A question that salon owners often ask is … “When my apprentice completes their Level 2 apprenticeship, how much must I pay them when they move to an advanced Level 3 apprenticeship?”
Our strong advice is based on the current National Minimum Wage (NMW) regulations, which state:
If the apprentice is under 18 years old, you can continue to pay them the apprentice minimum wage rate, which is currently £7.55 per hour (as of 1st April 1 2025).
If the apprentice is 18 years old or over, the rules depend on whether the new Level 3 apprenticeship is considered a continuation of their training or a new apprenticeship.
Our view is that, even when the apprenticeship is with the same employer, moving to a Level 3 would be a new apprenticeship with a separate new apprenticeship agreement, which means the employer can pay the apprentice rate for the first year of the new apprenticeship should they choose to do so.
It is important to remember that after the first year of the new apprenticeship the employer must pay at least the NMW for their age group, these currently are:
- For 18 to 20-year-olds: £10.00 per hour
- For 21 to 22-year-olds: £12.21 per hour (National Living Wage)
- For 23 and over: £12.21 per hour (National Living Wage)
Note that these rates are the legal minimums, many employers choose to pay more to ensure they retain their new talent.
Importantly, HMRC regions often seem to have contrasting views on this issue which means that one regional HMRC office may consider Level 3 is a continuation of the employee’s existing apprenticeship, in which case the employer must pay the NMW for their age group, whereas a neighbouring HMRC office may decide it is a continuation of the apprenticeship programme and the employer could choose to pay the apprentice rate.
Because of the confusion caused, our very strong advice to employers faced with this issue is as follows:
- Contact the National Minimum Wage enquiry line on 0300 123 1100
- Explain that you would like to place your apprentice on a Level 3 apprenticeship
- Important … emphasise that your employee will have a separate new apprenticeship agreement (which will, of course, be the case).
- Ask for a written response to your query.
If you follow this process and have written confirmation from HMRC, you can go ahead and pay your Level 3 apprentice the apprenticeship rate from the date of the apprentice starting their new programme.