Should your next recruit be an apprentice?

Since April 2017, all UK employers with a wage bill of more than £3 million have been paying an annual apprenticeship levy of 0.5%. The levy is then topped up by 10% from the government and the total fund is made available for employers to use towards the cost of apprenticeships.

Apprenticeships may not be appropriate in all circumstances, but they can offer a cost-effective solution for businesses looking to plug skills gaps and diversify their workforces.

Using apprenticeships to plug skills gaps

Apprenticeships are often cited as a way of futureproofing the workforce against skills gaps. In fact, 86% of employers surveyed by the government have said apprenticeships helped them develop skills relevant to their organisation. There is a wide range of apprenticeships available, with the government having invested in the development of over 500 apprenticeship standards, allowing businesses to adapt the training of apprentices according to business need.

Apprentices can be of any age, making an apprenticeship a potentially attractive option for existing employees who are interested in retraining and giving employers the option to upskill their workforce by offering apprenticeships internally as well as externally. Opting to address skills gaps through training existing employees can also demonstrate a commitment to employee development and, as an added bonus, boost employee motivation and improve retention.

Using apprenticeships to boost diversity and inclusion

Making use of apprenticeships can increase the diversity of the workforce not just in terms of age (hiring younger workers) but also from a socio-economic perspective.

Candidates who are attracted to pursuing an apprenticeship may be those who are not pursuing further education or university, either because they cannot afford to do so or are deterred by the prospect of having to take out and repay loans. Older workers who apply for apprenticeships may similarly be those who were not able to complete a degree on leaving school or who are looking for an opportunity to gain new qualifications while meeting existing financial commitments.

Anecdotally, apprenticeships may also help boost diversity in other ways, for example by potentially increasing the numbers of female candidates in male-dominated industries.

Cost-effectiveness and making use of apprenticeship incentive payments

As we explain above, large employers already pay an apprenticeship levy to which the government applies a top-up. If levy funds are not spent within two years, they will become unavailable. For levy-paying employers, therefore, it makes sense to use the funds where possible rather than allowing them to lapse. Extra incentive payments are also available for those taking on apprentices. Employers hiring a new apprentice with a start date between 1 October 2021 and 31 March 2022 can now apply for an incentive payment of £3,000. This is in addition to the existing £1,000 payment employers already receive for hiring an apprentice under 18 or who has been in the care system.

The Flexi-Job Apprenticeship Scheme

Many small and medium-sized organisations may not feel equipped to take on an apprentice – for example, because they cannot offer the range of experience required for the completion of the relevant standard. The government has sought to find a solution to this issue by introducing the Flexi Job Apprenticeship Scheme, which was launched in 2021 in a bid to make apprenticeships more portable. The scheme, to which the government has allocated £7 million in funding, will allow apprenticeship agencies to supply apprentices to work with multiple host employers and for short periods of time if necessary. The first flexi-job apprenticeships are expected in 2022. The BBC recently announced that it had been successful in its application for Flexi Job Apprenticeship Agency status and has launched an apprentice hub in Birmingham.

Legal considerations

It is crucial for employers to put the correct contractual arrangements in place when recruiting an apprentice so that levy funding can be accessed, and to avoid falling into the restrictive common law regime for apprentices (which may inadvertently lead to apprentices having enhanced employment protections). Employers offering apprenticeships will also need to conclude an agreement with a training provider to meet the off-the-job training requirement. For more details, see our InBrief guide to apprenticeships and, for the latest changes to the funding rules, see here.

Conclusion

Levy-paying employers looking to close their skills gap and increase the diversity of their workforce should seriously consider investing in an apprenticeship programme. We can assist with all aspects of employing apprentices, so feel free to contact us or your usual Lewis Silkin contact.