New research for HMRC has found that 70% of businesses are still unaware of the forthcoming...
There are many advantages to hiring an apprentice - not least the fact that you can test out an employee for a small investment and help them develop into a valuable member of your team
However, many small firms are unsure about apprentices because of the time and money it costs and the red tape involved.
Should you hire an apprentice?
Apprentices are usually keen to learn and want to prove themselves. Because they know you are investing in them, they often reward employers with loyalty and enthusiasm. Small firms often find that new apprentices bring fresh ideas and can help keep a business up-to-date and relevant, especially when it comes to digital skills.
Hiring an apprentice is an affordable way of recruiting and can be the best way to fill a skills gap; you can ensure their training is tailor-made for your business needs.
Financially, employers benefit because they can pay a more affordable apprentice rate of minimum wage. Also, employers do not have to pay Class 1 National Insurance contributions on earnings up to £827 per week for apprentices aged under 25 completing a statutory apprenticeship. It's a win-win for the apprentice too as they are getting paid while they learn.
Where do you start?
The Government provides information on apprenticeships via the Skills Funding Agency website. You can register your interest in employing an apprentice online or phone the National Apprenticeship Service on 0800 0150 600.
How do you find an apprentice?
Registered training organisations can help put you in touch with apprentices. You can search for an appropriate training organisation via the Apprenticeships website. You can also advertise an apprenticeship when you register as an employer.
How much do you pay apprentices?
You must pay an apprentice aged 16 to 18, and those aged over 19 but in the first year of their apprenticeship, the National Minimum Wage for apprentices which is £3.50 per hour from 1 April 2017. All other apprentices should be paid the rate of NMW applicable to their age. To do this, you must draw up an apprenticeship agreement signed by both parties - otherwise you will not be able to pay the apprentice rate of pay and will have to pay the National Minimum Wage applicable to the apprentice's age.
What are the rules governing apprenticeships?
An apprentice must be over 16 and not in full-time education. Apprentices must study for a work-based qualification at a college or training provider - typically one day a week.
Apprentices usually work for at least 30 paid hours a week and must work for at least 16 hours a week. You must pay your apprentice for time spent training or studying for a relevant qualification, whether at work or college.
You must also offer apprentices the same conditions as other employees working in similar roles, including paid holidays, sick pay, and any other benefits or support you offer.
Apprenticeships take one to four years to complete depending on their level - they range from the equivalent of five GCSEs right up to degree-level.
What about tax and national insurance?
Apprentices are treated like employees for tax purposes. This means they have to pay income tax and National Insurance Contributions (NICs) in the same way as other employees. However, the Government has introduced an exemption which came into force April 2016. Employers of apprentices under the age of 25 are no longer be required to pay secondary Class 1 (employer) National Insurance contributions (NICs) on earnings up to the Upper Earnings Limit (UEL), for those employees.
Is there any other red tape?
If you already employ staff then you will already comply with health and safety regulations and employment law.
How can I get the most out of an apprentice?
Make sure they have a mentor within your business, establish an in-house training plan and schedule regular reviews. Your apprentice must be taught job-specific skills. It's worth agreeing goals and performance indicators in advance.
You will need to ensure there's a term in your contract so that you can dismiss an apprentice for poor performance if necessary. However, in most situations you can't make an apprentice redundant.
Will I have to pay the apprenticeship levy?
The Government introduced an apprentice levy on large employers on 6 April 2017 to fund apprenticeships. The definition of "large" is a company with an annual pay bill of more than £3 million or is connected to other companies or charities for Employment Allowance which in total have an annual pay bill of more than £3 million.
It's part of the Government's commitment to deliver three million apprenticeships in this Parliament - a 35% increase over the 2.2 million apprenticeships delivered in the last Parliament.