How much do you earn as an agency social worker…and what do you lose?

As agency rates increase and council retention headaches grow, Social Work Tutor analyses the perks and pitfalls of life as a locum social worker

Picture: Osi Lettonhen/Rex/Shutterstock
Picture: Osi Lettonhen/Rex/Shutterstock

Agency social work appears to be on the rise, particularly in child protection. Figures out this week show locums make up more than half of the staff in some children’s services.

Local authorities are scrambling to find ways of cutting spiralling agency bills. In recent weeks we’ve seen region-wide deals to cap rates and moves to bring in non-professionally qualified support workers to take on more cases.

Despite these efforts, the truth is the levels of stress and burnout that come with our profession mean there’s little sign of demand for agency staff abating.

The incentives

So why do social workers turn to agency work? When asked, most will talk about the benefit of flexible working or their appetite for the challenge of turning around inadequate services.

Fewer will talk about the pay for fear of appearing money motivated. But with some agencies now paying around £30 an hour in England, there’s a clear financial incentive too. This is especially true given agency social workers can gain tax breaks by setting themselves up as a limited company or working under an umbrella company.

Let’s do the basic maths. At £30 an hour, a 37-hour week equates to an annual salary of £51,000 (once you factor in most agency staff will lose six weeks for holidays and bank holidays). That’s almost double the average newly qualified social worker salary and close to senior management pay.

The pay is pretty appealing. But most of us will also be familiar with the main counterpoint – that agency workers need a higher rate of pay to make up for their loss of pension, sick pay and holidays.

So does that attention grabbing £30 an hour come with hidden costs? Are you left with far bigger risks without being that much better off? We need to look at the wider picture and explore the advantages and disadvantages of life as a locum.

Photo: mwellis/Fotolia

Photo: mwellis/Fotolia

Advantages

Pay: Pay is a big draw to agency working. While the average hourly rate is £30, struggling councils are known to offer £35 plus. Experienced social workers can command even higher fees. With at least two years’ experience in frontline working and a will to enter under-pressure departments, you could realistically be earning up to £60,000 a year.

Flexibility: As an agency worker you’re not tied in to the usual commitments of having a full-time contract with your employer. This can mean a much shorter notice period and the ability to move positions should you need, or want, to.

Demand: In the current working climate, demand for experienced agency workers is high. This means you’re unlikely to go without work. Employers will be chasing you, not the other way around.

Disadvantages

Development: While some agencies offer online training resources, it’s unlikely that the local authority you’re placed with are going to invest in your continuous professional development (CPD).

This will mean missing out on progression, post-qualifying degrees and the courses the HCPC expect you to have in your CPD portfolio record. For newly qualified social workers this can also lead to difficulties in meeting deadlines for completing your ASYE.

Long-term security: As an agency worker you’ll be on a temporary contract. The flip side of the flexibility is that your position could also end at short notice. While it’s not unheard of for some agency workers to be in a post for years, there’s a risk of you being shifted from jobs you like to ones that are less desirable.

Pension: You won’t be entitled to the pension benefits of a full-time employee. Most social workers employed directly by councils will be on the local government pension scheme (LGPC).This currently sees your employer paying two-thirds of the pension costs (you can read more here).

As an agency worker you’d have to start your own private pension (should you wish to). You would not get any employer contributions.

Holiday pay: Most local authorities provide between 25-30 days paid holiday per year and this goes higher with service. Some agencies may provide holidays but, if you operate as limited company agency worker, you won’t get any.

Illness: If you’re unable to work then you won’t get paid. In order to prevent this, you can take out sickness cover but this can cost between £30-£50 a week.

What does it mean for take home pay?

Picture: shaunwilkinson/fotolia

Picture: shaunwilkinson/fotolia

So what does all this mean for your average practitioner? Is it possible to arrive at a figure for exactly how much more or less you get paid as an agency or local authority social worker?

Let’s start with the pension. The average social worker salary will probably land in the £21,000-£34,000 LGPS band. Say they’ll pay a 6.5% contribution to their pension – about £2,000 a year on average. The local authority will contribute two-thirds on top of this, so another £4,000.

You could also argue that the very generous benefits of the LGPS scheme (paying a 40th of career average salary for every year worked) are worth an extra financial incentive as the pension scheme isn’t open to workers outside local government. In light of this, an extra £2,000 a year is added to the financial benefit of this pension.

So, by being in the LGPS, a local authority social worker’s pension benefit could be £6,000 more than an agency worker.

Moving onto holiday pay: the benefit of this to the average social worker is between £2,800 and £4,000. We’ll split this down the middle and say it’s worth £3,400 a year.

Sickness pay is pretty straight-forward to work out. In the interest of fairness to agency workers, we’ll go off what it costs them for their insurance (rather than the generous long-term security of local authority permanent contract sickness benefits). At around £30 a week for the cheapest service, this is a yearly advantage to local authority workers of £1,560.

When we factor in the holiday benefits the gap between agency and local authority social worker pay narrows:

  • Agency worker current average salary before tax: £51,000 (including six weeks holiday)
  • Local Authority worker average salary before tax (with pension and holiday benefits added): £40,960

In addition to this, we then have to factor in the tax that is paid in the respective positions.

The final balance

With corporation tax at 20%, an agency worker would pay £10,200 of tax on their wage. However, this is before any expenses have been deducted. Deducting work-related expenses such as mileage and accountancy costs can see this tax bill significantly reduced, with most workers expecting to pay around 25% less. That means we might expect a tax deduction of around £7,500.

  • This means that the total take home pay of an agency worker, via a combination of dividends and wages, can be in the region of: £43,500
  • The average Local Authority worker will be taxed the following £3,480 in Income Tax and £2,392.80 for National Insurance.
  • Factoring in the benefits already included, this takes the total monetary benefit down to around: £35,000, with a cash take home pay in the region of: £21,100. 

Side by side, that difference in the cash in your pocket appears staggering: with locum workers expecting to bank more than twice what their permanent colleagues do. However, factoring in the additional benefits shows less disparity.

So do agency social workers get paid more even when everything’s factored in? The answer is yes – by around £8,500 a year on average. It’s not as much as it looks like before doing the calculations. It also means you’ve got to consider whether this increase is worth the lack of development opportunities and job security that permanent employment may offer.

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15 Responses to How much do you earn as an agency social worker…and what do you lose?

  1. Kerry February 26, 2016 at 8:47 pm #

    Although you start off talking about the number of pro and cons you then concentrate only on the money….and it’s not all about the money! !!! It’s about value. Feeling valued. Maybe financially initially but then..

    It about choosing what training I want and need and …as I’m paying for it…making sure it’s good quality. I have in my opinion experienced no loss of development opportunities. Instead of being shown the offers that just your local authority offer I have the freedom to look much wider without being constrained by budgets or current LA priorities.

    Deciding what a safe caseload looks like. ..and walking away if managers dont agree

    Acknowledging I’m an experienced sw without having to jump through more hoops…portfolio…presentation. ..supervisory experience. (Say what??? Being a competent experienced sw does not mean we all want to be managers so why keep telling us that to gain recognition as an experienced sw this needs to be demonstrated? ?)

    Having all those extra hours actually recognised…and paid for!!!

    Trying something new!! I have worked in a number of authorities in a number of teams ….and that’s OK, actually expected given nature of our contracts.

    I also do recognise what I’m missing….and that’s something you don’t mention. Team. Colleagues. Ftiends. A teapot….or at least a ‘who wants a cuppa?’ But then actually with the move to hot desking that’s something we’re all experiencing anyway!

    • Erica Roberts -Sackey March 4, 2016 at 9:32 am #

      Interesting take which makes good food for thought.

  2. James Talbot February 26, 2016 at 9:36 pm #

    You have failed to include accountancy fees, liability insurance and training costs within your calculations.

  3. Cllare February 29, 2016 at 6:21 am #

    Re how much do you earn as an agency social worker……and what do you lose ? I can’t see how your maths add up? The locum income is far greater than £8500 more than local authority .

  4. SHARON HUGHES February 29, 2016 at 1:11 pm #

    Hi

    Quite an interesting comparison, however it misses the point that most local authority training schemes do not actually do anything for development, its a tick box exercise. I found it far more useful identifying courses in the private sector and paying directly which are also tax deductible. The majourity of councils out there don’t give a jot about the workers, they put the caseloads through the roof and doing locum is just about the only way to keep some control over it. As for pensions, they have been eroded beyond belief and any minute now the government will claim them all back with the contributions as part of the budget cuts.

    If you add to that the LA cover ups of malpractice and collusion with child abuse that the and likes of Rotherham, Lucums play a valuable role of moving on , refusing to collude and blowing the whistle on the practice.Think that perhaps you need to update the facts of what ever glowing local authority you got the info from as well as re- assessing what qualifications Locum Social Workers actually have. Currently I have 3 related degrees including specialist practice and I’m about to do the forth

  5. Louie Green March 1, 2016 at 10:38 pm #

    I have heard Umbrella companies offering Pensions and Insurance. Some include Holiday and Sick Pay. Not every Umbrella is the same but often offer a similar product.

    This what I found about from company when I searched online

    http://www.umbrella.co.uk/industry-news/2012/08/agency-wants-me-use-their-umbrella-company#sthash.GcVhCI90.nnUz1fqX.dpuf

  6. Andrea March 2, 2016 at 10:09 am #

    Fed up with the bash the locum culture that has developed – the maths are slightly awry comparisons seem to include different regions and different levels of experience – the overall point of the immediate money in the pocket looks good but remember to factor in what locums loose is the issue – also paid leave for dependency and death in service grant is lost.

  7. paul March 2, 2016 at 11:55 am #

    Be careful, “Agency staff” or “Agency workers” are those on PAYE with an agency. Self-employed are locums. The difference being the former have rights under Agency Worker Regulations after 13 weeks; Locums do not.
    Also, Locums do need review their position in respect of tax regs IR35; many are not compliant. If HMRC investigate and you are found not to fall within IR35, there will be costs/ penalties. Willingly doing so could mean an HCPC hearing due to possible fraud.

  8. Nicola March 2, 2016 at 1:31 pm #

    Most agency SW’s come to the role with experience so you can’t compare a newly qualified worker’s pay rate in the same way. The pay structure in SW is way too flat and why should I be paid only £5000 a year more than a NQSW when I have 15+yrs experience. Agency workers provide better value for LA’s as they can hit the ground running, don’t pay holiday pay/pensions and very little time is taken off sick. It’s becoming somewhat tiresome to constantly feel under attack for being a locum, my pay reflects my experience, knowledge and skill as a SW and I for one, make no excuses for that. Without the benefit of agency workers, LA’s would have sunk years ago!

  9. JH March 2, 2016 at 4:13 pm #

    This resaerch is not at all accurate re pay..CPD..and holiday pay..
    Not accurate at all

  10. Yvonne Bon if as March 2, 2016 at 6:35 pm #

    Even if the money was less, the feeling of freedom and being able to move on if the manager is a micromanaging fool is incomparable. Its not for everyone and the pension point is important, you have to earn a lot to set up an equivalent private pension. You also have to be efficient, productive, professional and not create problems like client complaints to burden your overworked team manager. A word of advice, as someone has mentioned watch out for IR35. in my view the vast majority of locums are IR35 caught but lots get sucked into the advertising about higher take home pay. Plus, opening a limited co. Is easy but closing it can be tricky. Personally having done the ltd co thing I would just go umbrella next time.

  11. Carl March 2, 2016 at 7:15 pm #

    I can see another financial advantage to Agency work …..If an older social worker with a number of years service and a pension decided to take early retirement, say at 55, then they could take the option of re-commencing work through an Agency.

  12. Tina March 3, 2016 at 4:50 am #

    Unfortunately the author doesn’t consider some factors that are vital for a lot of SWs: parental / maternity pay (a lot of employers pay occupational maternity pay which agency workers aren’t entitled to) plus the option to go part time on return to work which usually isn’t an option for locums.

  13. Tina March 3, 2016 at 4:54 am #

    Plus there is no mention of the value of having a (more) stable case load as a permanent worker. I personally am very much against the locum culture. I feel it’s a great disadvantage to our service users when the locum leaves and once again a new SW takes over.

  14. maria March 4, 2016 at 10:22 pm #

    many locum s/w’s dont tend to stick around for long & the children/YP suffer by having numerous s/w’s which further adds to their “attachment issues” – building relationships then leaving the child with feelings of rejection/abandonment/loss – just what they experienced when they came into care!