Locuming is known for being famously lucrative. Locum doctors working just 2 days a week are able to earn their entire F2 salary. For this reason, receiving your first payslip is an exciting moment for new locum doctors.

However once opened, it's not uncommon for these new locums to experience a mixture of pupillary dilation, dry mouth and beads of sweat forming on their forehead as they look at their higher than expected deductions and a Net Pay considerably lower than expected.

This often leads to these doctors questioning the amount that they've received and brings about thoughts such as "Did I receive the right pay?" or "Did my Locum Agency just scam me?".

If this sounds like you, or if you want to learn how to decode your payslip so that you're not faced with this 'shock' in the future, then read on.

In this article, we'll break down the key terms around pay, and look at a real payslip to help you understand the different sections on payments and deductions. We'll also go through a number of key things to watch out for on your locum pay and questions to ask your agency before you begin your first shift.

🔑  Key Terms

Gross Pay

This is the total pay before any deductions are made. 

Net Pay

This is your take-home pay, the amount which is actually paid into your bank account. It's calculated as your Gross Pay minus any deductions, such as employee NI, income tax, pension contributions, and Student Loan.

PAYE‍

Pay As You Earn (PAYE) is a method of payment where all deductions are removed automatically by your employer before you are paid, so you only get the Net amount. This means you are entitled to keep all of what you are paid and won't have to worry about other deductions. 90% of the time locum doctors (especially SHOs) will be paid via this method.

Direct Pay

Another method of payment where you are paid your Gross Pay, and you are therefore responsible for paying national insurance, income tax and other deductions in your tax return at the end of the year. The process of calculating the tax you are due to pay is called Self Assessment. This is usually a method of payment that those using limited companies will be paid through providing their work is outside of IR35, you can learn more about this here.

🔨  Breaking Down a Payslip

In this section, we will break down the key components of a locum doctor's payslip, so you know what each of the terms means and you know how to navigate around yours.

A note on payments: some staff banks and locum agencies will pay you weekly, others will pay you fortnightly or even monthly (monthly is rare with agencies but is more common with banks). This is one to check with your locum agency when you are registering with them.

We have included sections of a real locum doctor's payslip below. This is for a weekly payment, and is based on the 2021-2022 tax year. Note that for 2022-2023 the deductions will be different.

💼  Section 1: General Information

The top of your payslip should look something like this. We've highlighted the key areas you should be aware of. Let's go through them:

👉  Worker Number - This is your unique worker or ESR number. You'll usually need to quote this when disputing any payment issues with payroll so make sure to note this down. You can also use this to create a MySBSPay account, (if your Trust is registered with them) where you can digitally keep track of all your payslips

👉  Pay Date - The date that your payment was issued.

👉  Tax Code - Your tax code determines what rate of income tax you are due to pay. The number tells you your Personal Allowance (tax-free) followed by a letter. 1257L is the most common tax code and indicates that for the first £12,570 earned this doctor will pay 0% Income Tax. The letter L at the end is usually given to people who have one job, and are therefore entitled to the standard tax-free allowance that we've just mentioned. However, as a Locum with multiple payment sources (different agencies or trusts) this can get tricky and you might find yourself being issued with letters such as W1, M1 or an X. These are all Emergency tax codes and could result in you paying more in tax. We recommend reading our article co-written with Medics' Money that explains this in more detail or checking out the .gov page on Emergency Tax Codes to help you understand this better.

👉  NI - Your National Insurance number. You might be asked to quote this in future, so can check it out here.

💰  Section 2: Payments

This section is key - it explains which timesheets you are being paid for, the numbers of hours you've worked and the rate of pay. If there are major errors in your payslip, you are likely to find them here! Let's break it down...

👉  Week End & Timesheet Number - These help you identify the timesheets that you've been paid for. In this example, you'll know the payslip is for the week ending on 27/06/21 and for the timesheet number GEN000152599, which was for a week of Gen Med shifts. Before looking at your payslip, it's a good idea to have your timesheets nearby. From this, you should be able to cross-reference your timesheets with your payslips to see how many hours you have worked, and for what dates you are being paid for. This lets you then know whether you have any outstanding timesheets left unpaid.

👉  Units - This is the number of hours you’re being paid for. In this case 37.50 hours, for 5 days at 7.5 hours per day. The doctor was working 8-hour shifts, with 30 minutes unpaid.

👉  Holiday Pay - Note that holiday pay of 4.53 hours is added on top of the 37.5 hours. As a locum you are legally entitled to accrue annual leave, but rather than taking holiday you are paid for this time on top of the hours actually worked. This is usually at a rate of around 12% of the hours worked.

👉  Rate - This is the hourly rate in £ that you are being paid. In this case it's £44.52 per hour. Please note this value was originally quoted as £50/h by the agency; we'll explain what has happened in the section "Things To Look Out For".‍

👉  Total Payments - This is your Gross Pay, based on the rate and hours you've worked. In this case, 37.5 hours, plus 4.53 hours for holiday pay, at £44.52 per hour is a Gross Pay of £1,871.01.

⚖  Section 3: Deductions

Unfortunately, each of these sections could form an entire lecture series. So we'll keep this as brief as we can and provide links to where we think the best sources are to help you understand these in greater detail.

Income Tax

This is the tax you pay on your income above your tax-free Personal Allowance. You will pay 20% for income earned between £12,571 and £50,271 (Basic Rate), and 40% between £50,271 and £150,000 (Higher Rate). For pay above £150,000 (should you be lucky enough to get there), you pay 45% income tax.

It's important to note that your tax-free Personal Allowance and the amount of Income Tax you pay, is made up of 'all' your income streams. If you're locuming ad-hoc on top of a substantive training post, whilst also renting out a spare room in your flat, then all of these will be factored in for working out what tax rate you will be on.

Want to learn more? This .gov page goes into greater detail.

Employee NI

Employee National Insurance is an additional form of taxation which is charged on top of your income tax. It is used to pay for things like the state pension, statutory sick pay and maternity leave.

Most employees are on a category A for their National Insurance, and this will likely be you too. For the 2022 to 2023 tax year, this means you will pay 13.25% on all monthly earnings between £823.01 to £4,189, and a further 3.25% on monthly earnings over £4,189. Learn more about this here.

Student Loan

How much you pay will be based on the repayment plan that you're on and the vast majority of you will either be on Plan 1 or 2. Here's how much you can expect to pay, although it's worth noting that the government has plans to change the Plan 2 threshold so the information below is subject to change.

Plan 1 - You will only pay this if you're income is over £1,682/month (Pre-Tax: £20,195 annual). You will pay 9% over this threshold i.e. if you earned £2,000 this month then you will pay £28 (9% of the difference between £,2000 and £1,682)

Plant 2 - You will only pay this if you're income is over £2,274/month (Pre-Tax: £27,295 annual). Similarly to plan 1, you will pay 9% over the threshold.

If you want to learn more, then click here.

Pension Contributions (Not on this payslip)

There are currently 3 different NHS Pension schemes (1995, 2008 and 2015), however, the vast majority of you reading this will be on the 2015 scheme. This will affect the final hypothetical "pot" you will receive, with the 1995 and 2008 schemes being far more generous, however, as far as pensions go, the 2015 NHS Pension scheme is still one of the better ones around.

Contributions work the same regardless of which scheme you are on and is based on the salary range that you fall into. Here's an up to date table of what you can expect. Learn more about the NHS Pension Scheme here.

Total Deductions

This is just the sum of the above amounts into a grand total for your deductions.

This amount will be dependent mainly on your total income, and subsequently what income tax band you fall into. It will also be dependent on whether you are paying back Student Loans or are subscribed to the NHS Pension or any other Pension Schemes for that matter.

To stay on top of your payslips, so that you can manage your finances easier. We recommend downloading MySBSPay, a free app developed for NHS Employees to view, examine and download all their payslips in one easy to access place.

‍

💸  Section 5: Net Pay and Cumulatives

👉  Net Pay - This is your take-home pay, as explained in the first section above. It is worked out as your Gross Pay after the Total Deductions are removed. This is what you can expect to hit your bank account.

👉  Cumulatives - These are the totals for the tax year to date. You can use it to keep track of your Gross Earnings, as well as all the tax and contributions that you've made in the current tax year so far.

You can use Messly's Locum Doctor Salary Calculator to work out how much you can expect to take home each year as a locum, based on projected rates and shift volumes. Using this in conjunction with a Take Home Pay Calculator will help you estimate how much your deductions are likely to be, and therefore, what you can expect your Net Pay to be as a locum.

🤔 Things To Watch Out For

Hopefully, everything will go to plan and your payslips will be as you'd expect them to be. However, that is not always the case! From speaking with locum doctors, here are the most common issues that could arise.

Rate

This is the first thing to check: is the rate on your payslip what you arranged with the locum agency or staff bank?

There's a common point of confusion around 'Employer' National Insurance payments (not to be confused with 'Employee' National Insurance!). These payments to the Government are the responsibility of the employer (hence the name) rather than the employee, and come in around 15% of the Gross Pay.

Employer National Insurance is not your responsibility and is completely separate from your Gross Pay.

Despite this, sometimes locum agencies will quote an inflated rate to the doctor which includes this Employer National Insurance, as a means of making the rate appear higher than it really is. This means you will receive less than was advertised once the Employer National Insurance has been removed.

For instance, in the above PAYE payslip, the doctor was originally quoted £50/h by the locum agency which was inclusive of the 15% Employer NI Contribution that the Hospital would need to pay the Government. This happens prior to the PAYE payments and as such does not appear on your payslip.

See below for advice on how to check this upfront.

Hours

The main reason for a discrepancy in hours is that most trust will have a 'compulsory break', which is unpaid, of about 30 minutes which they will subtract from your timesheet, and subsequently payslip.

This will usually apply automatically regardless of whether you took the break or not. So make sure you actually take this time off, or if it was a busy shift, content the pay with your agency who will bring it to the attention of the Trusts Payroll team.

Additionally, human errors can occur from time to time which results in incorrect hours being logged. If you notice an error, make sure you bring this to the attention of your locum agency recruiter or your Rota-Coordinator if you are working as a Bank Staff.

For these reasons, we recommend always checking your payslips against your timesheets and highlighting any outstanding hours as soon as you can.

Holiday Pay

You are legally entitled to holiday pay, and this must legally show up separately from your Total Amount on your payslips.

If this is not the case, you will need to raise this with payroll as you will likely be owed additional payments

Deductions

One of the biggest reasons for paying too much tax is being put on the wrong tax code by HMRC. This is usually an emergency Tax Code and depending on the information HMRC has on you, could result in you paying 20% or 40% on your entire Gross Pay without consideration of any Personal Allowances. This is usually temporary, and HMRC will eventually update this and you will get your money back. However, if you need the money now, then you'll need to keep HMRC up-to-date with where you are working and, get P45 from payroll. You can do this over the phone or by logging into your HMRC personal tax account and updating your details.

If you're earning below the threshold for Student Loan repayments yet are still finding payments being taken out, or if you're being charged a higher contribution bracket for your NHS Pensions than you should, then be sure to raise these with your payroll team, which will likely be NHS SBS. If proven that your deductions are in fact incorrect, then you will be eligible for a refund for your pension contributions, however, this will only stop your Student Loan repayments going forward. For a refund here, you will need to contact the Student Loans Company, whose details can be found here.

❓ Questions To Ask Your Locum Agency or Bank Before You Start

Here's a list of helpful questions that you should always ask before starting work, to avoid any negative surprises later down the line.

👉  Can you confirm that the quoted hourly rate already has Employer NI contributions taken out of already?

As explained above, agencies can inflate the quoted rate by including Employer National Insurance amounts. Make sure to check this, and always ask for them to specify the rate that will show up on your payslip. You may want to get this in writing too.

👉  How often will I get paid?

As mentioned earlier, you could be paid weekly, fortnightly or even monthly. This shouldn't affect the overall tax that you pay but is useful to know for managing your finances.

👉  When do I need to submit my timesheets to be included in the next pay run?

Most agencies will have a specific day of the week that they send all their timesheets for processing. If you miss this date then depending on the payment frequency, you might have to wait up to a month to receive payment for your last timesheet.

👉  Can I opt-out of NHS Pension Contributions?

We won't go into the financial implications of this, but some doctors prefer to have a slightly larger salary each month to use for other investments. If you would prefer this, then let your recruiter know and they will send you a form for you to fill out.

👉  Does 'Agency X' offer any sick leave pay?

Locum Doctors are entitled to SSP, but may also be entitled to Sick Pay from their agency and bank providing they meet certain criteria i.e. if you have worked for a number of weeks worked and pay in this period. Rarely, some banks may also pay their long-term Bank Workers for missed shifts due to sickness, although this seems to be becoming increasingly rare.

👉  What breaks am I entitled to and are these paid or unpaid? What if I do not take these breaks?

Each trust will have slightly different break specifications for their Locum Doctors. If the break is mandatory and the trust will not pay you for missing it, then always take it where possible.

This article is part of a wider series of resources and guides that are designed to support you as a locum doctor, covering areas such as getting your first job, managing your finances, understanding your rights, and many more. Visit our Locum Doctor Hub for everything you need to know about locuming today.

Additionally, if you're considering an F3 year, you might also find it useful to look through the selection of resources we've put together in our F3 Resource Hub.

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