Apprentice Incentive Scheme

The Apprentice Incentive Scheme is available to NSW employers of apprentices and aims to:

• grow the state's skill base
• encourage employers to hire apprentices
• improve workers compensation insurance outcomes over time because trained workers are less likely to be injured at work.

The Apprentice Incentive Scheme commenced on 31 December 2006 and applies to new or renewed policies commencing on or after that date.

A comprehensive guide on apprenticeships in NSW is available at Training Services NSW.

For information about the Apprentice Incentive Scheme and other workers compensation insurance matters, contact icare on 13 44 22.

To be eligible for the apprentice premium reduction you must:

• have a valid workers compensation insurance policy
• have entered into a 'training contract' approved by Training Services NSW with the apprentice in a designated trade vocation with a National Qualification Code (NQC). The apprentice must be identified in the training contract.

At renewal apprentice wages are carried forward from the previous policy period as part of total wages, however the apprentice discount will not be applied unless the employer contacts icare and advises updated apprentice details prior to renewal. At hindsight the discount will be applied based on your wages declaration.

Apprentice wages are used in the calculation of the employer's Average Performance Premium (APP). The apprentice incentive discount is applied once the full premium is calculated.

The apprentice incentive discount is calculated by multiplying the apprentice's wages by the employer's workers compensation industry (WIC) rate.

All employers with apprentices are entitled to a workers compensation insurance premium discount based on the wages paid to their apprentices. The amount of premium saved will vary depending on the number of apprentices employed, the apprentice’s wage rate, and the employer’s workers compensation industry (WIC) rate.  

The incentive is calculated by multiplying the annual apprentice wages by the applicable industry rate. For example, if apprentice wages are $25,000 and the WIC rate is 2.89%, the apprentice incentive discount will be $722.50.

Yes. You should provide details about the apprentices you employ including their wages and Workers Compensation Industry Classifications (WICs), when you complete your wages declaration.

No. The Apprentice Incentive Scheme applies only to apprenticeships in recognised trade vocations as designated by the Commissioner for vocational training under the Apprenticeship and Traineeship Act 2001 (AT Act).

Yes. So long as the trainee apprentice is undertaking an apprenticeship in a trade vocation approved by Training Services NSW. 

You should check to see if the training contract is Training Services NSW approved and the apprenticeship is listed as such on the Training Services NSW website. 

As the AT Act defines a ‘trainee apprenticeship’ as an apprenticeship under which the employer does not undertake to employ the apprentice for the whole of the term of the apprenticeship, you should only claim the reduction for those periods that you employ the apprentice.

For small employers
(APP of $30,000 or less)

Small employers with apprentices will receive a discount on their premium based on apprentice wages and the employer’s WIC rate.

For example:

• A second year apprentice carpenter working in house construction earning $29,500 p.a. with a tariff rate of 4.500 per cent (House Construction WIC) — the premium savings would be $1,327.50.
• A junior apprentice hairdresser earning $26,910 p.a. with a tariff rate of 1.480 per cent (Hairdressing and Beauty Salons WIC) — the premium savings would be $398.27.

For medium and large employers 
(APP more than $30,000)

For medium and large employers, the claims costs associated with an apprentice injured at work will still be used when calculating the experience adjustment premium.

Importantly, the premium retains the incentive discount for employers to practice good workplace safety, injury management and return to work. A good safety record leads to lower premiums.

For example:

• A large employer in residential building construction (WIC rate 4.610%) has wages of $15,000,000 p.a., 20 per cent of which is apprentice wages. The employer saves $138,300 under the Apprentice Incentive Scheme.

 

 

For all employers, the final workers compensation insurance premium payable cannot be less than the minimum premium payable, currently $225, even if the apprentice incentive and other premium adjustments total less than the minimum premium. 

You will need to retain your apprentice wages records, as well as your apprentice training contract and letter from Training Services NSW advising that the application for the training contract has been approved. These documents will need to be produced in the event of a wage audit.

It is a requirement for employers to retain details of apprenticeships and apprentice wages for the same period they are required to keep wage records under section 174 (2) of the Workers Compensation Act 1987. Under section 174 (2), employers are required to retain wage records in good order and condition for at least five years.