How to set up an apprenticeship scheme at your small business

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The government has announced that it will fully fund apprentices working in small businesses from April 1, 2024. They’ll do this by paying the full cost of training for anyone up to the age of 21.

A change to the Apprenticeship Levy will allow large businesses to pass on a greater amount of funding to other businesses too. Combined, these measures are expected to enable 20,000 more apprenticeships, primarily for young people.

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?

An apprenticeship scheme is a combination of study and work for people over the age of 16. The scheme is intended to equip apprentices with the skills and knowledge for a specific job or industry. Businesses, irrespective of size, can recruit an apprentice. The duration of their apprenticeship can range from 12 months to five years, depending on their level.

According to the House of Commons, there were 752,150 people participating in an apprenticeship in England in the 2022/23 academic year.

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.

The National Apprenticeship Service says that the estimated gain for employers is between £2,500 and £18,000 per apprentice. 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: Apprenticeship grants – A guide to what assistance and funding is available from the government

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 (GSCE)

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

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

Degree: level 6 and 7 (Bachelor’s or Master’s degree)

The National Apprenticeship Service has lots of useful advice on which level you should consider on its website. For different parts of the UK, check out the links below:

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 £5.28 per hour for apprentices aged 16 – 18. This will rise to £6.40 in the 2024/25 tax year) and the National Minimum Wage if they over 18 (£7.49 per hour for 18 – 20-year-olds and £10.18 for over 21-23 year olds and £10.42 for those 23 and over. That’ll rise to £8.60 for 18-20-year-olds and £11.44 for those 21 and older from April 2024). 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.

Remember that even if you’ve only taken on apprentices, you’ll still need employers’ liability insurance. Read more at Employers’ liability insurance – what is it and do you need it?

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

Under the aforementioned Apprentice Levy measures, large employers who pay the levy will be able to transfer up to 50 per cent of their funds to support other businesses, including smaller firms, to take on apprentices.

The Apprenticeship Levy effectively requires employers with an annual wage bill of more than £3m (in total earnings that are liable to employer class 1 National Insurance) to contribute 0.5 per cent of the monthly wage bill for the levy.

Any employer who takes on an apprentice will have a £15,000 annual allowance to offset against the sum that you have to pay.

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 their 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.