With everything that has happened in 2020, it's no surprise that the job market is in turmoil as many businesses have had to cease trading whilst others have seen a significant drop in turnover. The unemployment rate fell to a record low of 5% in September - November 2020, according to the Office for National Statistics. Over 750,000 jobs have been lost as companies make cuts to try and reduce their costs where possible.
Unfortunately, the demographic worst hit by job losses has been 16 to 24-year-olds. This is because young adults are more likely to be employed in areas such as hospitality, retail, and tourism - which have been hard hit by the national lockdown.
To help, Rishi Sunak announced the Kickstart Incentive scheme in July 2020, which means any firm that provides a six-month work placement for a new employee aged between 16 and 24 will be paid £1,500 in return. At the same time, he revealed employers who take on apprentices under the age of 25 can be paid £2,000 in addition to existing incentives.
Here's a look at how UK apprenticeships and the Kickstart Scheme work:
What is an apprenticeship?
An apprenticeship is a real job where the apprentice learns and gains experience whilst being paid. The apprentice will be a normal employee with a contract of employment and annual leave. By the end of the apprenticeship, they will receive a qualification to prove they're qualified in their chosen field.
It can take between one and six years to complete an apprenticeship, depending on the industry and qualification. Apprenticeships are funded from contributions made by the government and the employer.
Benefits to the apprentice
An apprenticeship is a great way to get into a profession by learning on the job, all whilst getting paid to do so. The main benefits of an apprenticeship for the apprentice include:
- Learn and train for a specific job or trade.
- Get paid and receive holiday pay whilst you learn.
- Get hands-on experience in a real job.
- Study for at least 20% of your work hours – usually at a college, university or with another training partner.
- Receive a qualification at the end of the apprenticeship.
- Be on a career path with huge future potential.
Benefits of an apprentice to the employer
There are, now more than ever, several good reasons for employers to consider hiring an apprentice. As part of the new 'Plan for Jobs' launched by Rishi Sunak, any employer who takes on a new apprentice between 1st August 2020 and 31st March 2021 can claim an incentive payment from the government. For apprentices aged under 25, this financial incentive amounts to £2,000; for apprentices over 25, there is £1,500 on offer.
In addition, companies will still be able to claim the regular payment of £1,000 for any apprentice who is either:
- 16 to 18 years old.
- 19 to 24 years old and has an Education, Health and Care (EHC) Plan provided by their local authority, or if they have been in the care of their local authority.
As well as the financial incentives of taking on an apprentice, there are several other benefits. The main one being that, when you take on an apprentice, you are able to take on a young individual who is open to learning and then train them in a chosen profession so that they can qualify for a trade. This is a great opportunity for a business to both develop and support the next generation of their workforce by training them on the job. This means not only will they have the academic training, but they will also get practical experience alongside their studies and once they have completed the apprenticeship, you can take them on as a fully-qualified member of staff.
Similarly, taking on an apprentice will help bring on board additional resources and fresh perspectives on work processes. Offering apprenticeships is also a good way to boost your brand reputation by being seen to support the next generation and developing fresh talent.
Terms and conditions of traditional apprenticeships
To employ an apprentice, the candidate must meet the following criteria:
- Be at least 16 years old.
- Not be in full-time education.
- Work in a role that is relevant to their apprenticeship.
- Work enough paid hours each week to undertake sufficient training to achieve their apprenticeship.
- Have the right to work in England.
- Spend at least 50% of their working hours in England.
According to HMRC, an apprentice can be a new or current employee already working for you and they must work a minimum of 30 paid hours per week, including ‘off-the-job’ training. As an apprentice, they must be paid at least the national minimum wage which for an apprentice is currently £4.15 per hour (correct for the 2020 tax year).
However, if they have completed the first year of their apprenticeship and are aged 19 or over, they are entitled to the minimum wage for their age rather than that for an apprentice. For more information check out the guidance on the gov.uk website.
In addition to the contract of employment, all apprentices must receive training from an approved training provider at a level suitable for the type of apprenticeship being offered. There are four levels of apprenticeship that can be offered depending on the level of qualification awarded at the end of the programme.
- Intermediate – Level 2 qualifications which are equivalent to GCSE passes at grade A*-C (4-9 on the new system).
- Advanced – Level 3 qualifications which are equivalent to A level passes.
- Higher – Levels 4 and 5 are equivalent to a higher education certificate, diploma, or foundation degree.
- Degree – Levels 6 and 7 are equivalent to gaining a university bachelor’s and master’s degree, respectively.
Terms and conditions of the Kickstart Scheme
Under the Kickstart Scheme, employers must create 6-month job placements for young people who are currently on Universal Credit and at risk of long-term unemployment. While it’s not possible to hire someone as an apprentice and at the same time employ them through the Kickstart Scheme, participants can move onto an apprenticeship at any time during or after the six-month placement.
Employers who take part in the scheme will receive funding to cover:
- 100% of the relevant National Minimum Wage for 25 hours a week. The employer can then pay for any additional hours worked.
- The associated employer National Insurance contributions.
- Employers' minimum automatic enrolment contributions.
- Any initial start-up costs and the costs of initial training, for which businesses are offered £1,500 per placement.
To employ someone through the Kickstart scheme, the placement must meet the below conditions:
- The job must be a new position – it cannot be a continuation of a previous role and must not cause existing employees to lose working hours.
- The candidate must be aged between 16-24 years old and be in receipt of Universal Credit.
- The role should only require basic training.
In summary, the Kickstart scheme is a unique opportunity to offer valuable work experience to young people during this time of adversity, while allowing employers a chance to see whether they could be a good fit for a permanent role or apprenticeship without incurring any costs. It can be a viable route for those requiring a quick fix to staffing shortages, or for businesses with limited resources to invest in training programmes.
Alternatively, apprenticeships are an excellent way to develop new talent within your business by offering extensive training on the job. Not only will you have a fully-qualified member of staff at the end of the apprenticeship, but you will also receive financial support from the government. Therefore, if you’re looking to grow your business and your workforce in the long-term, it may be worth investing in an apprenticeship.
About the Author
Simon Thomas is the Founder and Managing Director of Ridgefield Consulting - Oxford’s leading independent accountancy firm. Simon has over 15 years’ experience as a chartered accountant and founded Ridgefield Consulting in 2010 after working for EY, one of the big four accountancy firms in London and the UK. Ridgefield Consulting offers a wide range of guidance on Coronavirus support schemes for businesses, proudly earning more 5* Google reviews than any other accountancy firm in Oxford.