Why SMEs should invest in apprenticeships

Apprentices typically spend one day a week in the classroom. Photograph: Tetra Images / Alamy/Alamy
Apprenticeships are often described as a great way to introduce talent to an organisation, and the government’s pledge to fund 100,000 additional places before December 2015 could provide the ideal opportunity for your small business to get involved.

An apprentice holds a basic role within a company, and while they can be any age, they tend to be between 16 and 25 as this is where most financial support is available. They are given time, usually one day per week, to study at college or within a training organisation. They will also learn on the job – and, because of this, will often be paid less than the minimum wage.

However, apprenticeships are not cheap labour but are commonly seen as a long-term investment in an individual. Recruiting an experienced employee may give immediate returns, but training from the beginning allows a company to shape their work habits, train them in specific practices, or to work within niche industries.

Employers also report improved productivity and morale in the workplace, citing the enthusiasm and youthful approach apprentices bring. In addition, a Centre for Economics and Business Research study estimated that apprentices are worth around £214 per week to a business through reduced costs, improved quality of product and service, and better profit margins.

And while manufacturing and engineering may dominate common perceptions, modern apprenticeships are available in pretty much any field, from finance to law, agriculture to hairdressing, arts, media and beyond.

Terry Hort, managing director of H + H Accountants in Somerset, recently recruited an apprentice for the first time. It went to so well he earned the title of regional apprenticeship employer of the year, was highly commended in the south-west category, and has been appointed to the panel to judge future awards.

He says he had both personal and business reasons for taking on an apprentice.

“Youngsters these days don’t have the support they need to get the jobs they should have,” says Hort. “It’s not easy for them. William, my apprentice, has been brilliant, but before us he was working in a sports goods store. There’s nothing wrong with that, but he had the potential to do so much more and I have enjoyed creating the opportunity for him to pursue the career he wanted.

“Apprentices are slow-burners. One day a week in the classroom is 20% of their time, which is a huge investment on my part, plus they require extra time for exams. And while you don’t have to pay an apprentice the minimum wage, once William had shown progress I thought it was only fair that we did.

“For the first year, they are learning, asking questions and sometimes making mistakes. But after the second year they begin to contribute and by the third year you’re in profit. They are then better than somebody you brought in because you have trained them yourselves, within your business.”

Hort says the journey wasn’t easy, however, and the first recruit he hired didn’t work out, which was a costly lesson to learn. Following that, he approached a recruitment agency to help him find an interested individual, and found this route much more effective.

The next stage was to find a training partner. Hort approached the nearby Richard Huish College, which has worked closely with H + H Accountants ever since to monitor the apprentice’s progress, and ensure both he and the company are benefiting from the relationship.

Hort says: “Hiring an apprentice has been brilliant for us. I have learned a lot from the experience, we have given William the opportunity to pursue the career he wanted – which he has done with passion and enthusiasm – and the result is a confident and capable employee who is loyal to our company and almost ready to mentor the next apprentice we recruit.”

However, employers should also beware that apprenticeship contracts differ slightly from regular employment contracts. After all, an individual’s education and qualifications hang in the balance, so the law makes it more difficult to terminate the relationship.

The Forum of Private Business covers this in its employment guide, which states: “The employer’s ability to dismiss an apprentice before the scheduled end of the apprenticeship programme is limited; the relationship and contract cannot be terminated early merely by the employer giving notice to the apprentice.”

Apprentices have significant additional rights that are not available to other employees. They can’t be made redundant, and you can’t end their agreement just because of a downturn in business. This would equate to a breach of contract, and would result in compensation for your failure to train them and the consequent loss of prospects as a skilled worker.

Companies that do find themselves in a bind may be able to provide a suitable alternative apprenticeship post. And to avoid getting stuck with an apprentice who genuinely needs to be dismissed, one who is stealing for example, the FPB says that companies should consider having disciplinary procedures written into the apprentice agreement, including what constitutes fair and reasonable grounds for dismissal, as well as an action plan to address poor performance.

That said, many businesses large and small have been built on apprentices, and their popularity will only increase with the chancellor’s provisions announced in the 2014 Budget.

Terry Hort adds: “The apprenticeship worked for us because we did it the right way. We took a long-term view and found an ambitious youngster and we invested in his future. He’s done so well that he could easily have been head-hunted by a larger firm by now, but he’s stayed loyal because of the relationship we have built.”

Small businesses interested in finding out more can approach their local training providers, a database is available online at the National Apprenticeship Service or by reading the guide for small businesses.

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