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Apprenticeships for Small Businesses

Apprenticeship Week

Apprenticeships can offer small businesses an exciting opportunity to invest in new talent, address skill shortages, and increase productivity. However, understanding the mechanics of apprenticeships—from the apprenticeship levy to legal requirements—can feel daunting. This guide aims to demystify the process and equip small business owners with the knowledge needed to make informed decisions about integrating apprenticeships into their workforce strategy.

What Are Apprenticeships?

Apprenticeships are work-based training programmes that combine on-the-job learning with classroom instruction, enabling individuals to gain practical skills, qualifications, and work experience simultaneously. Apprenticeships aren’t just for entry-level roles either; they now span a wide range of professions and sectors and are available at different qualification levels, from GCSE equivalent right up to degree or even master’s levels.

For businesses, apprenticeships provide an opportunity to develop skilled employees in a way that aligns closely with the needs of the company.

How Do Apprenticeships Work?

An apprentice typically works within your business while studying for a qualification, usually delivered by an approved training provider. The programme can last anywhere from one to six years depending on its complexity and level.

Key aspects include:

  • Employment Contract: Apprentices need to be employed under an apprenticeship agreement and must work at least 30 hours per week.
  • Current Minimum Wage for Apprentices: As of April 2024, the National Minimum Wage for apprentices is £6.40 per hour. This rate applies to apprentices aged under 19 or those aged 19 and over who are in the first year of their apprenticeship. Apprentices aged 19 or over and who have completed their first year are entitled to the National Minimum Wage or Living Wage for their age group. These rates will increase in April 2025 (see the current rates below).  Businesses are encouraged to offer competitive pay to attract and retain high-quality talent.
  • Training: Apprentices must spend at least 20% of their time on off-the-job training, which can include classroom learning, e-learning, and practical assessments.
  • Qualifications: Apprentices work towards qualifications that align with the skills needed for their job role, such as a vocational qualification or an academic degree.

Current rates

21 and over18 to 20Under 18Apprentice
April 2024 (current rate)£11.44£8.60 £6.40 
April 2025£12.21 £10.00 £7.55 

When done correctly, apprenticeships provide businesses with enthusiastic, well-trained employees who understand your specific needs.

What is the Apprenticeship Levy?

Introduced in April 2017, the Apprenticeship Levy is a tax incentive aimed at funding apprenticeship training across the UK. While it primarily applies to larger businesses with a payroll of over £3 million, small businesses can also benefit from the levy indirectly.

If your small business doesn’t meet the threshold to pay the levy, you can access funding through the government’s co-investment programme. This initiative allows the government to cover 95% of the training costs for non-levy-paying businesses, leaving you to pay just 5%. Additionally, businesses with fewer than 50 employees may be able to access full funding for apprentices aged 16 to 18 or apprentices aged 19-24 with an Education, Health, and Care (EHC) plan.

How Can Small Businesses Access the Levy?

Non-levy-paying businesses can still use levy funds by partnering with large employers who share unused levy contributions through what is known as levy transfer schemes. Some local councils and regional bodies also offer guidance on accessing this funding to support smaller businesses.

To begin the process, visit the apprenticeships section on the UK government website and register your business on the Digital Apprenticeship Service (DAS).

Legal Requirements

Employing an apprentice comes with several legal obligations. These include:

  • Apprenticeship Agreement: This contract outlines the employment terms, including wages, working hours, job role, and duration.
  • Duration: The apprenticeship must last for a minimum of 12 months.
  • Employment Terms: Apprentices are entitled to the same rights and benefits as other employees, such as annual leave and sick pay.
  • Minimum Wage Compliance: Check regularly to ensure you’re meeting the minimum requirements for apprentice wages, which may differ depending on their age and stage of the programme.

Meeting these requirements is a legal necessity that protects both the apprentice and your business.

Costs for Small Businesses

For small businesses, engaging an apprentice is often a cost-effective way to bring fresh skills into the organisation. Key costs to consider are:

  1. Apprentice Wages: While apprentices are entitled to the national minimum wage for their role, you may choose to offer a higher salary to attract the best candidates.
  2. Training Costs: Government funding will cover some or all of these costs, depending on your eligibility and the level/age of the apprentice.
  3. Administrative Support: You may need to allocate time or resources to manage the apprenticeship programme and liaise with training providers.

Many businesses find the long-term benefits far outweigh these initial costs.

Benefits of Hiring an Apprentice

There are numerous advantages to incorporating apprenticeships into your workforce strategy:

  • Skill Development: Train apprentices with the specific skills your business needs, ensuring targeted growth.
  • Cost-Effectiveness: Tap into government funding and build talent at a fraction of the cost of hiring externally.
  • Loyalty and Retention: Many apprentices remain loyal to the company that helped them kickstart their careers.
  • Fresh Perspectives: Young apprentices bring fresh ideas and perspectives, invigorating your team.
  • Positive Brand Image: Hiring apprentices demonstrates your commitment to supporting emerging talent, which aligns well with socially responsible business practices.

Possible Downfalls

While the benefits are significant, it’s essential to consider potential challenges:

  • Time Investment: Apprentices require training and guidance, which may demand significant time from existing staff.
  • Work Readiness: Some apprentices may require more time to adapt to the workplace and meet productivity expectations.
  • Retention Risk: While many apprentices stay loyal, there’s always a risk that your investment may walk out the door at the end of the programme.

Planning, preparation, and ongoing evaluation can help mitigate these risks.

Where to Get Support

The UK offers a wealth of resources to assist small businesses interested in apprenticeships. Some of these include:

  • Government Services: The Digital Apprenticeship Service (DAS) is your one-stop platform for managing apprenticeship funding and finding training providers.
  • Local Authorities: Many councils offer dedicated small business support, including guidance on accessing levy funding.
  • Industry Bodies: Organisations like the Federation of Small Businesses (FSB) and local Chambers of Commerce can provide practical advice and connect you with relevant support networks.
  • Training Providers: Approved training providers guide businesses through the process of managing apprenticeships, from recruitment to programme delivery.

Don’t hesitate to leverage these resources to simplify your apprenticeship journey.

Final Thoughts

Apprenticeships offer businesses a valuable opportunity to develop skilled, loyal employees while contributing to the long-term success of their organisations. Proper planning and an understanding of the processes can help unlock the full potential of the scheme while minimising potential pitfalls.

If you’re considering taking the next step in hiring an apprentice, now is the perfect time to act. Visit the government’s apprenticeship page, explore available funding options, and find a training provider that aligns with your business goals. With the right approach, apprenticeships could be the key to achieving sustainable growth for your small business.

Angela Clay

A qualified employment law solicitor and our managing director, Angela has unparalleled legal expertise and decades of experience and knowledge to draw from. She’s a passionate speaker and writer that loves to keep employers updated with upcoming changes to legislation, and is a regular guest speaker on BBC Leicester Radio.

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