Growing Your Business
Huge change is coming to the early careers landscape. The Government wants 3 million apprenticeship starts by 2020. According to the Skills Funding Agency, 80% of those who employ apprentices agree that they make the workplace more productive. There are numerous advantages arising from bringing eager new people into your business, and apprenticeships now cover more skills and industries than ever before. Apprenticeships enable businesses to grow their own skilled workforce, while also gaining access to administrative support, financial help, and providing apprentices with a programme of structured learning.
The Government believes that economic benefits are generated when education and training helps individuals achieve a higher level of qualification, increasing their employment prospects, productivity and wages. Despite skill shortages reported by employers, investment by UK employers in training is low compared to international competitors, having declined rapidly in the last 20 years. The proportion of employers engaged with apprenticeships is higher in other countries. It is 24% in Germany, 30% in Australia but only 15% in England. The Government is positioning itself to support apprenticeships by making it easier to take on apprentices.
Benefits
There are many benefits of bringing an apprentice into your business; here are 6 important ones when looking at the positives from a business perspective.
- Loyalty: Apprenticeships are attractive to many companies who want to “grow their own” bespoke employees, rather than depending on the labour market to find skilled workers. In return, 9 out of 10 stay with the same employer after completion.
- Fresh ideas and enthusiasm: Bringing in apprentices means they will be doing on-the-job training alongside existing staff, as well as external training with a learning provider. This arrangement can bring fresh ideas and innovation to businesses.
- Increased productivity: Apprenticeships help businesses boost productivity by bringing in new talent that quickly helps to grow their skills base.
- Availability: Apprenticeship vacancies have increased at a record rate, with up to 28,000 available at any one time on the national apprenticeship website. Recruitment costs are often lower than for non-apprentices.
- Grants and financial support: Apprenticeships enable young people to earn while they learn in a real job, gaining valuable qualifications. Businesses with less than 50 staff can apply for an Apprenticeship Grant of £1,500.
They are comparatively inexpensive to employ: An apprentice must be paid at least the Apprenticeship Minimum Wage, which is currently £3.30 per hour, whereas the National Minimum Wage is £5.30 for an 18 – 20 year old. These rates will increase to £3.40 and £5.55 respectively in October 2016.
Constraints
If the benefits are that great why are many employers reluctant to recruit and develop apprentices?
There are probably three reasons; the first being lack of experience. Many younger Managers will have little experience of such training. Secondly, there are bound to be employers with bad experiences, either of employing poor quality apprentices, or of their own children being badly treated in their apprenticeships. In our experience, a third significant factor is the fear that they will be stuck with someone who is not working out. Historically, this had some strong foundation in the legalities of employing apprentices, who were seen as being on some sort of fixed term contract, because the main purpose of the contract was to train the apprentice, which means that an employer owed them greater obligations compared to normal employees.
They enjoyed certain rights that are not extended to other workers or employees, including protection from certain forms of dismissal. It is often thought that apprentices are employees with fixed term contracts. In fact, this is not the case. The Fixed-Term Employee (Prevention of Less Favourable Treatment) Regulations exclude apprentices from their provisions.
The nature of an apprentice’s contract made it difficult for an employer to dismiss them during the course of their apprenticeship. Legal precedents suggested that ordinary redundancy was not permissible in an apprenticeship. In reality, of course, the employer only had to show that they were dismissing the apprentice fairly and reasonably. You can legally dismiss an apprentice on the grounds of, for example, gross misconduct, or, if they break the terms of the contract, such as not attending college or passing exams.
However, an employer can struggle to show that a dismissal for anything other than gross misconduct is fair. The apprentice’s behaviour must be so unreasonable that it is no longer possible to teach the apprentice. An employer cannot dismiss a ‘traditional apprentice’ engaged under a contract of apprenticeship for redundancy, unless there is a closure of the business, or the employer’s business undergoes a fundamental change in its character.
The Future
To make it easier for employers to take on apprentices without such constraints, apprentice agreements are being replaced by ‘approved English apprenticeship agreements’.
If an employer would like to employ an apprentice under such an agreement (so the apprentice does not have enhanced protection from dismissal), the apprentice must work for the employer in accordance with an approved English apprenticeship, under the Apprenticeships, Skills, Children and Learning Act, which was amended in 2015.
An approved apprenticeship agreement must:
- Provide for an individual to work as an apprentice in a sector for which the Secretary of State has published an approved apprenticeship standard.
- Provide for the apprentice to receive training in order to assist the apprentice to achieve the approved apprenticeship standard in the work done under the agreement.
- Satisfy any other conditions specified by the Secretary of State in regulations.
An approved English apprenticeship agreement is deemed to be a contract of service, resulting in an employer being able to terminate such an agreement as any other employment contract. As apprentices are also employees, they have the same rights any other employees, including the right not to be discriminated against; the right not to be unfairly dismissed; the right to statutory sick pay; and the right to family-friendly leave.
How can we protect our Organisation?
The most important way in which you can provide protection is simply to understand the costs associated with hiring and employing an apprentice. All too often, businesses take on apprentices only to find that they cannot afford to keep them. Whatever the legal situation, this is a very bad idea.
You should also remember that there is significant financial help available for organisations that wish to take on apprentices. Although employers need to be careful when employing apprentices, and ensure that the apprenticeship is set up correctly, there are clear benefits in doing so. Hiring apprentices is a good way to in-house grow talent by developing a motivated, skilled and qualified workforce. As well as being a financially astute move, employers also report satisfaction at helping young people realise their potential. It can also help organisations to improve productivity and competitiveness.
Therefore, although employers need to be careful when employing apprentices, and ensure that the apprenticeship is set up correctly, this is not difficult if you talk to our Consultants about drafting appropriate apprenticeship employment contracts that can give you all of the benefits, and will help minimise the issues if you need, at some stage, to let them go either during, or at the end of the training.
