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We make pretty extensive use of levy transfer to support our smaller employers and have found the process to be successful, if a little frustrating at times. We've also used levy transfer to fund apprenticeships for our own staff and it has worked well.
Generally, SOs approve requests in a timely manner and cover the full 100%. We've had a couple of instances recently where the SO hasn't had enough funds and, in this instance, you then need to invoice the employer for 5% of the shortfall as it is treated as coinvestment. The key has been ensuring our employers are aware of this eventuality even if it doesn't actually arise. It is worth noting that if a receiving employer has levy funds, those are still used before calculating any co-investment that may be due.
Re contracts, I agree with the approach to make clear that using you as a provider is not a condition of funding.
Thanks Darren Vidler, that's really helpful 🙂 If the employer has to pay the 5% if the SO fails to uphold their end of the contract, then we'll suggest that the employer has a contract with the SO, saying that the SO will reimburse them for what they had to pay the provider (since they did commit to pay in full). I think I need a new flag in our MI system where we know the apprentice is funded through a levy transfer, so if we do have to invoice for a shortfall, we can word the request a little differently.
The employer we're doing this with shortly, is one that has a levy payer account, but has very little money in there (they must be only a little over £3 million), and we're always invoicing them for insufficient funds, so that note about their own levy funds being used before it then resorts to the 5%, is very useful.
As the provider, do you have a contract with the SO when it's another party? If you're ever the SO as well as the provider, do you just add anything about the transfer to the main contract, or do you have a separate one?
Glad it was of some use, Ruth!
We don't contract with the SO - that's on the employer via the Apprenticeship Service. The idea of suggesting those two parties have a formal agreement re potential reimbursement is an interesting one and not something I'd considered.
A flag in the system is useful, you'll also need confirmation of who the SO is and potentially a MFA declaration as levy transfer funds can fall under the subsidy rules.
We haven't been the SO as we're not a levy payer ourselves however, in this scenario, I'd likely use an addendum to the existing contract.
Ruth Canham-James
Levy Transfer Sending Organisations
Created
If you've had apprentices who were funded via a Levy Transfer, what (if any) dealings did you have with the Sending Organisation (SO)? The agreement is between the apprentice employer and the SO, but we're the ones who don't get paid if the SO didn't have enough levy. We know they have to agree to fund in full, but what if they run out because they miscalculated what they could afford? Does it go back to a 95%/5% split like levy payers with insufficient funds? Should the SO be liable for any payments required, rather than the employer? If so, we could do with a contract directly with the SO. Hopefully all hypothetical, but good to cover with a contract. Also, we normally send a schedule of levy payments/5% required to the employer, but if they're not paying directly, would we send that to the SO?
I don't think we've had a single apprentice funded via a levy transfer yet! I know that more organisations are starting to look at it. The first ones we're likely to have, we're the SO since that's now allowed. In that case, we're deciding whether we can wrap that up in the existing Employer contract, or whether we need a separate contract between the employer and us in our capacity as the SO. I've been very clear that we need it in the contract that the employer using us as a provider is not a condition of the transfer, and we commit to fund the apprentices to the end, whichever provider they use.
Any thoughts, experience or advice on this?