How do I set up an apprenticeship?

Introduction

This is a companion piece to Why now is the time to take on an apprentice and takes a more practical look at apprenticeships, taking employers through the process of setting up them up, from what level to offer to how to find a training provider.

Momentum is growing behind the apprenticeship system and the government recently committed to expanding it with its ‘new deal for young people’. Ministers have said they want to see another 50,000 apprenticeship starts by 2029 and are investing £3.3 billion this year in the sector.

A number of industries in the UK are short of skilled workers and apprenticeships can be the perfect way to plug these skills gaps. Furthermore, for smaller companies the government will pay almost all the costs of apprenticeships and the training provider will do the work of setting up and running courses and assessing apprentices at the end of them.

Apprenticeships have been shown to improve staff retention and morale, and they teach staff exactly the skills a business requires. They can be used to expand the workforce or to improve the skills of existing staff.

Perhaps most importantly of all they have a huge role to play in reducing the number of young people not in education, employment or training. At present there are about one million people in this position, and companies that run apprenticeship schemes play a vital role in giving youngsters the skills and confidence to make fulfilling lives for themselves.

Apprenticeships could be described as a win-win-win: the economy benefits from a larger, better trained workforce, companies increase their profitability and revenues and young people get the start so many of them badly need. So, how do companies set about taking on their first apprentice?

What sort of training do you want to provide?

Apprenticeship training providers support almost every sector and type of skills learning, from artificial intelligence to working in a zoo so, whatever your business, you should be able to find a provider that can help you.

Levels start at GCSE standard and continue up to degree equivalent. Apprenticeships should last for at least eight months, with an average duration of two years, so there must be a significant amount of knowledge transfer and skills to learn for them to be appropriate.

For employers that only require smaller skillsets to be taught apprenticeship units can work better. These are short, flexible courses that enable employees to develop the extra skills that they need. However, only contracted employees can do apprenticeship units and they must be 19 or above and must work mainly in England.

The Department for Education offers an Employer Support site for employers that want to know more about apprenticeships.

Companies in sectors that frequently use short-term contracts or more unpredictable employment models can take advantage of the flexi-job apprenticeship scheme. In this case an approved flexi-job agency employs the apprentices and arranges work for them.

An apprentice in this scheme can work for multiple employers and take breaks between apprenticeships. Further information about flexi-job apprenticeships can be found at gov.uk.

Apprenticeship levels

Apprenticeship levels mirror secondary and higher education standards. Your apprentice training provider will be able to advise you on the appropriate level for your apprentices.

Level 2

At level 2 no previous experience is needed. Foundation apprentices are set at level 2.

Level 3

Some qualifications or experience may be needed.

Levels 4-5

Relevant qualifications and experience would be expected, for example, a higher national certificate or higher national diploma.

Levels 6-7

This is high-level study, equivalent to university.

Funding: companies that pay the levy

The government requires companies with an annual pay bill of more than £3 million to pay the apprenticeship levy, which is charged at 0.5% of their annual pay bill.

Companies can be eligible for the apprenticeship levy allowance, which reduces the amount they have to pay by £15,000 over the year.

The levy entitles companies to financial support for running apprenticeship schemes, ranging from £1,500 to £27,000 per apprentice.

They also get a 10% top-up to their monthly funding from the government.

Funding: companies that do not pay the levy

If a company doesn’t pay the levy the government will pay all the costs of training and assessing apprentices if they are:

• aged 21 or under;

• aged 24 or under and have an education, health and care (EHC) plan;

• aged 24 and under and have been in care.

For other apprentices companies pay 5% of the costs and the government 95%.

Other funding

The government will give £1,000 to support an apprentice in the workplace if at the start of the apprenticeship training the apprentice is:

• 16 to 18 years old;

• 19 to 24 years old with an education, health and care plan; or

• 19 to 24 years old and has been in care.

This can be spent on things like salary, travel costs or a uniform.

Companies offering foundation apprenticeships can get £2,000 per apprentice for eligible workers.

In June the government announced it would give employers £3,000 for every long-term unemployed 18 to 24-year-old they took on. This offers an alternative way for employers to give young people a foothold in the workplace if setting up apprenticeships is not right for them.

Choosing a training provider

Employers can use a search tool on the gov.uk site to search for a provider. They simply need to type in the job role, course name or subject area plus their city or post code and a list of training providers will appear.

Alternatively they can use the same site area to search for a training provider by name or provider reference number.

Once they have decided on a training provider they need to agree a payment schedule with it.

Apprenticeships service account

Employers need to set up an apprenticeships service account to manage funding and provider payments. This does more than manage payments and is used to:

• advertise apprenticeships;

• accept employer agreements with the Department for Education; and

• set permissions for training providers, eg, to advertise for apprentices.

To set up the account you will need a Government Gateway user name and ID number, your PAYE scheme reference number and Accounts Office Reference Number, and other relevant information about your company.

The apprenticeship agreement, training plan and further help

A day a week of training is normal. Alternatively the training can occupy a block of time in between periods of full-time work.

The apprenticeship agreement – which is mandatory – should include details of:

• the skill, trade or occupation the apprentice is learning;

• the name of the apprenticeship;

• the start and end dates of the apprenticeship;

• the amount of training the apprentice will receive.

The government provides a downloadable apprenticeship agreement template.

At the end of the apprenticeship there is an assessment and if the apprentice has reached the required standard then he or she should receive a recognised qualification.

The employer must keep the provider up to date about changes to working patterns, the apprentice’s progression and any changes to average weekly hours.

The training plan

All three parties must sign the training plan. This must include:

• the training’s content and schedule;

• what is offered and expected by the employer, the training provider and the apprentice;

• procedure for complaints and queries.

The training provider may amend the training plan to take into account any existing skills, experience, training or qualifications that the apprentice already has.

Responsibilities to the apprentice

The company must give the apprentice a contract of employment and apprentices must be paid at least the National Minimum Wage. Apprentices should only be enrolled on approved, recognised schemes.

In general apprentices should be treated like other employees and are entitled to paid holidays, sick pay, benefits offered to staff such as childcare vouchers and workplace support, for example, mentoring.

They also have the same employment rights as other staff.

National insurance contributions

Employers don’t have to pay national insurance contributions for apprentices on an approved scheme who are under 25 and earning below £50,270 a year.

However, apprentices themselves do have to pay national insurance based on their earnings.

T levels

Employers interested in teaching young people valuable work skills may be interested in T levels. These relatively new qualifications – they were set up in 2020 – are an alternative to A levels and courses begin once pupils have completed their GCSEs.

They are set at A level standard and one T level is equivalent to three A levels. Each T level includes a 45-day placement in a company. Students spend 80% of the course in the classroom and 20% in the industry they want to work in, where they can apply the knowledge and skills that they are learning.

Further help

For all the advantages that come with taking on apprentices there are the inevitable tax and financial implications that go with them. Finsbury Robinson is here to talk you through the tax and accounting aspects of employing an apprentice, and would be happy to advise you on other matters related to your business.

Please contact our friendly and highly experienced team on 020 8858 4303 or via email at info@finsburyrobinson.co.uk