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

By Social Work Tutor on February 26, 2016 in Workforce, Your Say

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

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

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 40^th 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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