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Crunchers Accountants

Crunchers Accountants

Apprenticeships 2

Archive for October, 2011

Apprenticeships 2

Last week I posted that I was off to South London Apprenticeships Fair on a fact finding mission to see what is involved in taking on an apprentice.

My impression before going was that it was a fairly pain free process to take on an apprentice.  I am pleased to say that it is even easier than I thought.  Not that employing anyone is easy, just that the hurdles to taking on an apprentice are relatively straight forward.

Firstly let me provide a little overview of how the scheme works.  The basic idea is that your apprentice spends some time in college but most of the time training on the job (minimum of 16hrs per week).  The time in college is provided by a training provider and an employer provides the training on the job.  Typically an apprentice spends 4 days a week on the job and a day at college.  16-18 year olds are fully funded for their study by the state, 19 – 24 year olds are partially funded and 25+ year olds struggle to get funding.  The employer must pay a minimum apprenticeship wage of £2.50 / hr for apprentices over 18 years old (nothing for 16- 18 year olds).  They are encouraged to pay more an attract older or more skilled  aprpentices by offering more salary.  A figure of £170/wk is quoted in one piece of literature I picked up as an upper end salary.

So that covers the bare bones of the scheme.  Now let me  deal with what you need in place before you take on an apprentice.  At first appearance the requirements seemed to be a health and safety policy, employers liability insurance and a registration with HMRC for payroll (PAYE).  However when you dig a little further it turns out that really all you need is the employers liability insurance.  The reason for this is that an industry has sprung up amongst training providers to provide apprenticeships and they are doing everything they can ease the way for potential employers.

From chatting to a few people it appears that employers willing to take on an apprentice are in high demand.  They struggle most to place 16-18 year olds but employers willing to take on older apprentices are are also much sought.  As a result it seems to me that the agencies involved are making a big effort to take away as much of the pain from employers.

For example I found one agency London Apprenticeship Company who have structured the arrangement thus:  they employ the apprentice (saving you the trouble of setting up PAYE or dealing with that admin), they arrange the training and help you to recruit a candidate as you would normally, they pay the apprentice and bill you.  In other words you are not their employer, you are saved all of that admistration.  An added advantage is that if they turn out to be the wrong person you don’t even need to worry that you are sacking them and all the regulation that goes with that.  Why? Because the London Apprenticeship Company is their employer and continues to pay them.  Another agency I spoke to about Health and Safety will also support you to get you Health and Safety Policy in place.  I would recommend that anyone considering this does not simply make the Health and Safety aspect a box ticking exercise, but it seemed to me that this particular company were more or less offering something off the shelf to fulfill this requirement.

I also asked around about what happens if your apprentice turns out to be no good.  Universally the agencies who were there seemed to be saying that you are free to let someone go and that they would quickly find a suitable replacement.  Naturally they were keen to say that they made their best effort to avoid this by filtering the candidates they offered up.  I asked one agency what the success rate of candidates from the employers point of view and the answer that came back was that around10% of placements did not work out.  I didn’t think that was too worrying.

Of course employing people is not just about hiring, firing and cost.  It is also about managing people and in the case of apprenticeships, training them.  If you are considering taking on an apprentice I would make sure you plan for the time you will need to spend with them.  Certainly at the beginning you will have extra work to do until they can take work off you.

Like most people I talk to I am in favour of the scheme from a community point of view.  Young people have a tough hand to play coming to the jobs market at this time.  Setting that aside though, I can see big benefits for small businesses.  As I said in my last blog, it appears to provide a good half way house for those who would struggle to take on a full employee.

Apprenticeships 1

As I meet clients, the possibility of taking on an apprenticeship seems to pop up on a fairly regular basis.

To go from no business to some business must be one of the most daunting challenges in business (ie start up) but following that I would say that going from a business that supports you the owner to one that supports you and someone else must be fairly high up the list in terms of difficulty.  For a sole trader busy delivering their service to a high standard and managing the other aspects of the business, there is a considerable leap to make in order to grow the business to support a second worker.  Not only is there the problem of maintaining enough work to support two people suddenly a whole host of issues are arrive on the business owner’s lap that they have never had to deal with before.  Employment law, health and safety, managing people and tax spring to mind. On the other hand, it can be incredibly frustrating and stiffling to ignore the possibility of growth and stay at that level of having just one person involved in the business.

With this in mind the attractions of the apprenticeship scheme is obvious.  It solves two problems neatly.  Firstly the amount you pay is clearly considerably less than a fully skilled worker.  It allows you to move more gradually to a position where the business supports two people.  Secondly there is a huge attraction in training someone up to run the business in a way that meets your standards and has your values.  The alternative can be getting someone on board who thinks they know the business but resists your perspective and your ways of doing things.  Once on board, sacking people can difficult and emotionally draining, whilst the apprenticeship has a limited period and can be more easily written off as a failed experiment.

Having taken on an apprentice in  previous company I ran, I know that the right person can be an enormous resource.  There are procedures and policies that need to be in place before you can take one into the business and the problems of management do not disappear.  Making the shift from sole operator to manager is a psychological and logistical leap to make.  I would argue that from a business point of view it is a leap that brings huge rewards but I understand it is not for everyone.

I will therefore be attending the upcoming South London Apprenticeships Fair on Tuesday 25th Oct in Camberwell.  I need to remind myself of the specifics of what a business needs to put in place to bring on an apprentice.  I will blog again next week with my findings.