The Real Cost of Taking On An Apprentice


Discover the true cost of taking on an apprentice and gain insights on accessing funding and complying with regulations with this Pareto guide.

A recent Gartner-helmed study of CEOs has highlighted that the top three priorities amongst business leaders over the course of 2023 continue to be growth, digitalisation, and talent retention—with 34% of organisations reporting concerns around cybersecurity and facilitating remote work, and 31% reporting issues with retaining valuable employees. These are all matters which can be addressed by taking on an apprentice, but it’s important to understand what your duties are as an employer to get the most out of these expertly-delivered training programmes.

For those organisations looking to hire an apprentice or enrol their existing staff on a training programme in 2023, one of the major concerns is cost.

This is why our guide to the real cost of taking on an apprentice explores not only how to take on an apprentice, but how you can conduct a training cost breakdown, access funding, and understand apprentice wage rates, ensuring that you can comply with all legislation and leverage the skills and enthusiasm that an apprenticeship programme can instil.

How To Take On An Apprentice

As an employer considering how to take on an apprentice, it’s important that you’re aware of all of the legislation you’ll need to comply with, giving you the confidence to know you’re not exposed to risk—and that you can take full advantage of these candidates’ skills and eagerness to succeed.

Your Duties As An Employer When Taking On An Apprentice

What are your duties, as an employer, to your apprentices? The following points are crucial for you to address before taking on an apprentice:

  • A genuine job must be available. First and foremost, it’s important that your apprentices are entered into a role with a contract duration which is long enough to see them complete their assessment and skills development programme.
  • An apprenticeship provider must be chosen. Business leaders can choose a specialist training organisation from the Register of Apprenticeship Training Providers. These government-vetted organisations will help you to ensure that your apprentices are able to access the latest techniques and opportunities for advanced learning.
  • You need to pay your apprentices. Younger apprentices, from the ages of 16 – 18, or those who are 19 or over and in the first year of their apprenticeship, are entitled to minimum apprentice wage rates of £5.28 per hour. If your apprentice is aged over 19 and has completed the first full year of their training, you must pay them in line with National Minimum Wage, which will depend on their age bracket, from £7.49 at 19 to £10.42 for 23 years and over.
  • There should be a commitment statement in place. This document, signed by the apprentice, your organisation, and the training provider, ensures that the apprenticeship is in place for at least one year.
  • An organisation must be chosen for the end-point assessment. The UK government’s Register of End-Point Assessment Organisations makes this a straightforward task, but you need to be certain that you’ve agreed to the cost of this assessment with the provider.

This isn’t to say that you must only hire new apprentices. Apprenticeship courses are available for anyone over the age of 16, as long as they’re spending 50%—or more—of their contracted working hours in England over the course of their programme.

As a result, apprenticeships offer an excellent and cost-effective way for business leaders to inject new skills and techniques into their business across many areas, from sales to network engineering or operational management, and everything in between.

Training Commitments

When you choose to hire an apprentice—or enrol an existing employee on an apprenticeship programme—it’s important to recognise that your apprentices have to spend at least 20% of their contracted hours carrying out off-the-job training, whether that’s delivered in a providers’ classrooms on day release, or via virtual methods in their normal place of work.

This training should be directly relevant to the apprenticeship that you’ve enrolled this member of staff on, and can be as much of a mix of practical and theoretical training as is necessary—which your training provider will help you to understand.

Whether this is time spent shadowing a mentor, attending industry events, or studying best practice, this blend ensures that your apprentices will begin to develop the skills that are most important for their chosen career, and that you have staff with the skills you need to continue making an impact.

Similarly, if your apprentice has not met the requirements for level 2 in English and Maths—equivalent to a passing grade at GCSE—then you need to ensure they’re given the time to achieve these qualifications within their contracted hours.

Training Cost Breakdown of Taking on An Apprentice

Now we’ve explored the intricacies of choosing to hire an apprentice, including giving employees on training programmes the necessary time to train and paying the appropriate apprentice wage rates, we can learn some more about the training cost breakdown—and detail some of the payments and funding you can take advantage of to ensure that your staff receive the best learning experience possible.

Conducting a training cost breakdown of taking on an apprentice requires you to consider a number of factors, including:

  • Identifying and comparing the training programmes that are most relevant to your urgent and long-term business needs, and the maximum funding band that the government will support in those areas.
  • Considering direct costs that you may wish to cover for the apprentice, including travel fees if their off-the-job learning takes place away from their normal place of work.
  • Determining the training delivery method that is suitable for your employees, which can entail certain indirect costs such as administrative overheads or how much time spent on training takes away from regular responsibilities.

Whilst it’s important to carry out a training cost breakdown, you’ll also be happy to learn that there’s plenty of financial support available for organisations looking to hire an apprentice. With smaller employers only needing to pay a maximum of 5% of the total cost of a training programme, apprenticeships have never been so accessible for business leaders looking to upskill their workforces.

The Apprenticeship Levy

Many employers will have heard of the Apprenticeship Levy, initially introduced in 2017, but there are still several misconceptions about how long funds last and whether they’re ring-fenced or not.

In short, the Apprenticeship Levy is intended to encourage large businesses to develop the skills of their existing workforce, and to offer an incentive for them to employ early-career apprentices.

As long as an organisation meets the criteria of having an annual wage bill of £3mn or more, it will automatically enrol into paying 0.5% of its annual overall salary bill towards the Apprenticeship Levy, giving them access to a Levy Allowance of £15,000—which the UK government will top up by a further 10%—which can be utilised over the following 24 months.

Apprenticeship providers will always be paid using the oldest funds in the Levy account, ensuring that the potential for funds to expire is reduced. New funds will enter this account for every month that you’re paying the aforementioned 0.5% of your salary bill, so you can be certain that funding will always be available if you discover the need for new skills and expertise within your organisation.

Calculating the training cost breakdown based on your decision to hire an apprentice can certainly be a challenge, particularly if you’re a larger organisation with the need to hire several apprentices at once. As a result, we’ve created a handy Apprenticeship Levy calculator, which will allow you to understand your available funds.

National Insurance Contributions

Organisations that employ apprentices under the age of 25 are not required to pay National Insurance contributions, as long as those apprentices are earning less than £50,270 per year.

As long as your apprentice meets the above criteria, and is enrolled on an approved programme of study with a provider on the Register of Apprenticeship Training Providers, you can access this support.

Your apprentices will continue to pay the standard rate of National Insurance Contributions, which will be automatically deducted from their salary. This means that even if you don’t qualify for the Apprenticeship Levy, you can still benefit from government support towards upskilling your employees.

Additional Funding For Smaller Organisations

But what about those SMEs that don’t meet the £3mn payroll baseline necessary to access the Apprenticeship Levy? Well, it’s positive news for the smaller business leader, too.

All organisations that take on an apprentice between the ages of 16 – 18, or between 19 – 25 with an education, health, and care plan, are entitled to a one-off £1000 payment, which can be spent on any costs associated with taking on an apprentice. For instance, you could put this funding towards uniform costs, equipment, travel expenses, or their apprentice wage rates. This is delivered in two £500 payments, with the first offered 90 days into the apprenticeship, and the other 365 days after the training programme has begun.

Taking on an apprentice needn’t be a source of worry for business leaders, since even if they don’t meet the payroll criteria for the Apprenticeship Levy, they’ll still receive the support of the government for at least 95% of the cost of the programme of study. Employers will be asked to make up the 5% shortfall by paying this fee directly to the approved training provider.

If you’re interested in learning more about how Pareto’s expertise in delivering apprenticeship training can help your business after reading this article, see our guide to why apprenticeships are so valuable for employers for more information.

How Taking on An Apprentice Benefits Your Business

As we’ve seen, an apprenticeship offers business leaders a fantastic opportunity to support the career development of entry-level and established employees alike. By earning as they learn, apprentices are motivated to practice and gain new skills in the real working environment, whilst also demonstrating that they have what it takes to drive business success and complete tasks to industry standards.

So, now that you’ve understood how to take on an apprentice, what is there to be said for the benefits that these candidates bring to a business?

Training Can Be Adapted to Suit Business Needs

Whether it’s improving your service or adding in-demand features to an existing product, taking on an apprentice allows you to address immediate business concerns and fill skills gaps through a targeted approach to on-the-job training, which prioritises minimal downtime.

Apprentices will be taught current methods of working through industry-recognised best practices. For instance, an Apprentice Software Development Technician will be focused on studying how to write developer-friendly, well-commented, clear code and documentation, perform unit testing, and support the programming and maintenance of software at all stages of the development lifecycle.

Whilst this is only one example, all apprenticeships offered by organisations on the Register of Apprenticeship Training Providers will partner with you to equip your staff with the skills they need to understand and ameliorate your day-to-day and long-term challenges.

Research from the Department for Education has highlighted that 72% of small to medium-sized business leaders report improved products or services as a result of their decision to employ apprentices and develop their skills. At the same time, 24,000 of those organisations surveyed also highlighted that their choice to hire an apprentice has helped them to win new business.

A Clear Progression Roadmap For Employees

By offering a clear set of criteria that your staff need to follow for training and career progression, an apprenticeship is an excellent way to keep your workforce motivated and ready to bring their all to their day-to-day responsibilities.

Apprenticeships offered by recognised providers will have clear targets that need to be met, ensuring that your staff stay engaged and know exactly what needs to be done next to achieve one of their key outcomes.

With 85% of employees polled by Gallup reporting that they feel disengaged at work, this is a major benefit of apprenticeships: they offer the opportunity to show staff that you care about their professional development and that you’re willing to support them as they prepare for the complexities of your business.

Whilst increasing engagement ensures that your staff are happy and delivering the best product or service possible, there’s also a business case to be made for ensuring that your workforce is motivated and intellectually stimulated by their work.

Businesses that employ highly-engaged candidates are 23% more profitable than their competitors that report lower levels of engagement—so not only does taking on an apprentice give you an opportunity to make a positive impact on your employees’ well-being but on your bottom line, too.

Save On the Costs of Recruitment

By showing that you’re focused on nurturing talent by taking on an apprentice or offering existing staff the potential to enhance their skills via a tailored programme of study, you can not only save on the cost of recruiting new and potentially expensive employees to fill your skills gaps, but you can also build a strong reputation as an employee-first business. This can go a long way to helping to secure talent in future recruitment exercises.

Alongside this, by offering apprenticeships to your employees or choosing to hire an apprentice, you can reduce staff turnover and drive internal career mobility. One in three apprentices will go on to receive a promotion within a year of completing their training programme, whilst over half of apprentices remain with the same employer as a result of their investment.

Indeed, by utilising the apprenticeship levy that we explored in the second section, you have an excellent opportunity to upskill or retrain employees at any level of seniority, with bespoke programmes equivalent to Master’s degrees available, some of which also offer additional professional accreditation.

It’s clear that taking on an apprentice can help business leaders to address their major priorities in 2023, whether that’s profitability and growth, plugging the digital skills gap, or reducing staff turnover.

Understanding your duties as an employer of apprentices is crucial if you want to successfully utilise the cutting-edge skills, techniques, and enthusiasm that these candidates bring to their roles. With careful consideration of your business needs, a training cost breakdown which highlights the affordability of an apprenticeship programme, and an understanding of apprentice wage rates and other direct costs, you can make a robust business case for offering these courses for existing staff and new hires alike.

Apprenticeships benefit businesses by adapting training to suit the needs of their employees and the wider organisation, and help to increase engagement and productivity by providing a clear path for internal progression for apprentices. By making a choice to hire an apprentice or offer a programme of study for existing employees, you can save on recruitment costs, secure talent, and drive success.

If you’re interested in learning more about how to take on an apprentice, see our insights page for more information—such as how to take on an apprentice with a degree—penned by our expert training providers.

Learn How Pareto Can Help You to Hire An Apprentice

For over 25 years, the expert training providers at Pareto have been helping candidates realise their potential. Our bespoke learning and development solutions are tailored to address urgent operational needs, and we work in close partnership with business leaders to understand the right blend of practical skills and theoretical knowledge necessary to achieve success. Contact us to hear more about the training programmes we offer and learn how Pareto can help your organisation to navigate the apprenticeship environment.

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