The apprenticeship wage: how much should your business be paying? - Apprenticeships
With a UK government target of three million apprenticeship starters by 2020, now is a great time for businesses to consider apprentice schemes for both new and existing employees. Apprenticeships are available to anyone aged 16 and over, not in full-time education and eligible to work in the UK. There is a lot to gain, for both businesses and apprentices, but equally there are factors – including pay – to understand before hiring.
For example, there are currently three types of apprenticeship in the UK to be aware of, each with its own nuances. These are:
- A contract of apprenticeship. A traditional two-party arrangement whereby it’s the responsibility of the employer to facilitate training.
- An apprenticeship agreement. A contract of service in which apprentices are treated as other employees.
- Modern apprenticeships. Introduced in 1994, and better known simply as apprenticeships, these can be one of the above but also involve a third party training provider – such as MidKent College.
The benefits of an apprentice to your business
In response to being offered a great opportunity to learn, apprentices bring with them enthusiasm, fresh perspectives and a willingness to learn. Apprentices will be productive members of a team and for businesses, it’s great to see individuals learn and progress.
Further benefits include, but are by no means limited to:
- The chance for businesses to fill existing gaps in skills and build future talent pipelines
- Access to a wider pool of talent
- A potential cut in recruitment costs
- The opportunity for existing employees to build and practice training and mentoring skills
- Positive impacts on reputation
What’s more, data compiled by the National Apprenticeship Service (NAS) confirm the number of advantages available. Highlights include: 81% of consumers favour companies taking on apprentices, 92% of employers who employ apprentices believe schemes lead to a more motivated and satisfied workforce, and 80% of companies investing in apprentices have reported a significant increase in employee retention.
What you should be paying an apprentice
With the benefits looking solid, if you’re considering an apprentice, there are minimum wage requirements to comply with. According to the government website, apprentices are entitled to the apprentice rate of the National Minimum Wage if they’re either: aged under 19, or aged 19 and over currently in the first year of their apprenticeship.
As of April 2016, the apprentice rate is £3.30 an hour, but will be rising to £3.40 an hour in October 2016. This rate must be paid for all the time an apprentice spends working, as well as the time spent training at a college or similar institution.
Apprentices are entitled to the minimum wage for their age group when they are both aged 19 or over and have completed the first year of their apprenticeship. The current minimum wage rates are:
It’s important to remember that, similarly to other employees, as the skills of an apprentice increase, this should accordingly be recognised in their pay.
Other factors to consider when taking on an apprentice
- You can pay apprentices an increased salary, bonus or commission. Indeed, many businesses do pay their apprentices more than the minimum; a 2011 research report for unionlearn, titled Apprenticeship Pay and Conditions Research Report, found those subjects boasting the highest average levels of apprenticeship salaries are also those that appear to have the highest average post-training retention rates.
- Apprentices can work weekends and bank holidays, so long as the total working week is not more than 40 hours.
- Businesses must provide certain opportunities for their apprentice(s). These include the chance to work with experienced staff, learn job-specific skills and study for a work-based qualification (typically at a college or training organisation) during the working week.
- Apprentices must also be treated the same as other employees, including receiving paid holidays, sick pay and any other benefits or support your business offers.
- Apprenticeships can last from one to four years.
Funding available for apprenticeships
Keen to get more participants involved, NAS offer financial support to businesses for taking on apprentices. Apprenticeship grants worth £1,500 are available to businesses of fewer than 50 employees who employ an apprentice aged 16 to 24. This support can be claimed for up to five apprentices.
Whilst the training organisation or college providing the apprentice’s training typically gets funding to cover the costs of qualification, if, in addition to being the employer, you are providing formal study, you can apply for funding to cover these costs too.
The amounts available do vary, however. In England, for apprentices aged 16-18, the government will cover 100% of the training cost - but for those apprentices aged 19-23-years old, funding is only available for up to 50% of the training cost. Those employing apprentices aged 24 or above will receive a contribution to the cost of training.
What happens after an apprentice completes training?
The good news is that most apprentices excel in training and stay with their employers after completing an apprenticeship, at which point they add significant value to the team and can be considered an asset, which the company has supported from the roots up.
What to do next?
If you think an apprentice could add value to your business, the UK government advises taking the following steps:
- To find an apprenticeship in your industry and at a suitable level, check the apprenticeship framework.
- Register your interest in employing an apprentice with NAS.
- Look for a training organisation or college that offers apprenticeships in your industry. MidKent College, for instance, offer a variety of apprenticeships that are added to every year to meet employer demands.
- Check whether your business would be eligible for an apprenticeship grant – and apply.
- Advertise the apprenticeship vacancy. This is something that your training organisation can help with.
- Choose your apprentice!