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Supply Teacher Furlough Pay – making it fair
This week has seen the debate around furlough eligibility for supply teachers and agency staff reach fever pitch. For many school leaders, agency staff aren’t just the saviours who swoop in at the last minute to cover sickness absence - they’re a critical part of the team, the community and the fabric of the school. Chetan Sood, Head of Operations, Teacher Booker looks at what schools and agency workers need to look out for.
The coronavirus disruption has shone a light on the good, the bad and the ugly when it comes to agency worker’s employment status and remuneration. We’ve been calling for greater transparency and accountability in this essential segment of the workforce for years, and now the turning point has come. Where previously agency workers’ employment statuses, compensation packages, professional challenges and personal circumstances were all too often swept under the rug, school leaders must now look to understand the brokenness of the temporary worker sector, act to end exploitation of workers and step up their workforce planning game to realise budgetary efficiency and the workforce’s demands for increased flexibility.
Supply work in schools has dried up, leaving many agency workers without income. But Government guidance has not yet explicitly addressed furlough eligibility for every employment mechanism - and there are several employment mechanisms that supply teachers may work through.
Below we break down how these mechanisms work and consider how schools can support, and maintain positive relationships with, their network of great agency staff at this challenging time by accessing furlough grants or other public funds for these at-risk key workers.
If teachers are paid PAYE for agency work, they are eligible for furlough pay. This is how Teacher Booker operates, and reputable agencies or online platforms will offer this. That’s the easy one - moving forward, schools should work only with providers who offer this.
If teachers work through an umbrella company (many agencies corner teachers into agreeing to this because of private financial benefits and removing the associated administrative burden), there are three main ways their pay might be calculated.
1. Gross pay with statutory deductions only. This includes income tax, employee’s NI and employee’s pension contribution. This is the how one would expect to be paid -- simply, cleanly and only with statutory deductions
2. Gross pay with extra deductions. This includes the deductions above, but may also include things like umbrella company fees, admin fees and in bad cases, Employer’s NI deductions (Employers NI should never be taken from the teachers' agreed rate of pay). This should raise alarm bells as extra ‘hidden’ deductions seriously reduce supply teacher’s take home pay, creating undue hardship
3. ‘Employment Income’ (or otherwise described) further broken down into National Minimum Wage (NMW) + ‘Profit Share’ or ‘Discretionary Bonus’
This would include statutory (and maybe extra) deductions as above, but further breaks down teachers’ take home pay into two or more ‘categories’. The coronavirus crisis has exposed this poor practice for what it is -- a tax loophole. This method of calculating pay has left thousands of supply teachers in serious financial difficulty
Where umbrella companies structure supply teachers’ pay in this third way, they can currently only claim 80% of what is considered basic pay - that is, NMW - from HMRC as a furlough grant. This means supply teachers paid this way can only receive a maximum of 80% of National Minimum Wage, regardless of how long they’ve been at the school or how important they may be to the school community. In fact, several large umbrella organisations have refused to claim even this on other, peripheral technicalities, either stating that they are "waiting on further clarification" or just staying silent and not responding to workers - leaving key workers high and dry.
School leaders may now question why agency workers’ pay would be structured this way. They may also question why and how this practice has been allowed to continue.
Finding a solution
Whilst we would ideally like to fundamentally reshape the sector so these kinds of practices become a thing of the past, and agency workers receive the employment security, compensation and respect they deserve, right now, we need to act fast to help supply teachers access the financial support they need.
We have developed practical solutions to ensure your network of great agency teachers are supported financially, establishing security and generating goodwill throughout this period. Act now to ensure your good professional relationships - and the relationships between those agency staff and your pupils - are maintained.
- Ask your agency teacher contacts whether they have been furloughed, and if so, whether they are being supported adequately. If there are discrepancies, or your agency teacher contacts are not receiving adequate support, encourage them to seek advice. We offer free, confidential advice and practical solutions and there are some other great organisations out there doing the same. It is important that agencies and school leaders work together to ensure workforce plans are well laid for the new dynamics in recruitment and workforce management that this crisis will precipitate.
- For teachers who may be registering with new employment businesses and agencies at this time, be sure to ask for the Key Information Document (KID). As of April 6th 2020 it is a requirement that agencies provide this when you register with them, and it will detail how your pay is broken down, the type of contract you will have, and an indication of the rate of pay you can expect. Knowing all this in advance will help you make informed decisions about who to register with and how you will be paid. Teacher Booker’s KID is available on our website here.
- Lastly, if any supply teachers are still being paid via an agency through this period, school leaders should note that they should be engaged on an open book basis - that is, the agency must provide schools with full details of the cost of (i.e. the gross pay of) the teacher. Knowing the cost of the teacher will enable schools to ascertain what the agency margins that they are paying for are, as well as indicate the teacher’s gross pay (although the presence of umbrella companies in the supply chain my obfuscate true gross pay), so you can be more confident that the teacher is being paid a fair wage. If requested, they even need to provide financial statements like balance sheets, to ensure that public funds continue to be used properly. This may stress-test relationships with agency suppliers, but if handled well and will create more transparency, leading to a healthier, stronger recruitment landscape.