If you’re an employer considering whether to take on an apprentice (or several) in 2022, you may not be aware of the very latest cost implications, funding or government incentives available and you might not even be sure if apprenticeships are the right route for your organisation.
In this article, we look at these issues and more, to help you decide if apprenticeships are suited to your business and how you could potentially benefit from taking on an apprentice in 2022.
Why are apprenticeships good for businesses?
If you’ve not taken on an apprentice before, or not for some considerable time, you may be unsure about the potential benefits that offering one or more modern apprenticeships can have for your organisation. While the apprenticeship itself will usually run for anywhere from 12-months to four years, depending on the level of the programme, research shows that there can be multiple benefits for businesses that can sometimes fundamentally change the organisation for the better, often long-term.
- 78 per cent of employers said that apprenticeships helped improve productivity in the workplace.
- 74 per cent of employers said that apprenticeships helped them to improve the quality of their service or product(s).
Apprentices can be a very valuable addition to your organisation because you are able to expand your workforce and ensure that the training they receive correlates with the needs of your business, both now and in the future.
Why an apprenticeship rather than taking on another standard employee?
If you’re looking to increase the size of your workforce, you might be unsure as to whether it makes more sense for your business to take on a new employee through a traditional recruitment route or whether to offer an apprenticeship.
There were 322,500 apprenticeships started in 2019/20 in England, placed in nearly 70,000 different enterprises across the country. There are some great reasons why so many different organisations decide to offer apprenticeships rather than recruit employees through the standard route. These include:
- The apprentice is able to study for a relevant qualification alongside working and gaining new job-specific skills, which can have long-term benefits for both the employee and the employer, helping to fill skills gaps in the business. Without the apprenticeship training provider involvement, the employer would be solely responsible for all training delivered to the employee.
- With the government incentives and other apprenticeship funding assistance, hiring an apprentice in 2022 could be a very cost-effective way to bring on and train a new member of staff.
- Many companies find that apprentices turn out to be loyal employees, with a Learning and Skills Council survey finding that 74 per cent of the employers surveyed saying that apprentices tended to be more loyal than non-apprentices.
- A simplified recruitment process, because potential apprentices apply directly and you also have the support of your training provider with the recruitment and ongoing apprenticeship programme.
The cost of apprenticeships to an organisation
The cost of an apprenticeship to the business will depend on a range of different factors, which include:
- Whether you are considered a large employer or a small employer (i.e. whether you pay into the apprenticeship levy or not) as this will have an impact on training and assessment costs.
- The age of the apprentice (if the apprenticeship programme lasts for longer than 12 months) as this affects the minimum hourly wage you are legally obliged to pay.
- Which government incentives you are eligible for with your apprenticeship.
It was announced in October 2021 that the government’s financial incentives for hiring apprentices, currently at their highest ever level, are being continued until 31st January 2022, which is great news for employers who might be concerned about the cost of apprenticeships. It means that any SME taking on an apprentice between now and January 2022 can receive up to £3,000 in incentives which can be put towards the wages, training or equipment needed for the apprentice. This can rise to £4,000 if the apprentice is aged 16-18 years or is under the age of 25 and has an Education, Health and Care Plan (EHCP).
If you are a large employer and pay the apprenticeship levy, these funds can be used for training and assessment costs for apprentices. If your organisation does not pay the levy, you will usually need to pay 5% of the training and assessment costs for each apprentice, with the government contributing the other 95%. It can sometimes be possible for a large employer to transfer some of their unused levy funds to smaller businesses, which can mean that you don’t need to pay any training costs.
In terms of wages, the first year of the programme, an apprentice needs to be paid at least the current apprenticeship rate, which is reassessed every April and is currently £4.30 an hour. If the apprenticeship is longer than 12 months, after the first year, the employer needs to pay at least the current national minimum wage for the individual’s age.
Should you take on an apprentice in 2022?
Bearing all of the above information in mind, your organisation needs to decide whether to take on an apprentice in 2022. With the future of government incentives after January 2022 as yet unclear, it could make financial sense to ensure that your apprenticeship is registered and started by this point, to ensure you get the maximum benefit possible as it might be the cases that incentives are reduced at this point.