An apprenticeship is defined as paid employment, working at least 30 hours per week, which incorporates both on and off the job learning. In May 2017, the government introduced a new apprenticeship levy, to encourage an increase in the number of apprenticeships offered and undertaken within the UK. Following the introduction of the levy, it is more important than ever that employers are familiar with every aspect of an apprenticeship, from getting the most out of their levy funds, to ensuring the best possible experience for the apprentice in question. With that in mind, here is a crash course in everything an employer should know about apprenticeships.
The Facts
In 2016/17, there were 491,300 apprenticeship starts in England. Over 3.4 million apprenticeships were started between 2010/11 and 2016/17, with 1.5 million apprenticeships completed between 2010/11 and 2015/16.
There are varying qualification levels under the apprenticeship umbrella. Firstly, the Intermediate Level 2, which is equivalent to five GCSE pass grades at A*-C. An Advanced Level 3 apprenticeship is equivalent to two A Level passes and Higher Level 4, 5, 6 and 7 apprenticeships are equivalent to a foundation degree and above. Many believe that apprenticeships are all-too-often associated exclusively with young people straight out of school, with no consideration given to the higher-level apprenticeships, the highest of which is in fact equivalent to a master’s degree.
It is not yet clear how a Level 2 apprenticeship will equate to the new GCSE grades 1-9, but based on the concept of a “good pass” it is believed that a Level 2 apprenticeship would be equivalent to five GCSEs at a grade 5 or higher in line with the new system.
Changes to the funding system
In May 2017, the way in which the government contributes towards the relevant training and assessment costs of apprenticeships was changed. One of the most noteworthy changes to come out of this was the introduction of the apprenticeship levy.
The apprenticeship levy
As of May 2017, all UK employers with a payroll bill of over £3 million per year are required to pay an apprenticeship levy. The levy is set at 0.5% of the value of the employer’s payroll bill, minus an apprenticeship levy allowance of £15,000. The funds generated by the levy may only be spent on apprenticeship training costs. The government will then top up those funds paid by the employer by 10%.
Employers who do not qualify for mandatory levy payments were generally paying 10% towards any apprenticeship training costs, with the government contributing the remaining 90%. It was announced in the 2018 Autumn Budget, however, that this contribution will be halved to 5%. The government will occasionally provide additional funds, mainly aimed at training younger apprentices.
Are employers making the most of their levy funds?
According to a survey released earlier this year, 1 in 5 levy-paying employers writes off the payments as a tax on the business, as they believe utilising the funds through the hiring or training of an apprentice to be too complicated, time-consuming or troublesome to be a worthwhile endeavour.
Apprentice retention also poses significant challenges to the proper utilisation of levy payments and funds. A survey released in March 2018 showed that more than 30% of people who start an apprenticeship in Britain do not complete it. Unfortunately, when an apprentice drops out, the employer receives no refund of any kind, meaning that the levy funds put towards this apprentice are, ultimately, wasted.
Hiring an apprentice
An apprentice can be a new or existing employee. There are a number of steps that an employer can take in order to ensure that the process of hiring an apprentice is as painless as possible, as well as ensuring the appointment of the best possible candidate for the role.
Choose an apprenticeship framework/standard that is both relevant to your industry and at a suitable level.
Find an organisation that offers training for your chosen framework/standard.
Advertise your apprenticeship. Your training provider should do this on your behalf via the “Find an Apprenticeship” service.
Select the candidate for your apprenticeship and make the relevant apprenticeship agreement and commitment statement with them.
How long does an apprenticeship last?
The minimum duration of an apprenticeship is 12 months, but an apprenticeship can last up to five years, depending on the level at which the apprentice is studying. In the instance of standards, the end point assessment (EPA) can only take place after the minimum duration of the apprenticeship, thereby extending the duration. This means that, in the instance of a 12-month apprenticeship, the EPA cannot occur until after the full 12 months have passed, meaning that the full apprenticeship will last over 12 months. This does not apply in the instance of frameworks, however, where an assessment is not required.
What are an employer's responsibilities with regards to managing an apprentice?
An employer must ensure that there is a genuine job available, with a contract of employment long enough to allow time for the apprentice to complete their apprenticeship. The employer is responsible for paying the apprentice’s wages and ensuring that they are placed in a role that will help them to gain the relevant knowledge, skills and behaviours needed to achieve the apprenticeship, whilst also providing any support that the apprentice may need.
The employer also has an obligation to ensure that the apprentice partakes in 20% “off the job” learning, which must be planned, recorded and subsequently evidenced.
Employers are not required to pay National Insurance contributions for apprentices under the age of 25 on earnings below the higher tax rate of £43,000.
What are the benefits of hiring an apprentice?
Aside from the utilisation of apprenticeship levy funds, an employer can receive a number of benefits from hiring an apprentice. The government also offers certain financial incentives to employers to encourage apprenticeships. There are also, however, a number of non-pecuniary benefits to hiring an apprentice. In fact, apprenticeships are often seen to be a productive and effective way for any business to nurture talent and develop a motivated, skilled and qualified workforce.
One report showed that employers with an established apprenticeship programme cited an improvement in productivity of 76%. Additionally, 75% of employers reported that apprenticeships actively improved the quality of their product or service.
Other benefits include increased employee satisfaction, lower staff turnover, reduced recruitment costs and many more.
What software is available to help employers and training providers manage apprentices?
All aspects of managing and evidencing an apprentice’s workload can be made easier and more efficient with the use of the appropriate software and solutions.
Rubitek Core is a cloud-based apprentice management platform with a suite of tools fit to deliver total management of your apprentices and their training. With our software, employers are able to plan, track and manage their apprentices’ workloads, which is infinitely useful when it comes to subsequently evidencing this workload.
To find out more about how Rubitek Core can benefit you as an employer, get in touch with us today.