How to set up an apprenticeship scheme at your small business

Is an apprenticeship scheme right for your business, and where do you begin? Crissi Williams, CEO of the Institute of Telecommunications Professionals, looks into the matter.

Once only the domain of big businesses, apprenticeships are now a credible option for many small businesses looking for a cost-effective way to recruit fresh talent. However, many business owners are put off by the perceived amount of administration required to get started. Is an apprenticeship scheme right for your business, and where do you begin?

What is an apprenticeship scheme?

Currently there are apprenticeships available in 1,500 occupations across 170 industries in the UK. Businesses, irrespective of size, can recruit an apprentice. The duration of their apprenticeship can range from 12 months to four years.

Consider the benefits

Hiring an apprentice is a long-term investment, and many organisations we work with see it as an ideal opportunity to create a workforce trained from scratch – shaping employee’s work habits from the offset and aligning them with company culture.

According to the National Apprenticeship Service, the average graduated apprentice increases business productivity by £214 per week. These gains include increased profits, lower prices and better products. Apprentice employers have also seen increased productivity in their existing workforce and apprenticeships are a great way to plug a widening skills gap in our industry.

See also: The Small Business guide to HR

Steve Hayden, managing director of Green Telecom, has seen the benefits with his business. He started as an apprentice himself and has now employed two apprentices over a three-year period: ‘An apprentice is an asset to a small business, they bring fresh ideas to the table and can be trained to fit in with the company.’

Where to begin

Decide on the level of apprenticeship you want to offer. Apprenticeships are divided into different levels so it’s important to establish which one is most suitable for your business:

– Intermediate: level 2 (equivalent educational level of 5 passes at GSCE grades A – C).

– Advanced: level 3 (equivalent to 2 A Level passes)

– Higher: Level 4,5,6 and 7 (foundation degree and above)

The National Apprenticeship Service has lots of useful advice on which level you should consider on its website.

As your apprentice will be learning on the job, a proportion of their time is taken up with training. You will need to find a training provider to work alongside to deliver your apprenticeship scheme. You can find this on the Education & Skills Funding Agency website.

Legal issues to consider

As an employer, it is your responsibility to draw up an apprenticeship agreement between your business and your employee.

There are other factors you also need to remember:

– You must pay your apprentice no less than the Apprenticeship National Minimum Wage (which is £3.50 per hour for apprentices aged 16 – 18) and the National Minimum Wage if they over 18 (£5.60 per hour for 18 – 20 year olds and £7.05 for over 21s.) However, many businesses choose to pay a higher wage than this.

– You must employ your apprentice for a minimum of 30 hours per week.

– You must ensure that all apprentices receive the same benefits as your other employees.

Recruitment

The National Apprenticeship Service provides a portal in which to advertise vacancies to its massive database and this is the best place to advertise your vacancy. You can also use the traditional advertising channels, such as job boards and LinkedIn. We have found the best way to recruit apprentices is through assessment days. Through a series of tasks, set throughout the day, you can observe the candidates in a relaxed environment prior to a formal interview.

Funding and apprenticeship reforms

This year has seen changes to the way apprenticeships are funded, with the introduction of the Apprenticeship Levy in April. This effectively requires employers with an annual wage bill of more than £3 million to contribute 0.5 per cent of the monthly wage bill for the levy. For those who aren’t eligible for the levy, the government will co-fund 90 per cent of the costs, leaving 10 per cent for the employer to contribute.

Any employer who takes on an apprentice aged 16-18 will receive £1,000 to help in the extra costs associated with this. This will be paid in two equal instalments at three and 12 months. This also applies for 19-24 year olds who have an education, health and care plan.

Employers of apprentices under the age of 25 are no longer required to pay secondary class 1 (employer) National Insurance Contributions (current rate of 13.8 per cent) There is a potential NI saving for existing staff moving onto an apprenticeship, or new apprentice hires of they are within this age range.

Employers are also not required to pay national insurance contributions for their apprentices if under the age of 25 and on earnings below the higher tax rate £827 per year.

Development and training

It’s important to set out a detailed development plan from the start, working in conjunction with the education provider. This will not only ensure your apprentice gets the most from his or her experience, but that you are training someone to match the exact needs of your small business. The government website also has lots of useful resources to draw upon.

Crissi Williams is CEO of the Institute of Telecommunications Professionals.

Further reading on apprenticeships

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