Author Mark Fairlie
Apprenticeships offer significant advantages to businesses and individuals. They help to improve business efficiency and productivity. They allow existing employees to pass their wisdom and knowledge to apprentices wishing to learn more about the industries they are interested in.
Apprenticeships allow individuals to learn on-the-job, giving them invaluable work experience that can benefit them for years into the future. There are opportunities to learn and earn are available in 1,500 different occupations in 170 industries.
Apprentices are employed by companies and organisations of all sizes and an apprenticeship can last between one and four years.
Who are apprenticeships for?
Apprenticeships are designed for people aged over 16, not in full-time education and living in England. They can either be offered to brand new employees or people who already have an association with a company or organisation.
Apprenticeships are largely focussed on providing people with the skills and expertise they need to work in specific roles. The scheme enhances apprentices’ future employment opportunities and helps them to make substantial career progress.
What are the benefits of hiring an apprentice for a company
Hiring an apprentice gives employers the chance to nurture their existing talent and create a skilled, qualified and dedicated workforce. Research suggests that around 83% of employees would recommend using apprenticeships to other companies and organisations.
Just one apprentice can boost productivity by around £215 each week, a figure that reflects reduced costs, higher-quality products and heightened profits.
Apprentices can also enhance in-work productivity, cut staff turnover levels, reduce the cost of recruitment and strengthen employee satisfaction levels.
Employer responsibilities and apprentices
Employers have defined responsibilities when it comes to apprenticeships and apprentices. They will need to train your apprentice on-the-job and induct them into their role.
Employers will need to produce an Apprenticeship Agreement between themselves and their apprentice. Apprentices must be paid at least the National Minimum Wage. If an apprentice is in their first year with a company and/or is aged 16-17, they must receive at least £3.50 per hour. 18-20-year olds are entitled to £5.60 per hour, with those aged between 21-24 receiving £7.05.
Many businesses do choose to pay more. Whether your business opts to pay the minimum or more may depend on your circumstances and the nature of the apprenticeship.
Your apprentice must be contracted to work a minimum of 30 hours each week. If there is a genuine reason why this isn’t possible, for instance, if the nature of employment or the apprentice’s circumstances mean this cannot be the case, you will still need to employ them for at least 16 hours per week.
If the apprentice is working a reduced number of hours a week, you will normally need to extend the apprenticeship. You will need to provide apprenticeships with the same benefits as your other employees.
The Apprenticeship Levy
The government introduced the Apprenticeship Levy on the 6th April 2017. This levy is designed to have almost no impact on SMEs at all but bigger companies and organisations whose wage bill comes to more than £3 million per annum will need to pay into it.
The levy essentially means that the companies in question will be paying into their own budgets for staff training.
The levy has been created to encourage a larger number of companies to invest in apprentices and apprenticeships. It is also hoped that the scheme will enhance the calibre and number of apprenticeships.
Bigger companies will be expected to fund apprenticeship programmes for new and existing team members with the credit accrued from Levy payments. Funds that are not used by levy payers within 24 months of them being credited will disappear.
If your company is or will be a levy payer, 0.5% of your monthly wage bill will be deducted and deposited into your account on the Digital Apprenticeship Service as credits.
Each 0.5% paid into the levy pool by you will be matched with a 10% contribution from the government.
You can offset a £15,000 levy allowance against your levy payments every tax year. Remember, fewer than 1.3% of employers in the UK will be instructed to pay the levy.
Should you spend all the credit you have added to the levy pot and decide to contribute further funds, you can get a 90% government contribution for your training costs.
If you are not a levy payer, you won’t need to worry about the Digital Apprenticeship Service and paying for training through it as yet, as you won’t need to make any changes to the way you fund training.
However, it could be beneficial to find out more about the changes being made to apprenticeship funding.
How apprenticeships are funded
Levy payers will receive 90p towards each pound used for training provision once all their credit is used. This means, as a levy payer, you will only need to pay 10p in each £1 being paid to the training organisation.
Non-levy payers will only need to pay 10p for each £1 being paid to the training provider if they need to pay anything. If you have less than 50 employees and hire an apprentice aged between 16-18 years of age, the government will pay 100% of the cost of training.
Should you recruit a 19-24-year-old apprentice who has an has an Education and Health Care Plan or has been in care, the training costs will also be paid by the government.
In both cases, you will receive another £1,000 in training support costs whether you are a levy payer or not.
Apprenticeship funding bands
The new funding system for apprenticeship is split into 15 bands.
Upper limits for each band start at £1,500 and reach £27,000. All Apprenticeship Standards fall into one of these bands.
You are able to negotiate the apprenticeship cost, but there is no minimum limit in any funding band, which is why some have worried that training companies will cut corners just to be the market’s most affordable.
Apprenticeship funding system
The new levy means academic years will be replaced by a monthly roll-on, roll-off system, which has been designed as a better fit for levy payer wage bills and employment patterns.
The amount of funding available will no longer be determined by the apprentice’s age, existing qualifications or age.
The Digital Apprenticeship Service
If you plan to recruit an apprentice or provide an apprenticeship for an existing team member, you will need a Digital Apprenticeship Service account.
The Digital Apprenticeship Service enables employers to pick training providers, determine apprenticeship prices and use credits they have generated after paying into the levy if this is relevant.
The service has been created to benefit levy and non-levy payers, allowing them to choose the apprenticeship framework or standard that’s right for them, choose assessment organisations for the final assessment, look for approved providers able to provide the type of training they are interested in and post vacancies for their apprenticeships.
Those paying into the levy can now see how much credit is available for training provision, determine the training fee between themselves and the provider and pay training providers and assessment organisations.
By 2020, all employers should have the ability to use the online service to pay training providers and assessment organisations. Non-levy payers can continue as before for now.
The online Apprenticeship Service
The Apprenticeship Service on the gov.uk site allows employers to manage and plan apprenticeship programmes.
It offers several key features which enable you to estimate apprenticeship funding, calculate if you will need to pay the levy or not and see how much they can spend on apprenticeships. You can also see how much the government can contribute towards training costs, look for apprenticeship training and get simplified information about your choices.
You can use the service to look for and compare standard, framework and training providers, recruit apprentices by posting vacancies, manage applications.
If you are a registered levy payer, manage apprenticeships, look at your levy balance, plan spending and pay training providers.
Want to find out more?
If you’re a business looking to take on an apprentice, click here to find out more.