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New legislation to give workers their tips

Here is the Hot Topic for December 2023 and an accompanying webinar will follow, which will be hosted on 11 January 2024

Introduction

Is your organisation struggling to recruit? Are you struggling to find qualified candidates to fill your open positions? Or are you looking for a way to upskill your existing workforce?

In this month’s Hot Topic we explore the benefits of apprenticeships in detail and how they can help you address your current recruitment challenges. We will also explore the different types of apprenticeships available, how to find and recruit apprentices, the government funding available for apprenticeships and the benefits for your employees themselves.

Please note, that the content in this Hot Topic relates to apprenticeships in England.  Wales, Scotland and Northern Ireland have their own rules and practices for how apprenticeships work.

Understanding apprenticeships

Apprenticeships are Government backed training schemes that allow organisations to hire either someone new or upskill an existing employee to grow and develop talent.

Since 2020/21, apprenticeships must be managed in line with standards rather than the previous frameworks that were previously in place.  Whereas the framework approach focussed on achieving qualifications, the new standards approach is aimed at achieving full occupational competence.  This means the learning is gained throughout with the apprentice being assessed at the end to demonstrate that they are competent in all aspects of the occupation.

There are four types of apprenticeships; intermediate; advanced; higher and degree.  Overall, across all levels there are over 600 occupational standards which have been set by the Institute for Apprenticeships and Technical Education (IfATE) in collaboration with thousands of employers.

Government funding

The type of business that you operate will influence the extent to which funding is available from the Government and what you are required to pay.  For instance, only employers with a pay bill of over £3 million each year or who are connected to any companies or charities that have a combined annual pay bill of more than £3 million are required to pay an apprenticeship levy. This is currently 0.5% of the annual pay bill.

All other employers generally pay 5% towards the cost of training and assessing an apprenticeship with the Government funding the rest.  Here is a summary of how the funding operates in this instance:

  • The employer pays the training provider directly and agrees the payment schedule
  • The Government’s contribution is up to a funding band maximum, so any additional costs must be met by the employer
  • However, the Government will pay 100% of the apprenticeship training cost up to the funding band maximum when
    • They employ fewer than 50 employees and
    • The apprentice is aged between 16 to 18 (or 19 to 24 with an education, health and care plan provided by the local authority or has been in the care of the local authority)

Additionally, employers and training providers could be eligible to receive £1,000 from the Government for each apprentice that they hire who is either:

  • aged between 16 to 18
  • aged between 19 to 24 with an education, health and care plan provided by the local authority or has been in the care of the local authority.

This additional funding can be used on any costs associated with supporting the apprentice in the workplace, such as travel, salary, or uniforms.  The employer does not need to do anything to receive this payment as the training provider confirms who is eligible to the Government.

The £1,000 is paid in instalments:

  • The first £500 is paid after 90 days of the apprenticeship starting date
  • The final £500 is paid after 365 days of the apprenticeship starting date.

The benefits of employing apprenticeships

Apprenticeships can be a fantastic asset to your business as they bring many benefits to the organisation, such as:

  • They provide a pipeline of fresh talent that can be moulded to fit your company’s specific needs. It’s like growing your own skilled workforce.
  • They contribute to a more diverse and inclusive workplace by offering opportunities to individuals who might not have pursued a traditional academic path. This diversity can bring different perspectives and creative solutions to your team plus, it means that you are able to tap into a broader pool of talent.
  • They can enhance employee loyalty because apprentices who have been nurtured within the company often feel a strong sense of loyalty and commitment. Investing in their development, means that you gain dedicated and skilled employees.
  • In turn, an engaged and motivated employee will be more productive therefore contributing to the business productivity and efficiency
  • There are financial incentives and support from the government for hiring apprentices. Government support can help offset the costs of training and development, making it a cost-effective way to build a skilled workforce.
  • Give the business a positive impact on your employer brand locally and nationally.
  • Opportunities for businesses to receive government funding to help offset the costs of training.

Not only are there massive benefits to an organisation, but for the individual too, which can positively impact on their engagement and motivation with the organisation; something that is a key priority for employers at present given the continued recruitment challenges.   The benefits to the individual include:

  1. Providing valuable hands-on experience that is in a real work environment. This practical experience is often more relevant and directly applicable than theoretical knowledge gained in a classroom.
  2. They offer a structured training program, allowing individuals to acquire specific skills related to their job role. This targeted development enhances their expertise and makes them more competitive in the job market.
  3. Apprenticeships often come with mentorship opportunities. Having a mentor within the company can provide guidance, support, and a valuable connection for career development.
  4. Completing an apprenticeship can open doors to long-term career opportunities within the company. Many employers prioritise promoting from within, and apprenticeships are a great way for individuals to start climbing the career ladder.
  5. Being part of a company through an apprenticeship exposes individuals to a professional network. Building connections within the industry can be instrumental in future career growth and job opportunities.
  6. Successfully completing an apprenticeship can boost an individual’s confidence. The combination of practical skills, work experience, and mentorship can make them feel more prepared and capable in their chosen field.

5.    How they can address your recruitment challenges

In last month’s Hot Topic and accompanying webinar, we explored the key HR trends for HR in 2024.  Alongside significant developments in employment law, we discussed how recruitment is likely to continue to be a challenge for most businesses next year.

We know from our own research carried out back in July 2023, that at that time, 80% of respondents to our survey said that they continued to have recruitment challenges. In delving further into what these challenges were specifically, it was identified that the biggest challenge facing employers was regarding a skills shortage (43%), followed by candidate shortage (24%) then the time it takes to hire (15%) with increasing demands from candidates for hybrid working (11%) and finally, cost per hire (7%).

We re-ran our survey again in a recent Webinar and added further questions to find out what the current feeling was amongst employers when it came to identifying and developing skills within the workforce.  In this webinar (Identifying and Developing Skills within your Workforce November 2023) we found the following:

  • 89% of respondents said they were struggling to have the right skill set in their business in order to respond to current and future business challenges
  • 31% reported that understanding and identifying the skills gap was the biggest challenge when it came to talent and 26% said it was about the ability to retain skills and talent
  • We then asked whether anybody planned for their managers of the future, with just 33% saying that they did, either through succession planning or a management development programme. This meant that 67% said that they didn’t plan for future managers instead recruited at the time needed.

So we know that recruitment continues to be a key focus for business and HR leaders going into 2024, and so there is a clear business case for employing apprentices, given the vast benefits they bring.

Apprenticeships are a cost-effective way to recruit, that can ultimately help mitigate against:

  • The struggles in recruiting currently experienced by many employers
  • The ability to attract and retain staff
  • Knee-jerk recruitment when a manager vacancy becomes open
  • Skill shortages
  • Candidate shortages
  • Lengthy recruitment processes and timescales.

How to hire an apprenticeship

There is a misconception that hiring an apprenticeship is complicated and timely.  With any recruitment process there will be an element of management time and effort, and with apprenticeships it isn’t significantly greater to if you recruit in your usual way.  Here is our step by step approach on how to hire an apprentice:

Step 1

Understanding the skill gap in your organisation is the first step and doing this should be a key business activity that occurs throughout the year, not just at the time of needing to recruit.

Another key business activity is developing a strategic people plan that is aligned with the business goals.  Training and skills analysis should form part of this to enable the business to prioritise recruitment needs and budget resources.

Step 2

When you have identified a skill and resource gap then you need to find the most suitable apprenticeship course that matches to the job role that you need. When looking for an apprenticeship, make sure you:

  • select the right training to suit your business
  • think about the level and duration of the training
  • discuss your expectations with the training provider
  • ensure your agreed training plan is flexible and can be changed to meet the needs of your business and the apprentice.

You can find training courses via the Government website here.

Step 3

Once you have identified the training course, you must then find the best training provider who will provide your apprentice with the best off the job training.

The training provider will be responsible for the 20% ‘off-the-job’ training. The provider can be local or national because many will provide training either online or at your workplace.

You can use the Government’s find apprenticeship training service which will enable you to find your course at the right level and providing the right skills, plus, you can check availability by location and read reviews posted from other employers.

Once you’ve decided on the type of apprenticeship your business needs, and chosen a training provider, you’ll need to create an apprenticeship service account.  This account will enable you to set up and manage the apprentice.  All apprenticeships in England must be managed through this service.

Your service account can also be used to:

  • access and manage funding
  • receive a transfer of funds
  • advertise vacancies
  • chose the course and provider
  • give permission to training providers to carry out some tasks on your behalf

Step 4

Once you have found both the apprenticeship course and the training provider, you need to recruit by using a fair recruitment process.  You can use the Government’s ‘recruit and apprentice’ system to do so, which will require you to create the opportunity and advertise.  You can either manage the recruitment process or ask the training provider to do so.

Other ways in which you can recruit apprentices include:

  • Your training provider can recruit on your behalf
  • You can build contacts with local schools and collages so that they can introduce your organisation to their students
  • Your networks on LinkedIn.

You can read a previous Hot Topic ‘Running a successful recruitment campaign’.

Step 5

Once you have recruited an apprentice, by law, they must be provided with an Approved English Apprenticeship Agreement.  Apprentices have the same rights as other employees including working hours, rest breaks and to be paid at least the National Minimum Wage (NMW).  Currently, the NMW for an apprentice is £5.28 and will be increasing to £6.40 from 1 April 2024.

All apprenticeships must be at least 12 months in duration.

Step 6

The apprenticeship begins!

At the outset, the employer gets involved in an initial assessment with the training provider and apprentice.  This assessment is about identifying whether the individual is already competent in any areas of the apprenticeship occupation standards.  If they are, then they are not required to undertake those elements of the training.

Throughout the apprenticeship, on the job training must be provided to support their overall training.  This can include:

  • Comprehensive induction programme
  • Mentoring
  • 121s
  • Networking opportunities
  • Performance reviews
  • Mental health and wellbeing support.

Step 7

Your apprentice is successful in their programme!  For employers, given the time and effort that has been invested in their learning, consider what comes next for them.  It could be to offer them a position within your organisation and make their employment permanent.  It could be to offer them a promotion, or it could even be to continue with their formal development and place them on a higher level of apprenticeship.

Ultimately, you hope that you can retain the talent that you have grown so that you can reap the many benefits that employing apprenticeships provide.

7.    Further Information

A free accompanying webinar for this topic is taking place Thursday 11 January 2024 at 10am.  You can register for this event here.

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