Apprenticeships have emerged as valuable to small and medium businesses (SMEs) in the UK, offering numerous benefits such as skills development, cost-effective recruitment, and fostering a loyal and skilled workforce. However, before SMEs engage in an apprenticeship program, it is essential to consider the legal landscape surrounding these arrangements. Here, we will explore the legal pros and cons of apprenticeships for SMEs in the UK and outline key factors that businesses should consider when deciding whether to embark on this journey.

What are apprenticeships?

Apprenticeships are work-based training programmes, which lead to nationally recognised qualifications. They enable employers to avoid shortages in traditionally skilled occupations. They also allow apprentices to develop skills by working alongside experienced staff and attending day-release training. An approved apprenticeship in England may include a practical period or learning off-the-job training (constituting at least 20% of a 30-hour week for a full-time apprentice), and an end-of-scheme assessment.

Who can be an apprentice?

Apprenticeships are open to anyone over the age of 16 and are available at intermediate, advanced and higher degree levels. An apprenticeship will be for a fixed term (usually between one to five years) and/or until a level of qualification is reached. Generally, apprentices work for at least 30 hours a week. A part-time apprentice works at least 16 hours per week, or a minimum of 6 hours per week if they work less than 30 hours. However, the number of hours an apprentice works each week can be reduced if the apprenticeship programme is extended. Apprentices are entitled to a minimum hourly wage rate. The training element of the apprenticeship is usually fully or partially government funded. The agreement will usually be in a form common to all apprentices in that trade.

Pros of apprenticeships for SMEs:

Apprenticeships offer a range of advantages for SMEs:

1. Skills Development and Tailored Training

Apprenticeships allow SMEs to design training programs that align precisely with their specific business needs. This tailored approach ensures that apprentices acquire skills directly relevant to the organisation, promoting productivity and efficiency within the workforce. Apprenticeship training is generally delivered by specialist government-approved organisations such as O1 Founders which specialise in coding or Capital City Training which offers a broad range of skills.

2. Cost-Effective Recruitment

Hiring apprentices can be a cost-effective solution for SMEs. Apprentices are typically paid lower wages compared to experienced workers, making them an attractive option for businesses with limited resources.

3. Government Funding and Incentives

SMEs can access various government funding and incentives to support apprenticeship programs. These financial aids can cover training costs and alleviate the financial burden on businesses, making apprenticeships a viable option for talent development. From April 1st 2024 the Government will pay the full cost of training anyone up to the age of 21 for small business owners.

4. Loyalty and Retention

Apprenticeships allow SMEs to shape the next generation of their workforce. By instilling company values, work ethics, and culture from the outset, businesses can foster loyalty and long-term commitment among apprentices.

Cons of apprenticeships for SMEs:

While apprenticeships offer significant benefits, SMEs must also consider the legal implications:

1. Compliance with an Apprenticeship Agreement

SMEs must ensure the existence of a written apprenticeship agreement for each apprentice. This document should outline the terms and conditions of the apprenticeship, including the duration, training details, wages, working hours, and other relevant provisions

2. Wage and Working Hour Compliance

Apprentices are entitled to receive at least the minimum wage, which is determined by their age and the length of the apprenticeship. SMEs must ensure compliance with these wage requirements to avoid legal repercussions. Additionally, apprentices have specific restrictions on working hours, and SMEs should adhere to them to ensure the well-being of the apprentice.

3. Health and Safety Obligations

SMEs have a legal duty to provide a safe and healthy working environment for their apprentices. This includes conducting risk assessments, providing appropriate training, and implementing necessary safety measures. Failure to meet health and safety obligations can result in legal consequences and harm the reputation of the business.

4. Statutory Rights and Protections

Apprentices are entitled to the same employment rights and protections as other employees. SMEs must ensure that apprentices are not subjected to discrimination, have access to fair treatment, and can raise grievances or complaints without fear of retaliation.

Considerations for SMEs in relation to Apprenticeships

When deciding whether to engage an apprentice, SMEs should consider the following factors:

1. Business Needs and Long-Term Goals

SMEs should evaluate their specific business needs and long-term goals to determine whether engaging an apprentice aligns with their objectives. Consider whether an apprentice can address existing skill gaps or contribute to future growth.

2. Resources and Training Capacity

Assess the availability of resources, including time, expertise, and infrastructure, to ensure effective training and support for apprentices. SMEs should consider whether they can provide appropriate mentoring and supervision to foster the apprentice’s development.

3. Financial Implications

SMEs should carefully consider the financial impact of employing an apprentice. This includes wage costs, training expenses, and potential funding options available. Evaluate whether the investment in an apprentice aligns with the company’s budget and resources.

4. Workplace Integration and Supervision

Consider whether the business can integrate an apprentice seamlessly into the existing workforce. Assess the readiness to provide adequate supervision and mentorship to support the apprentice’s learning journey.

What the experts say

We asked Matt Harvey of O1 Founders and Capital City College Training what he sees as the benefits of apprentices for SMEs: “In the current economy, a skill shortage and a lack of diversity in the workforce recruiting an apprentice will be a key solution for any SME in the months ahead.

“Apprenticeships have adapted over the years and businesses can now recruit people of all ages, and backgrounds, with different transferable skills and qualifications to support their business growth and productivity.

“We have hundreds of programmes to support different roles and sectors that will give you the employer, the staff with the right skills, knowledge, and behaviour. Apprenticeship is the “new way to recruit” talented and work-ready staff who will be committed and loyal to support your businesses through these challenging times.”

Apprenticeships offer SMEs in the UK a powerful avenue for talent development, cost-effective recruitment, and fostering a skilled workforce. However, businesses need to understand the positives and negatives associated with apprenticeships and carefully consider critical factors before engaging an apprentice. By evaluating business needs, resources, financial implications, and the capacity for supervision, SMEs can make informed decisions to unlock the potential of apprenticeships, drive growth, and secure a competitive advantage in their respective industries.