Quick answer
Your first apprentice costs more than their wage: add super (paid within seven business days of payday under Payday Super), workers compensation, paid trade-school days, reimbursed course fees, tools and your own supervision time. Employers may get a $2,500 Priority Hiring Incentive or $5,000 under the Key Apprenticeship Program, but it's paid at six and twelve months, so plan to fund the early months yourself.
Key points
- An apprentice's trade-school days are paid working hours, not days off.
- Most awards require you to reimburse training fees and prescribed textbooks.
- From 1 January 2026 the Priority Hiring Incentive for new apprenticeships is up to $2,500.
- Housing construction and new energy apprentices may attract up to $5,000 under the Key Apprenticeship Program.
- Incentives are paid in arrears, at six and twelve months, so the first half-year is on you.
- Your Apprentice Connect Australia Provider checks eligibility and lodges the claim with you.
Here’s the idea in one sentence: an apprentice is an investment that costs you money from their first day and pays you back slowly, so the real planning job is the gap in between.
Most first-time employers get the big picture right. They know an apprentice earns less than a qualified tradesperson, and they’ve heard there’s government money to help. What catches them out is the timing. The wages start in week one. The help arrives months later. And the apprentice is learning, which means they’re not yet doing the work of a qualified person.
This lesson walks you through it as if you’ve never employed anyone before.
What does a first apprentice actually cost?
Think of the wage as the tip of the iceberg. Below the waterline sit the costs that don’t appear in the job ad.
| Cost | What it means for a beginner |
|---|---|
| Wage | Set by the award for your industry, usually as a percentage of the qualified rate that rises each year of the apprenticeship. Adult apprentices often have higher minimums. |
| Super | The Super Guarantee is 12% of ordinary time earnings. Under Payday Super, it must reach the fund within seven business days of each payday. |
| Paid training days | Trade-school time is paid and counts towards ordinary hours. A day at TAFE is a paid day with nothing to invoice. |
| Course fees and textbooks | Most awards require you to reimburse the apprentice’s training fees and prescribed textbooks. |
| Workers compensation | Compulsory insurance, run state by state. Your premium usually rises with your wages bill. |
| Tools, uniform, safety gear | Some awards include tool allowances; either way, a new starter needs kit. |
| Your time | Supervising, teaching and checking work. Every hour you spend teaching is an hour you’re not billing. |
The Fair Work Ombudsman’s apprentice entitlements page is the place to check the details for your award, including how training time and fee reimbursement work.
Quick check: have you counted these?
- Leave: annual leave and personal leave build up from day one for a full-time or part-time apprentice
- Public holidays falling on a rostered day
- Payroll software, if you’re running a pay run for the first time
- A slower first few months on jobs while your apprentice learns
What does the government pay back?
The Australian Apprenticeships Incentive System has two main payments for employers. You get one or the other for the same apprentice, not both.
1. The Priority Hiring Incentive. For apprentices training towards a Certificate III or above in an occupation on the Australian Apprenticeships Priority List. The Department of Employment and Workplace Relations says that for apprenticeships starting from 1 January 2026, employers may receive up to $2,500 in the first year, down from $5,000 for apprenticeships that started earlier.
2. The Key Apprenticeship Program (KAP). For apprentices in housing construction or new energy trades. The KAP factsheet sets the employer payment at up to $5,000 per apprenticeship. The program has been extended in the 2026–27 Budget.
Here’s when the money actually lands for a full-time apprentice:
| Incentive | At 6 months | At 12 months | Total (full-time) |
|---|---|---|---|
| Priority Hiring Incentive | $1,000 | $1,500 | $2,500 |
| Key Apprenticeship Program | $2,000 | $3,000 | $5,000 |
Part-time apprentices get half these amounts. Eligibility rules, waiting periods and claim time limits apply, so always confirm with your provider before you count on the money.
Why does the timing matter so much?
Picture lending a mate your ladder and getting it back in six months. You still need a ladder in the meantime.
Incentives work the same way. Nothing arrives until the apprentice has been with you for six months. If the apprentice leaves at month five, you may get nothing at all. So the first half-year is funded entirely from your own trading.
Meanwhile your costs are higher than they’ll ever be relative to output. A first-year apprentice is slower, needs more supervision and spends regular days at trade school. By the second and third year, they’re usually earning their keep and then some. The squeeze is right at the start.
That’s why a 13-week cash flow forecast is the single most useful thing you can build before you hire. Add the wage, super on its new Payday Super timing, workers compensation and a TAFE day each week, and see where the balance dips.
Planning your first hire and want a second opinion on the numbers? Have a quick chat with a real person, with no credit check to enquire.
Myths about first apprentices
Myth: “The incentive covers the apprentice’s wages.” It doesn’t come close. At most it covers a small slice of a first year’s cost. Treat it as a welcome bonus, not a funding plan.
Myth: “TAFE days are free days.” They’re paid days. The apprentice is working towards their qualification, and you’re paying for that time.
Myth: “I’ll sort the paperwork once they’ve started.” Do it first. The training contract has to be signed and registered with your state or territory training authority, and incentive eligibility depends on details that are set when the apprenticeship starts.
Myth: “An apprentice is cheap labour.” An apprentice is a trainee. The value comes in years two to four and beyond, when you have someone skilled, trained your way and loyal to the business.
How do you sign up an apprentice, step by step?
- Check the award. Find your industry’s award and the apprentice pay table on the Fair Work website.
- Contact an Apprentice Connect Australia Provider. business.gov.au lists how to reach one. They’re free for employers.
- Agree the training contract. Your provider helps you complete it and lodge it with the state or territory training authority.
- Choose a training organisation. The apprentice enrols with a registered training organisation (often TAFE).
- Set up payroll and super properly. Under Payday Super, super must reach the fund within seven business days of each payday, so make sure your software is ready. The ATO’s Payday Super page explains the timing.
- Diary the incentive dates. Put the six-month and twelve-month marks in your calendar and check claim time limits with your provider.
An illustrative example: Mia’s first apprentice
This is a made-up example to show the thinking. Figures are rounded and illustrative.
Mia runs a two-year-old plumbing business on the NSW Central Coast. She’s turning work away, so she decides to take on a first-year apprentice, Josh, full-time from February.
Her provider tells her the apprenticeship should be eligible for the KAP housing construction stream, so she may receive $2,000 in August and $3,000 the following February.
Mia builds a forecast. Josh’s wage, super, workers compensation, course fee reimbursement and his gear add up to roughly $4,500 a month in the early months. But he’s at TAFE one day a week, and for the first few months he’s mostly carrying, fetching and learning. Mia estimates he lifts her billable work by about $2,000 a month to start, climbing as he gains confidence.
So for the first six months, there’s a gap of roughly $2,500 a month, or about $15,000 before the first incentive payment of $2,000 arrives.
Mia has a buffer of about $20,000. Using most of it on the gap would leave her exposed if a big customer paid late. Instead, she:
- keeps $10,000 of her buffer untouched
- covers part of the gap from trading
- sets up a modest line of credit to draw on only in tight weeks, and plans to pay it back as Josh’s output grows and the incentive payments land
By month nine, Josh is doing enough to cover his own costs. By year two, he’s the reason Mia can quote bigger jobs.
Should you borrow to take on an apprentice?
Borrowing isn’t the answer for everyone. It can make sense when:
- the business is already trading steadily and the bank statements show it
- there’s more work available than you can do, so the extra hands will genuinely turn into income
- you’ve got a forecast showing the gap and when it closes
- the repayments pass the slowest-month test in can you afford the repayments
It doesn’t make sense if the business is already losing money each month and the apprentice is a hope rather than a plan. Fix the underlying numbers first.
For a first hire, the usual options are a line of credit (you draw only what you need and pay interest on what you use) or a smaller unsecured business loan. For trading businesses, those are typically $5,000 to $500,000, sized on turnover and bank statements. Our lesson on how much to borrow helps you size it so you’re not borrowing more than the gap.
Ready to grow your team?
Taking on your first apprentice is one of the best signs a young business can show: there’s more work than you can handle, and you’re building for the next ten years. The only tricky part is the first six months, before the apprentice hits their stride and the incentive payments arrive.
If you’d like a cushion for that stretch, our enquiry form takes about 60 seconds, and there’s no credit check when you first enquire. Your details stay with us rather than going out to a pile of lenders, so you won’t be fielding calls from strangers all week. A real person reads your situation, looks at your trading and your hiring plan, and calls you to explain what might fit in plain English. Please fill the form in accurately, especially your turnover and how long you’ve been trading, so we can point you to the right option the first time.
Frequently asked questions
How much does the government pay employers to take on an apprentice in 2026?
It depends on the occupation. For apprenticeships starting from 1 January 2026 in priority occupations, the Priority Hiring Incentive is up to $2,500 in the first year. Apprentices in housing construction or new energy may instead attract up to $5,000 under the Key Apprenticeship Program. You can't receive both for the same apprentice.
When are apprentice incentives paid?
In instalments after the apprentice has stayed with you a while. For a full-time apprentice, the Priority Hiring Incentive is $1,000 at six months and $1,500 at twelve months, and the Key Apprenticeship Program pays $2,000 at six months and $3,000 at twelve months. Part-time amounts are halved.
Do I have to pay my apprentice when they're at TAFE?
Yes. The Fair Work Ombudsman says time at trade school is paid time and counts towards the apprentice's ordinary hours. Plan your rosters and your cash flow around those days, because they are paid but not billable.
Do I have to pay my apprentice's TAFE fees?
Under most awards, yes. The Fair Work Ombudsman says apprentices should be reimbursed for training fees charged by the training organisation and the cost of prescribed textbooks, with some exceptions, such as unsatisfactory progress or the employer paying the provider directly.
Who do I contact to sign up an apprentice?
An Apprentice Connect Australia Provider. They help you set up the training contract with your state or territory training authority, check which incentives you may be eligible for and help with claims. business.gov.au lists the contact details.
Can I use a business loan to cover the cost of a new apprentice?
Some owners use a line of credit or a small unsecured loan to cover the months between hiring and the extra work paying off. It suits a business that's already trading steadily and has a clear plan for the apprentice's hours. Borrowing to cover a business that's losing money every month is a different conversation.