Apprentices Act, 1961: Rules, Stipend and HR Compliance
Table of Contents
Hiring apprentices can be a practical way for organizations to develop job-ready talent while providing individuals with valuable workplace experience. But for HR teams, an apprenticeship program involves more than selecting candidates and assigning them to a role; it also requires adhering to specific rules regarding contracts, training, stipends, working conditions, and compliance. This guide explores the Apprentices Act, 1961, covering the key rules HR teams should know.
What is the Apprentices Act, 1961?
The Apprentices Act, 1961 provides the legal framework for apprenticeship training in India. It regulates structured training under an apprenticeship contract rather than ordinary employment.
The Act works alongside the Apprenticeship Rules, 1992, which set out detailed requirements for implementing apprenticeship programs and have been updated through subsequent amendments, including those made in 2025. In simple terms:
- Apprentice: A person undergoing apprenticeship training.
- Employer: The organization providing the apprenticeship training.
- Establishment: The workplace where training is provided.
- Designated trade: A trade officially approved for apprenticeship training.
- Optional trade: A trade an establishment can offer based on its requirements, subject to applicable rules.
The Act remains relevant today and has not been replaced by the four labour codes.
Apprentices Act Rules at a Glance
The following table summarizes the core provisions and compliance thresholds under the Act.
| Topic | Summary |
|---|---|
| Minimum age | 14 years for most trades. It is 18 years for designated trades linked to hazardous industries. |
| Mandatory coverage | Establishments with 30 or more workers, counting regular and contract staff, in a notified industry must engage apprentices. |
| Apprentice band | 2.5% to 15% of total establishment strength in a financial year, with at least 5% reserved for freshers and skill certificate holders. |
| Contract | Every apprenticeship is governed by a written contract and registered on the correct portal. |
| Payment | The apprentice receives a stipend, not a regular employee salary. |
| Employment status | Under Section 18, an apprentice is a trainee, not a worker. PF and ESI do not apply to the stipend. |
| Job after training | Completing training does not guarantee a job unless the contract says so (Section 22). |
| Current stipend | Minimum monthly stipends range from ₹6,800 to ₹12,300 depending on the qualification category (effective 11 September 2025). |
To Which Establishments does the Apprentices Act Apply?
Mandatory, Optional and Ineligible Establishments
First, check the workforce count, since it includes regular employees and contract workers but not apprentices.
- Fewer than 4 workers: The establishment cannot engage apprentices under the Act.
- 4 to 29 workers: Engaging apprentices is optional.
- 30 or more workers: Engaging apprentices is mandatory (Section 8).
Industry coverage must also be checked, as the establishment must fall under a notified industry group. The 2025 amendment aligned industry coverage with the National Industrial Classification, expanding it to more manufacturing and service activities.
How to Calculate the Required Number of Apprentices
The formula is:
Total workforce × applicable apprenticeship percentage = apprentice positions
The range is 2.5% to 15% of total strength. Contract staff must be included in the total headcount calculation. At least 5% is reserved for fresher apprentices and skill certificate holders. Vacant reserved seats can go to other categories with approval. The portal calculates the required range once the workforce figure is entered.
Some states set a higher requirement. Maharashtra, for example, expects a higher level of engagement.
Practical Example of Apprentice Headcount Planning
An establishment has 160 regular employees and 40 contract workers.
The strength for apprenticeship is 200. At 2.5%, the lower end is 5 positions. At 15%, the upper end is 30; 5% of the 200-person headcount equals 10 positions reserved for freshers and skill certificate holders.
Disclaimer: This calculation model is provided for illustrative purposes and does not constitute formal legal counsel.
Who Can Become an Apprentice under the Act?
Age, Education and Physical Fitness Requirements
The minimum age is generally 14 years, or 18 years for designated trades involving hazardous industries. Educational qualifications and physical fitness requirements vary by trade and apprentice category, so HR should verify the applicable requirements before engagement.
Freshers, Skill Certificate Holders and Existing Qualification Holders
Apprentices may be freshers, skill certificate holders, or diploma and degree holders, depending on the trade. At least 5% of apprentice positions are reserved for freshers and skill certificate holders, subject to the applicable rules.
Apprentices with Benchmark Disabilities
The 2025 Rules provide for reserved apprenticeship opportunities for persons with benchmark disabilities, including in optional trades, in line with the applicable disability law. Employers should provide suitable training facilities and support for eligible apprentices.
Types of Apprentices Covered by the Apprenticeship Framework
The apprentice’s training pathway depends on their designated qualification category.
| Apprentice category | Definition and usual route |
|---|---|
| Trade apprentice | Trains in a designated trade, often after school or an ITI course. |
| Graduate apprentice | An engineering or technology graduate receiving training in a related discipline. |
| Technician apprentice | A diploma holder training in a technical field. |
| Technician (vocational) apprentice | A student or holder of a vocational certificate training in a related area. |
| Optional trade apprentice | Trains in a trade the employer runs based on its own industry need, rather than a notified designated trade. |
| Degree apprentice | Trains under a degree apprenticeship route that blends a degree program with structured on-the-job training. |
| Fresher apprentice | Joins without prior formal skill certification. |
| Skill certificate holder | Enters with a recognized skill certificate. |
NAPS vs NATS: Which Portal Should HR Use?
The Act and the Rules are the legal framework. NAPS and NATS are two administrative routes. HR teams must distinguish between legal obligations under the Act and the administrative portals used to implement them.
| Field | NAPS | NATS |
|---|---|---|
| Full name | National Apprenticeship Promotion Scheme | National Apprenticeship Training Scheme |
| Administering authority | Ministry of Skill Development and Entrepreneurship, through the Directorate General of Training | Ministry of Education, through the Boards of Apprenticeship Training |
| Common apprentice categories | ITI graduates, secondary school graduates, and uncertified freshers across multiple sectors. | Graduate, technician, and diploma apprentices, mainly in technical streams |
| Portal | apprenticeshipindia.gov.in | nats.education.gov.in |
| Government stipend share | 25% of the prescribed stipend, up to ₹1,500 per apprentice per month, paid to the apprentice by Direct Benefit Transfer | 50% of the prescribed minimum stipend, reimbursed to the employer (about ₹4,500 per month for a graduate apprentice) |
Reimbursement of the government stipend share is subject to eligibility criteria, timely approvals, and claim processing; the employer remains initially liable for paying the full stipend.
How HR Can Engage an Apprentice Step by Step
The process runs from registration through completion, with records maintained at each stage.
1. Check Establishment Coverage and Workforce Strength
Confirm that the establishment falls under the notified industry coverage, calculate the average workforce for the relevant financial year, and retain the calculation for records.
2. Select the Trade and Apprentice Category
Select the appropriate designated or optional trade and determine the apprentice categories for the intake, keeping the selection on record.
3. Register the Establishment on the Correct Portal
Register the establishment on NAPS or NATS, as applicable to the apprentice category, and retain the registration acknowledgment.
4. Advertise, Source and Verify Candidates
Advertise job positions and verify candidates against the trade’s eligibility and qualification requirements. Recruitment software tools can manage applications, while statutory registration remains on the government portal.
5. Create and Register the Apprenticeship Contract
Prepare and submit the apprenticeship contract through the applicable portal, then retain the registered copy.
6. Prepare the Training Plan and Assign a Supervisor
Prepare the approved training plan and assign a qualified supervisor. An onboarding process can help manage documentation and orientation.
7. Pay the Stipend and Maintain Records
Pay the prescribed stipend by the 10th of the following month and maintain attendance, calculation, and payment records.
8. Complete Assessment, Certification, or Contract Closure
Complete the required assessment and certification process, close the contract when training ends, and retain the relevant records.
Apprenticeship Contract Requirements
What the Contract Should Contain
An appointment letter does not replace the statutory apprenticeship contract. The contract records the trade, training period, stipend, training plan, and obligations of the apprentice and employer. It establishes a training relationship, not an employment relationship.
Registration through the Portal
The apprenticeship contract must be registered through the applicable portal. For degree apprentices and sandwich-course students, the 2025 Rules provide a separate process, including Format-I, which is signed by the educational institution, apprentice, and employer before being submitted through the portal.
Novation, Transfer and Termination
An apprentice may be transferred, or the contract terminated,d only through the process permitted under the Act, Rules, and contract. These actions should not be handled like a regular employee resignation or transfer.
Minimum Stipend Rates for Apprentices From 11 September 2025
These minimum monthly rates apply from 11 September 2025 under the Apprenticeship (Amendment) Rules, 2025. The amendment was notified in the Gazette under G.S.R. 610(E).
| Apprentice category | Minimum monthly stipend (effective 11 September 2025) |
|---|---|
| Class 5 to Class 9 pass-outs | ₹6,800 |
| Class 10 pass-outs | ₹8,200 |
| Class 12 pass-outs | ₹9,600 |
| National or State Certificate holders | ₹9,600 |
| Technician (vocational), vocational certificate holders, or sandwich course students from diploma institutions | ₹9,600 |
| Technician apprentices, diploma holders in any stream, or sandwich course students from degree institutions | ₹10,900 |
| Graduate or degree apprentices | ₹12,300 |
The stipend increases for multi-year training. It increases by 10% in the second year and by 15% in the third year. The first-year rate is the base for the category.
For contracts in progress as of 11 September 2025, the stipend is automatically revised through the portal, which generates an appendix reflecting the new rate. The establishment must accept the addendum through its login and confirm that it has been completed for every apprentice in progress.
Is Apprentice Stipend a Salary?
No. A stipend supports an apprentice during training and is different from a regular employee salary or minimum wage.
Can an Employer Pay More than the Minimum Stipend?
Yes. The prescribed rates are minimum amounts, so employers can pay a higher stipend.
Who Pays the Stipend and is Reimbursement Automatic?
The employer pays the stipend to the apprentice. Under NAPS, the government provides 25% of the prescribed stipend, up to ₹1,500 per month, to the apprentice through Direct Benefit Transfer. Under NATS, the government reimburses the employer 50% of the prescribed minimum stipend. Both benefits are subject to the applicable eligibility, approval, and claim requirements.
Working Hours, Overtime, Leave and Holidays for Apprentices
Daily and Weekly Training Hours
A trade apprentice undergoes training for 42 to 48 hours a week, including related instruction. During the third year and any subsequent years, training hours must align with the standard working hours of regular workers in the respective trade. Graduate, technician, and technician (vocational) apprentices follow their department’s normal working hours.
When Overtime May be Allowed
Overtime is restricted. A trade apprentice cannot train between 10 p.m. and 6 a.m. without the prior approval of the Apprenticeship Adviser. Apprentices under 18 train between 8 a.m. and 6 p.m. Compelling an apprentice to work overtime or during prohibited hours without explicit prior authorization leads to an offense punishable under the Act.
Leave and Weekly Holidays
Apprentices follow the establishment’s leave rules. In an establishment working five days a week for 45 hours, an apprentice needs at least 200 days of attendance in the year. Casual and medical leave do not reduce the stipend.
Employer Obligations under the Apprentices Act
The core duties of an employer, along with the required verification records, are mentioned below:
| Duty | What HR should do | Evidence to retain |
|---|---|---|
| Provide approved training | Deliver training against the approved program | Training plan and program record |
| Provide trainers and facilities | Assign qualified training staff and suitable facilities | Supervisor and facility records |
| Fulfill the contract | Meet the terms of the registered apprenticeship contract | Registered contract |
| Pay the stipend on time | Pay at least the prescribed minimum by the 10th of the next month | Stipend calculations and payment proof |
| Protect health and safety | Follow health, safety, and welfare requirements | Safety and induction records |
| Maintain records and returns | Keep records and file the required portal and quarterly returns | Records and return acknowledgments |
| Reserve places for inclusion | Reserve seats for freshers, skill certificate holders, and persons with benchmark disabilities | Reservation and selection records |
| Support certification | Support assessment and certification where applicable | Assessment and certificate records |
| Prohibition of substitution | Employers must not deploy apprentices to fill vacancies instead of providing structured training. | Training plan showing real learning outcomes |
Duties and Rights of an Apprentice
An apprentice is expected to learn the trade, attend required training, follow lawful instructions, and comply with the apprenticeship contract. In return, the apprentice is entitled to the prescribed training, stipend, safe working conditions, and due contractual process, with the engagement remaining focused on training rather than regular employment.
Apprentice vs Intern vs Trainee vs Employee
An apprentice engaged under the Apprentices Act is treated as a trainee, not a worker, under Section 18. Unlike an employee, an apprentice receives a stipend rather than a salary, and PF, ESI, bonus, and gratuity generally do not apply to the apprenticeship stipend.
An internship, company trainee program, and statutory apprenticeship may look similar in practice, but their legal basis, terms, and obligations can differ. The key differences are outlined below:
| Factor | Apprentice (under the Act) | Intern | Trainee | Employee |
|---|---|---|---|---|
| Legal basis | Apprentices Act, 1961 and Rules | No single dedicated statute | Company policy or contract | Employment laws and contract |
| Contract | Statutory apprenticeship contract | Internship letter or agreement | Training or employment terms | Employment contract |
| Main purpose | Structured skill training | Short-term exposure or project work | Job-linked training | Regular, ongoing employment |
| Payment | Stipend under the Act | Stipend, if any, varies | Stipend or salary, varies | Salary |
| PF and ESI | Generally do not apply to the stipend | Depends on the arrangement | Depends on the employment terms | Applicable as per law |
| Employment status | Trainee, not a worker under Section 18 | Not automatically an employee | Depends on the arrangement | Employee |
| Job guarantee | No automatic job | No statutory entitlement to employment | Depends on the terms | Ongoing employment |
Does an Employer have to Offer a Job after Apprenticeship?
No. An employer does not have to offer a permanent job when an apprentice completes training. Section 22 provides an exception where the apprenticeship contract contains a binding condition to employ the apprentice on completion. Without that condition, completing training does not create a right to permanent employment. Participation in schemes such as the National Apprenticeship Promotion Scheme (NAPS) or National Apprenticeship Training Scheme (NATS) does not guarantee job placement.
Termination, Second Apprenticeship and Dispute Resolution
When an Apprenticeship Contract Can End Early
Ending an apprenticeship before normal completion requires the procedure in the contract and the Rules. It is not the same as an employee resignation or dismissal. Follow the prescribed process and retain the records.
Gap and Limit for a Second Apprenticeship
Under the 2025 framework, an individual can undertake up to two apprenticeships in different trades, usually with a one-year gap between them. The gap may not apply in certain cases, while government stipend support is not available for a second apprenticeship.
How Apprenticeship Disputes are Decided
Apprenticeship disputes are taken through the Apprenticeship Adviser and the statutory appeal route. Establishments should not process apprenticeship disputes solely through internal employee disciplinary proceedings.
Health, Safety, Welfare and Injury Compensation
The employer is responsible for the health, safety, and welfare of apprentices during training, including applicable injury-compensation obligations. For factory-based training, Section 14 contains references to the Factories Act, but current requirements should also be checked under the Occupational Safety, Health and Working Conditions Code and its rules. The older factory safety and working-condition rules are therefore not the only relevant source.
What Changed under the Apprenticeship (Amendment) Rules, 2025?
The 2025 amendment took effect on 11 September 2025. It changed several requirements.
| Area | Before | After the 2025 Rules |
|---|---|---|
| Minimum stipend | ₹5,000 to ₹9,000 by category | ₹6,800 to ₹12,300 by category |
| Engagement ceiling | Up to 10% of total strength | Up to 15% of total strength |
| Degree apprenticeship | No distinct statutory provision | Recognized as a distinct route blending degree study and training |
| Educational institutions | Limited role | Party to a three-way contract for degree and sandwich apprentices |
| Apprentices with benchmark disabilities | Limited express provision | Reserved training places across trades, including optional trades |
| More than one apprenticeship | Undefined | Up to two, one-year gap, second in a different trade, no government stipend |
| Reporting | Periodic returns | Quarterly reports on apprentice training |
Older copies of the Act and third-party guidance may still have the pre-2025 figures. Use the requirements effective from 11 September 2025 for current compliance work.
Penalties and Common Compliance Mistakes
When Penalties May Apply
The 2014 amendment replaced imprisonment with monetary penalties for relevant offenses. An establishment that fails to engage the required number of apprentices may face a penalty of ₹500 per apprentice per month for the first three months of shortfall, increasing to ₹1,000 per month thereafter. Other contraventions, such as engaging an unqualified apprentice or failing to fulfil the apprenticeship contract, may attract separate penalties.
Common Mistakes HR Should Avoid
- Calculating apprentice ratios using only permanent staff strength rather than total headcount.
- Issuing appointment letters instead of formal, registered apprenticeship contracts.
- Applying outdated stipend rates prior to the September 2025 amendments.
- Registering the establishment on the wrong portal or under an incorrect apprentice category.
- Engaging apprentices as low-cost manpower without a genuine training plan.
- Assuming that government stipend support is provided automatically.
- Promising permanent employment when it is not specified in the apprenticeship contract.
- Failing to maintain proper attendance, training, and stipend payment records.
Apprentices Act Compliance Checklist for HR
Use these checks at the three main stages of the apprenticeship.
Before engagement
- Confirm industry coverage and average workforce strength
- Calculate the required apprentice quota (2.5% to 15% of total workforce), reserving at least 5% for fresher apprentices and skill certificate holders.
- Select trades and apprentice categories
- Register on the correct portal, NAPS or NATS
During training
- Register the apprenticeship contract before training starts
- Assign a qualified supervisor and issue the training plan
- Pay at least the prescribed minimum stipend by the 10th of the next month
- Record attendance, progress, and stipend payments
At completion
- Support assessment and certification where required
- Close or transfer the contract through the correct process
- File portal and quarterly returns and retain acknowledgments
- Archive the full apprentice file for audit
Frequently Asked Questions
What is the Main Purpose of the Apprentices Act, 1961?
The Act serves as the primary legal framework for apprenticeship training in India. It covers eligibility, establishment obligations, training contracts, stipends, and working conditions. The engagement provides structured skill training rather than regular employment.
Is Compliance with the Apprentices Act Mandatory for all Establishments?
No, applicability depends on workforce size. Establishments with 30 or more workers in notified industries must engage apprentices. Those with 4 to 29 workers may choose to engage apprentices voluntarily. Establishments with fewer than 4 workers cannot engage apprentices under the Act. Applicability also depends on whether the establishment falls under a notified industry classification.
How Many Apprentices Must an Establishment Engage?
The range is 2.5% to 15% of total strength in a financial year. Regular and contract staff are included. At least 5% is reserved for fresher apprentices and skill certificate holders. The total workforce size and trade category breakdown determine the exact requirement. The official portal automatically calculates the applicable band based on reported workforce figures.
Are Contract Workers Included when Calculating Apprentice Strength?
Yes. Contractual staff are included alongside regular employees in the calculation. The basis is the average workforce strength for the preceding financial year. Apprentices are excluded. Excluding contractual staff will result in an inaccurate headcount calculation.
What is the Minimum Age for an Apprentice in India?
The minimum age is 14 years. The minimum age is raised to 18 years for designated trades involving hazardous processes. The educational qualifications and physical fitness standards depend on the trade and category.
What is the Minimum Apprentice Stipend from September 2025?
From 11 September 2025, the minimum monthly amount ranges from ₹6,800 for Class 5-9 educated candidates to ₹12,300 for graduates or degree apprentices. Employers may pay above the statutory minimum. The amount increases by 10% in the second year and 15% in the third year for multi-year training.
Is an Apprentice an Employee under the Act?
No. Section 18 treats an apprentice engaged under the Act as a trainee, not a worker. This status applies provided the apprenticeship is executed in accordance with statutory procedures. However, statutory provisions regarding safety, welfare, and workplace injury compensation remain applicable.
Are PF and ESI Applicable to Apprentices?
No. PF and ESI contributions do not apply to stipends paid under the Act. There is no employer PF or ESI liability on that amount. Additionally, statutory bonus and gratuity obligations do not apply.
Can an Apprentice Work Overtime?
Overtime is restricted. Trade apprentices are prohibited from undergoing training between 10:00 PM and 6:00 AM without prior approval from the Apprenticeship Adviser. Apprentices under 18 train between 8 a.m. and 6 p.m. Unapproved overtime may result in a penalty.
Can an Employer Terminate an Apprenticeship Contract?
Yes; however, termination must strictly adhere to the procedure prescribed under the Act and Rules, which differs from standard employee termination. Ensure all procedural steps and justifications are documented thoroughly. Disputes go through the Apprenticeship Adviser and the statutory route.
Does an Apprentice have a Right to a Permanent Job?
No. Section 22 does not create a general right to employment after training. Unless explicitly agreed upon as a binding condition within the contract, employment is not guaranteed. NAPS and NATS apprenticeships do not guarantee placement.
What is the Difference between NAPS and NATS?
NAPS is administered by the Ministry of Skill Development and Entrepreneurship. It covers trade, ITI, school pass-out, and fresher apprentices. Under NAPS, the government reimburses 25% of the prescribed stipend, up to a maximum of ₹1,500 per month per apprentice.
Grow your business with factoHR today
Focus on the significant decision-making tasks, transfer all your common repetitive HR tasks to factoHR and see the things falling into their place.
