Guidance

Policy for Apprenticeship and Traineeship Employers demonstrating High-Risk Behaviours

Updated 28 June 2022

Applies to England

1. Background and introduction

1.1: The Secretary of State may act through the Department for Education and /or its executive agency, the Education and Skills Funding Agency (“the department”). As such where this policy refers to “the department”, it means the Secretary of State acting through the Department for Education and /or the Education and Skills Funding Agency.

1.2: The department remit includes financing apprenticeship training and education services provided in respect of people in employment.

1.3: The department must exercise appropriate control over Funding for which it is responsible. This means it must ensure that:

• public funds are properly spent and are safeguarded through continued identification of employer funding risk
• services/activity is delivered within the terms of agreements, contracts and Funding Rules in place; and
• that Funding is used to deliver the policies and priorities set by the Secretary of State and for the purposes intended by Parliament.

1.4: In addition to being responsible for Funding the delivery of education and training the department must also be satisfied as to the provision of accurate data, in accordance with the agreements and or contracts through which Funding is provided, in order to be confident that the requirements at 1.3 are being met.

1.5: The provision of public funding is contingent upon the department being satisfied that an Employer is not demonstrating High-Risk Behaviour, as set out in this policy and its proper use as set out in the agreements and/or contracts that an Employer holds with the department.

2. Purpose of this policy

2.1: This policy sets out and defines what the department means by High-Risk Behaviour by an Employer, the possible actions the department may take as a result and the department’s decision making process.

2.2: Terms in this policy which are defined have the first letter of each word capitalised and are set out in Annex 1 (Definitions and Interpretation).

2.3: The department reserves the right to take any of the steps set out in paragraph 6.1 whilst it undertakes relevant checks and tests, however, any such steps will only be taken for as long as they are serving a legitimate aim. These are called “Pre-Risk Checks”.

2.4: The Employer has entered into the Employer Agreement and by doing so, has agreed to abide by the Apprenticeship Funding Rules. The Employer has also agreed to comply with the Terms and Conditions for the Apprenticeship Service, where applicable.

3. Scope of the policy

3.1: The policy applies to public and private sector Employers (including employer-providers), accessing the funding streams specified below:

• apprenticeships programme Funding (Apprenticeship Levy and Co-Investment) and non-standard Funding such as time limited employer incentives
• traineeships

3.2: Connected Employers, as defined in the Employer Agreement are within the scope of this policy. Reference to the Employer shall also include a Connected Employer unless the context requires otherwise, and the actions and non-actions of a Connected Employer shall be deemed to be the actions and non-actions of the Employer.

3.3: Where the Employer is a separate legal entity, the conduct and / or omissions of the Officers in Charge will be taken into account when considering whether the Employer is exhibiting High-Risk Behaviour.

3.4: This policy relates to Apprenticeships and Traineeships and together with the Funding Rules, the Employer Agreement and Agreement for Employers providing a Work Placement as part of a Traineeship, provides rules and parameters that relate to the delivery and management of the funding streams specified.

3.5: For the avoidance of doubt, if the employer is classified as an “Employer-Provider”, the scope of this policy applies.

4. Criteria under which the department considers an Employer to be demonstrating a High-Risk Behaviour

4.1: The following paragraphs set out examples where the department will consider an Employer to be a demonstrating High-Risk Behaviour:

4.1.1: The Employer:

I. Is in breach of one or more terms of any agreement or Funding Rule including but not limited to the Funding Higher Risk Organisations and Subcontractors Policy and/or has failed or is unable to comply with department requirements or additional conditions imposed by the department;

II. Has previously had any contract or legal agreement with the department terminated as a consequence of falling within one or more of the criteria specified in this policy and has not been able to present sufficient evidence such that the department can be satisfied that there would be no risk to public funds (in the last 3 years);

III. Has appointed one or more directors, shadow directors, Person in Control or with powers of representation, influence or management in respect of which the department has made a finding (which has been shared with the Employer) that they exhibit High-Risk Behaviour or have exhibited High-Risk Behaviour in the previous 3 years;

IV. Has been subject to prior relevant investigations where the department has found grounds to take action or is subject to an ongoing relevant investigation;

V. Has a director, shadow director, Person in Control or with powers of representation, influence or management who:

• is bankrupt or is the subject of insolvency or winding-up proceedings, where its assets are being administered by a liquidator or by the court or where it is in an arrangement with creditors
• have been served with a Public Interest Winding Up petition under section 124A of the Insolvency Act 1986
• has been removed from a charity commission, charity regulator or appear on the Register of Removed Trustees;
• is subject to a director disqualification order under the Company Directors Disqualification Act 1986 or are subject to a Bankruptcy Restriction Order
• has been convicted of one or more of the offences specified below unless the conviction is regarded as spent within the meaning of the Rehabilitation of Offenders Act 1974 (and subsequent amendments):

a. An offence under sections 6A, 206 to 211,251 and 353 to 360 of the Insolvency Act 1986.

b. An offence under sections 386 – 389 and 993 of the Companies Act 2006.

c. An offence under sections 15, 21 and 22 of the Immigration and Asylum Act 2006.

d. An offence under sections 34-38 if the Immigration Act 2016.

e. A criminal offence under the Health and Safety at Work etc Act 1974.

VI. No longer meets the criteria or conditions of use of service operated by the department in order to allow access to funds or is removed from one or more of the department registers;

VII: Has breached the Apprenticeship Service Terms & Conditions which were signed when the Apprenticeship Service Account was created; specifically, but not limited to those relating to access, data security, active trading and PAYE scheme usage;

VIII. Has not kept Apprenticeship Service information up to date – changes to the statements and declarations made as part of the Apprenticeship Service registration;

IX. Does not cooperate with department processes and/or provides misleading/inaccurate/ incomplete/inadequate data or information, indicating inadequacies and where validation/investigation of this information shows malicious intent;

X: Has had action taken against them under this Policy previously and has continued to demonstrate High-Risk Behaviour in breach of this Policy;

XI: Starts or continues to use a Training Provider in respect of which the department has made a determination that the Training Provider has breached the Funding Higher Risk Organisations and Subcontractors Policy and/or Apprenticeship Agreement for Training Providers.

4.2.2: Data submitted by the Employer or Training Provider has given the department reason to be concerned, including in relation to the data itself and/or its accuracy and department decides that the explanation given by the Employer and/or Connected Employer is not satisfactory or having raised such issues with the Employer, the Employer still exhibits High-Risk Behaviour. This includes but is not limited to:

I. Inconsistencies in standards selected or recruitment for a business sector;

II. Size or quantity of the standards being employed against has changed and/or a change to high-value/short-duration standards.

5. Actions the department will consider where an Employer is demonstrating High-Risk Behaviour

5.1: Where one or more of the criteria set out in paragraphs 4 apply to any Employer, the department may take whatever action it deems necessary (including but not limited to one or more of the courses of action specified below):

• pause access to the Apprenticeship Service (including stopping Funding) temporarily in order to undertake checks on and with the Employer to establish severity or otherwise of the risk. A pause on access to the Apprenticeship Service (including stopping Funding) may be for new Funding, existing funding or both, depending on the alleged conduct;
• refuse access to the Apprenticeship Service;
• refuse to make a payment under any Incentive Payment scheme, or through any type of contract or agreement with the department for any other apprenticeships Funding; this may include recovering amounts already paid;
• terminate one or more or all of the contracts or agreements held by the Employer with the department where contracts/agreements allow;
• restrict or withdraw programme Funding and/or stop payments on either a temporary or permanent basis;
• limit numbers of apprentices funded by the department by placing a cap on reservations made through the Apprenticeship Service

5.2: The department reserves the right to take any of the steps set out in paragraph 5.1 whilst it undertakes relevant checks and tests, however, any steps taken will be removed if no action is required.

5.3: Where this policy applies to an “Employer-Provider”, action may have been taken under the “Funding Higher Risk Organisations and Subcontractors Policy”. Additionally, the department may also take one or more of the actions in paragraph 5.1.

6. The Decision-Making Process

6.1: The department as part of its decision-making process will consider the level of risk associated with the High-Risk Behaviour and information the department has from its own knowledge/intelligence from records it maintains, information already in the public domain and records held by other organisations that can be accessed or disclosed to the department.

6.2: The Employer concerned will be notified of the department’s preliminary decision made under the policy along with reasons for the decision. The Employer will be given an opportunity to make representations about the preliminary decision before the department make a final decision, unless the department has a right to immediate termination as set out in the relevant contract/ agreement. Decisions will be made on a case-by-case basis.

6.3: If an Employer falls within one or more of the criteria set out in paragraph 4 the department may exercise its right to take action as set out in paragraph 5 for a period to be determined by the department acting reasonably and proportionately up to a maximum of 1 year.

6.4: The department will inform the Employer of the decision and the reasons for it, except in limited circumstances where the department believes fraud has occurred or the department reasonably concludes that to do so could prejudice or undermine an investigation.

6.5: The department’s decision is final and there is no appeal process to the department. If an Employer is not happy with any aspect of our service, the Employer can make a formal complaint direct to us. Any complaint arising shall be resolved in accordance with the departments’s official complaints procedure which can be accessed on GOV.UK

Annex 1: Definitions and Interpretation

In this Policy the following terms shall have the following meanings:

Apprentice: a person who works under an Apprenticeship Agreement.

Apprenticeship: a job with training. This includes the Training and (where required) End- Point Assessment for an employee. The full definitions of (i) an English Apprenticeship (frameworks) and (ii) an approved English Apprenticeship (standards) can be found in Part 1 of the Apprenticeships, Skills, Children and Learning Act 2009.

Apprenticeship Agreement: an Apprenticeship Agreement is between an employer and an Apprentice, either in accordance with the Apprenticeships, Skills, Children and Learning Act 2009 sections 32 to 36 (for frameworks) or section A1 (for standards – an approved English Apprenticeship Agreement).

Apprenticeship Details: the details of the Apprentice and their Apprenticeship including but not limited to; the Apprenticeship Standard; the agreed cost of the Training and End-Point Assessment; the Apprentice’s name, date of birth and Unique Learner Number and the Apprenticeship start date.

Apprenticeship Levy: the levy payable by all employers with an annual pay bill of more than £3 million which is used to support the funding of Apprenticeships.

Apprenticeship Service: the digital service provided by the Department for Education to manage and fund Apprenticeship Training approved by Employers through the service and delivered by Training Providers listed on the Register of Apprenticeship Training Providers using government funds.

Apprenticeship Service Account: the part of the Apprenticeship Service where the Employer can add Apprenticeship Details and see information about Funding and Apprentices they have previously added to their account.

Co-investment: Sharing the cost of training and assessing apprentices with the government. The following types of employers will pay co-investment:

• non-levy payers
• levy payers who have run out of levy funds

For apprenticeships that started before 1 April 2019, employers pay 10% towards the cost of apprenticeship training. The government will pay the rest (90%). For apprenticeships that started on or after 1 April 2019, employers pay 5% towards the cost of apprenticeship training. The government will pay the rest (95%).

Connected Employer: any entity (being a distinct legal entity from the Employer) which is connected with the Employer within the meaning of Schedule 1 Parts 1 and 2 of the National Insurance Contributions Act 2014, and which, not being a contracting party to this Agreement, carries out activities on behalf of the Employer in relation to the Apprenticeship Service or employs an Apprentice whose Training is funded through the Employer’s Apprenticeship Service Account.

Employer: any organisation, public or private, which enters into a contract with a Training Provider to commission Training (a) for its own Apprentices and / or (b) on behalf of a Connected Employer for the Connected Employer’s Apprentices; and / or is providing the Work Placement, in whole or part, for Learner(s) as set out more particularly in the Traineeships Framework for Delivery.

Employer Agreement: A legally binding agreement between an employer and the Education and Skills Funding Agency (ESFA). Employers must accept this agreement to get or reserve apprenticeship Funding.

Funding: the funding paid to the Training Provider on behalf of the Employer towards the cost of Training and End-Point Assessment by the department .

Funding Rules: the department’s rules for funding Apprenticeships published on GOV.UK as revised and amended from time to time. Guidance: any applicable guidance or directions with which the Employer is bound to comply.

High-Risk Behaviour: behaviour by the Employer where:

• its actions put public Funding at risk of not being used for the purpose it was intended or intends that to be the case
• it has received Funding for which it is not eligible under the funding rules applicable to the funding stream
• it colludes with any other party, including the Training Provider, in order to be granted Funding to which it is not eligible
• any employee or other individual carrying out activities on behalf of the Employer or a Connected Employer has acted dishonestly or negligently at any time in its dealings with the department
• it has negligently or deliberately provided misleading information to the department or training provider which could influence decisions regarding the availability of department Funding to the benefit of the Employer or any other party.
• the department reasonably considers there is evidence of fraud, irregularity, negligence of dishonesty in relation to department funding by a person who is a director, shadow Director, Person in Control or with powers of representation, influence or management for the Employer.

Officer in Charge: A person who is in the top two tiers of the Employer’s Management Team. Person in Control: any direct or indirect legal and/or beneficial interest in the share capital (as defined in Section 545 of the Companies Act 2006) of the Employer as a result of which that person or group of persons has a direct or indirect interest in more than 25% of the share capital of the Employer. It shall also include any change in the top two tiers of the Employer’s management team.

Traineeship: an education and training programme with a Work Placement for young people as set out more particularly in the Traineeship Framework for Delivery.

Training: the delivery of training and on-programme assessment and where relevant End-Point Assessment by the Training Provider and where relevant the End-Point Assessment Organisation to one or more Apprentices.

Training Provider: an organisation listed on the Register of Apprenticeship Training Providers which has a contract with the Employer to provide Training to one or more Apprentices.