Updated: Jan 20, 2021
This is the sixth in this series of circulars looking at frequently asked questions or topical issues. Previous circulars (on Payments on account; Telephony and Broadband; MTD & Bookkeeping software; the 2018 Autumn Statement; and Travel, Subsistence and Entertainment) are included below.
As we enter 2019, many of us are assessing our objectives for the upcoming year and perhaps looking to grow beyond our current capacity. There are many ways to create extra capacity including identifying efficiencies in our processes, tendering for new suppliers, or recruiting more staff. This edition looks at recruitment, and in particular, one area which may be of particular appeal to small, growing businesses – apprenticeships.
If candidates and their courses are considered carefully, apprenticeships can be enormously beneficial to you and your ventures, at a cost and commitment level that is palatable.
18th January 2019
Apprentices are aged over 16 but generally between the ages of 16-25. They are individuals looking to combine employment with a formal qualification, and are typically suited to those people who feel they have a clear idea on what career they would like to pursue – something that can appeal to potential employers.
Apprenticeships last from between 1 year for immediate level all the way up to 6 years for degree level.
Initially, it’s the job of the employer to pick the specific topic and level of qualification, before selecting the college or organisation that currently runs the course. Clearly, the higher level of qualification, the more competent the apprentice is likely to be. However, it will come with higher costs in terms of course funding and wages (see below).
Course fees and funding
Apprenticeships not only benefit the apprentice and the employer, they of course benefit the wider labour market. Therefore the UK government have consistently incentivised the scheme by funding 90% of the course fees. The remaining 10% would normally need to be paid by the employer. However, just as an example, a level 3 18 month qualification in recruitment consultancy, provided by a professional body in Bristol, would require a £500 contribution by the employer.
Once you have selected your course, the host training organisation, and agreed on a desired start date, your placement will then be advertised on a nationwide Gov.uk database.
Pay and conditions for the apprentice
It is for you to derive the salary on offer for the apprentice, but it must be at least the national minimum wage. It’s generally accepted that apprentices will not expect the level of salary of a qualified and/or permanent member of staff, however, the more competitive the offer, the greater the candidate pool.
If I could use a trade close to home as a guide, a law firm in Bristol are offering a 15 months / 35 hr per week accountancy apprenticeship studying AAT at £150 per week.
In terms of employment conditions, apprenticeships work very similarly to PAYE fixed term contracts, in that apprentices for the term of their employment should expect the same rights as a regular employee. That includes holiday allowances, sick pay, mentoring, benefits, and redundancy payments etc.
• Tax impact – all costs associated with initiating and seeing through an apprenticeship, including advertising, course funding, and employee expenses can be offset against taxable profits. Also employers NI does not apply for under 25’s.
• Intermediaries – rather than source apprentices yourself, naturally there are companies out there that will take care of it for you. This can relieve you of some of the admin, and it holds those companies accountable for a successful apprenticeship (for an additional cost…).
• The candidates – given the demographic, apprentices can inject some youthful enthusiasm and fresh ideas, and often wish to stay on if the opportunity arises. Juggling a full time role and study will be hard work though, so you’d need to ensure you have an apprentice with the staying power and a strong work ethic.
If you would like to discuss the merits of apprenticeships or any other topics covered please give me a call.