeships delivery.

“I was quite shocked at some of the lower quality delivery that happened in the first stages of the levy being introduced, and I never want to go back to those days… I’ve met people on the doorstep who’ve actually said to me, this is a load of old rubbish. We have to make sure that every apprenticeship is quality.”

When pressed on whether she believed there was a correlation between low-paid and low-quality apprenticeships, she said: “No, not at all, low quality is low quality

“Low quality and low pay are not necessarily together, but low quality is low quality.”

 

Traineeships on DfE radar

Keegan was joined by Peter Mucklow, the director of further education at the Education & Skills Funding Agency, during the webcast.

Asked about whether the government was working on plans to add flexibilities to traineeships during the current crisis, as they have done for apprenticeships, Mucklow said “nothing specific” has been drawn up yet, “but that’s something we’re very happy to take away”.

“We will be looking at traineeships. It’s really quite tricky as obviously the work experience placement is such an important part of the qualification,” he added.

Keegan said there are “difficulties in delivering the work placement for traineeships, so they’re looking at that right now”.

 

‘A big thank you from me to everyone in the sector’

Keegan said the FE sector has done a “remarkable job to keep the show on the road despite massive headwinds and all the challenges we have all had to deal with” and offered the following thank you message.

“Clearly the priority for the sector was to keep people studying, in particular, apprentices, still getting access to continue their studies as much as possible.

“It has been a challenge for many, but from what we have seen, many have stepped up to that challenge.

“Wherever I look there are just great examples of the sector going above and beyond to deliver brilliant experiences to apprentices to continue online learning and for all kinds of other training courses and full-time qualifications.

“New apprentices being signed up – we are continuing to see activity of that kind.

“I have been in business for 30 years before becoming an MP, and I completely understand the difficulty when your business model changes. You have very little time to react, you have got to change your delivery mechanism, change your staff in some circumstances and make difficult decisions about staff.

“The more that we can keep close, discussing things… We are here, we are listening and trying to do our best. But of course, this is across the whole economy, across many sectors, and it is something that none of us was expecting to do just a couple of months ago. “A big thank you from me to everyone in the sector.”

A two-year £10 million project to renovate the digital apprenticeship service as it is scaled up is being launched by the Department for Education.

The development, to start as soon as next month, will aim to “simplify processes to remove burden” by, for example, creating a new function for paying end-point assessment organisations direct.

The number of employers using the system is expected to increase by more than 150,000 in the coming months as small and medium sized businesses transition onto it.

Large levy-paying employers have had full use of the digital service to manage their apprenticeships since the “minimum viable” system became operational in 2017.

It currently allows businesses to manage their apprenticeship funding, select a suitable standard or framework, choose a provider to deliver training and provide digital certification.

Over the last three years the department has “continued to add new capabilities” that are “connected through personalised user-outcome, AI based, real time data model”.

Two tenders looking for suppliers to now “make the service easy to use” and enable “all employers take greater control of apprenticeship funding” are currently live from the DfE and total £5 million each.

The successful bidders must scale the apprenticeship service “so that this holds true at significant volumes”.

Another “problem to be solved”, according to the tenders, is to “surface unmet demand to the marketplace” by “ensuring suppliers have visibility of real-time employer demand and can explore opportunities to fill gaps and meet employers skills needs”.

Officials also want the service to “mature” by suppliers “building out our continuous improvement function with focus on simplifying processes to remove burden, ensuring we maintain service availability and reliability as we scale the volume of users and increasing performance and efficiency”.

A key part of the upgrade will be to add a function that enables end-point assessment organisations to receive payment direct from government – rather than the current system where they are paid through training providers.

The incumbent software house supporting the digital apprenticeship service is the firm Contractsonline Ltd.

Both DfE tenders are worth up to £5 million and both “opportunities will both be supporting apprenticeship services”.

“Whilst there is some cross over in capabilities required for delivery, there is varying essential criteria which we are looking for in each opportunity,” the tenders state.

“They will be run independently of each other and will be assessed against the skills experience outlined. The current delivery model brings together managed services, potentially from different suppliers and permanent staff.”

The closing date for one of the tenders is 6 May with a start date of 1 June, while the last day for applications for the other is 13 May with the contract due to commence on 14 June.

While the government has promised £1.5 billion of new cash to colleges over this parliament to create “cutting-edge facilities”, a number of multi-million-pound building projects are already under way.

Construction was being pushed ahead for Institutes of Technology and T-level facilities ahead of their rollout in September, but the coronavirus pandemic has stopped some in their tracks and put question marks over their completion dates.

In recent days the government has said work on construction sites can continue as long as it is done safely, so a number of providers have introduced safety protocols and got straight back to work.

FE Week spoke with a number of affected colleges to find out how they have adapted to delivering the projects during this crisis.

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Capital projects to launch T-levels in September

Almost £40 million has been made available in capital funding for providers delivering T-levels from this September to use for building new classrooms and refurbishing buildings.

Derby College Group received £1.2 million as it was delivering T-levels in the construction, digital and education and childcare, which it has spent on a virtual reality laboratory, new digital laboratories and a space for construction students.

After skills minister Gillian Keegan told providers in April the T-level roll-out would go ahead as planned in September, DCG decided to progress the works as the time was “opportune”, due to minimal occupancy levels by staff and students on-site.

Vice principal Kate Martin said although lockdown presented the estates team with “some challenges in progressing the work, we are confident that these will be ready for the first T-level learners in September”.

The college said construction workers are encouraged to wear gloves and masks, and hand- washing facilities and sanitisers are being provided. An independent health and safety consultancy is checking whether social distancing guidelines are being adhered to.

The college is also putting in place measures so that a minimum amount of personnel are on site at any one time – including through the use of staggered start and finish times.

Shipley College was awarded £120,000 from the T-level capital fund last July to help deliver qualifications in digital and education and childcare.

Principal Nav Chohan said his college is “still on target to deliver all capital works and the new curriculum for September”, but would “continue to monitor progress in the light of any future Covid-related restrictions”.

Although “the planned works are not major”, he said the current lockdown restrictions would need to be lifted to some degree so work can continue.

Havant & South Downs College in Hampshire, which won £495,000 in July, has said work is due to start in June on refurbishing three spaces for T-levels in education, construction and digital. A spokesperson told FE Week: “Our focus for T-level delivery from September 2020 remains.”

With regard to social distancing measures to be followed on site, she said: “We are content that the necessary steps will be taken to comply with government guidelines.”

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Building the Institutes of Technology

Nine colleges and three universities were announced as the winners of a £170 million pot of capital funding to develop Institutes of Technology by the government in April 2019.

But construction work for Dudley College, which led a successful £30 million bid to build facilities in advanced manufacturing, modern construction methodologies and medical engineering, grounded to a halt following the Covid-19 outbreak.

It has since put in social distancing measures, but the project is now five weeks behind.

The measures meant that toilets, the canteen and site offices were scaled up to multiple cabins so workers could be the minimum two metres apart.

A spokesperson said contractors are “confident” some time will be made up so the institute can open as planned in September 2021.

Exeter College, which was part of a consortium led by the University of Exeter and received £15 million for an Institute of Technology, is building a new digital and data centre on site that is set to be completed early next year.

Robert Woolcock, operations director at Exeter’s building contractor Willmott Dixon, said personal protective equipment (PPE) was in adequate supply at the site and, after initial difficulties in getting hold of stocks, hand sanitiser and cleaning products were being distributed.

And because the college is closed: “We have been able to open up additional canteen and welfare facilities for the site workforce to use which has ensured that social distancing can be observed in break times as well as during construction.”

HCUC in London is part of a group building an £8.6 million Institute of Technology, based on Uxbridge College’s campus and focused on subjects such as computing, games design and animation, electrical engineering, mechanical engineering and building services and construction.

The college said all construction work had continued through the pandemic with a reduced workforce, and the institute will be ready to accommodate new learners from October.

Solihull College and University Centre said its advanced manufacturing and engineering Institute of Technology opened to its first students last September, but it then carried out capital investment projects on campus, with a completion date set for this September.

The college said it is “ensuring building work is completed in a way which adheres to social distancing and associated safety advice”.

But where this is not possible, the spokesperson said, construction work has been paused.

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Mayoral combined authority and local enterprise partnership projects

A number of college building projects, paid for out of mayoral combined authorities’ and local enterprise partnerships’ capital funds, have also been in the works for a number of years.

The Greater Manchester Combined Authority, which has handed out over £75 million through its Skills Capital programme since 2017, has confirmed that all the sites it helped finance are continuing with construction, and that social distancing guidelines are being adhered to.

A spokesperson said it does not yet know how its projects will be impacted by coronavirus, but “there will likely be some impact in the long term”.

Halesowen College, in the West Midlands, is spending £8.4 million to reshape its main campus to create an essential skills and business, construction management and digital centre, along with a student hub.

However, construction work on the project, which is being part-funded by the Black Country Local Enterprise Partnership, stopped for a week when the lockdown was announced, and only resumed once the government made it clear such work could continue.

Following this, workers had to sign to say they have read and understood the government’s guidelines on safe operating procedures and new Covid-19 risk assessments.

Everyone working on site has been issued with PPE and the number of people on site is kept to a minimum, with people like architects and surveyors working digitally through the use of live streams and video conferencing.

Regular safety briefings are held for everyone working on site, and they are all aware that if they or a member of their household display symptoms, they should not come to site, a spokesperson for the college said.

She said this “fastidious approach” to safety on site means the project is still on track to meet its original deadline of December 2020.

A high-profile QC has worked with solicitors to write to the apprenticeships minister, Gillian Keegan, arguing that the Education and Skills Funding Agency’s provider relief scheme is “unlawful”.

James Goudie QC, a senior silk at 11KBW, as well as a deputy High Court judge and a master of the bench of the Inner Temple, was instructed by the law firm VWV to help present the case in a letter on behalf of the Association of Employment and Learning Providers.

The letter from VWV, dated April 27 and shared with the media, comes after the ESFA excluded the majority of apprenticeship provision from the relief scheme launched last Friday on the basis it was not covered by the Cabinet Office’s coronavirus policy notice PPN 02/20.

Keegan had told MPs that where apprentices are recorded on the government’s digital system, the contractual relationship is between the employer and the provider, rather than the government.

The lawyers counter this argument, stating that “this is comprehensively wrong in at least three respects”.

“First, the source of funding is simply irrelevant. Second, there is a contractual relationship for the provision of apprenticeship services. Third, there is more than one contractual relationship and it is important to focus on the right one.”

Goudie goes on to explain that the “scope” of the Cabinet Office guidance states that it “covers goods, services and works contracts being delivered in the UK” – which all apprenticeship providers fall under.

“These are public service contracts, by way of duly procured framework agreements and all providers had to go through an application process with the ESFA to pass quality and financial thresholds to be admitted on to the Register of Apprenticeship Training Providers,” Goudie said.

“Our clients are calling for no more, and no less, than the straightforward application to their situation of straightforward guidance.”

His letter states that the AELP’s case is that apprenticeships funded through the digital system have a “plain and obvious entitlement by way of legitimate expectation to supplier relief under the guidance” and it is “unclear on what the failure to pay is based”.

The failure not to provide supplier relief, if persisted in, will be “unlawful”, it continues.

“This is on each of two broad grounds. First, the failure is not in accordance with, but is contrary to, the guidance. Second, it is discriminatory.”

It goes on to list a number of aspects of the DfE’s decision that “display a multiplicity of legal errors” including that failure to comply with Cabinet Office guidance is an “abuse of power”.

The letter concludes: “We understand that you are conducting a review. We trust that the threatened injustice will speedily be removed.”

A DfE spokesperson confirmed they have received the letter from the AELP and “we will respond in due course”.

There are 1,624 main and employer providers on the register of apprenticeship training providers currently, of which 593 have non-levy allocations this year, amounting to £690 million.

That means there are 1,031 providers that only have access to levy funding, and are therefore not eligible for the supplier relief.

The DfE has also confirmed that non-levy apprenticeships funded via an employer transfer or that have recently transitioned on to the government’s digital system will not be eligible for supplier relief.

FE Week analysis shows that of the 198,632 apprenticeship starts in the first six months of 2019-20, around two-thirds of the provision would be ineligible for supplier relief.

The provider with the largest number of starts in that period was Lifetime Training.

FE Week analysis shows that of their 10,000 recruits, more than 90 per cent were funded through the government’s digital system and are therefore ineligible.

Lifetime’s chief executive, Alex Khan, told this newspaper they will not be applying for the financial support as a result.

But Khan is not expecting the lack of additional help to have a big impact on his business, as it may do for others.

“Whilst the government furlough scheme is in place the main cost burden for Lifetime can be managed. However, it is worth noting that we do not have many training facilities or academies that we are exposed to funding whilst they are vacant,” he said.

“This is not true, however, for large portions of the sector, where the financial exposure to such indirect costs will make things incredibly difficult.”