All you need to know about pay

Find out more about the terms and language used for NHS pay negotiations

Agenda for Change is the nationally agreed UK-wide set of pay, terms and conditions for all NHS staff other than very senior managers and medical staff. You can access the Agenda for Change Handbook through the NHS Employers website and on the MSG website for those in Scotland.  Agenda for Change is supported by a robust job evaluation scheme based on equal pay for equal work of equal value.

The RCN is Secretary of Staff Side of the National NHS Staff Council and UNISON holds the Chair role. The NHS Staff Council has overall responsibility for the Agenda for Change pay system and has representatives from both employers and trade unions[1].  The RCN also plays a central in partnership forums across the UK.

In England, the Social Partnership Forum (SPF) brings together NHS Employers, NHS trade unions, Health Education England (HEE) and NHS England and NHS Improvement (NHSEI) and the Department of Health and Social Care (DHSC) to discuss and debate the development and implementation of the workforce implications of policy.[2]


In Scotland, the Scottish Terms and Conditions Committee (STAC) is a partnership organisation set up to collectively negotiate terms and conditions issues for NHS Scotland staff and is made up of union and employer representatives.[3]

In Wales, the Welsh Partnership Forum consists of representatives from NHS trade unions, representatives of NHS Wales and the Welsh Government.  The main purpose of the Welsh Partnership Forum is the development, support and delivery of workforce policies on a national, regional and local level. The Welsh Partnership Forum provides strategy leadership on partnership working between employers and employee representatives.[4]

In Northern Ireland there is a Joint Negotiation and Consultation Forum (JNCF) which deals with issues relating to employment across Health and Social Care in Northern Ireland.  The RCN is one of the Northern Ireland health trade unions represented on this Forum which also includes representative from the Health and Social Care Trusts/employers and the NI Department of Health. The RCN are an integral member of staff-side and are one of the Joint Secretaries who co-ordinate staff -side contributions to the JNCF. The application of Agenda for Change Terms and Conditions in Northern Ireland is within the remit of the JNCF as well as negotiation and consultation on issues affecting the HSC (Agenda for Change) workforce across Northern Ireland.



[1] www.nhsemployers.org/engagement-and-networks/nhs-staff-council

[2] www.socialpartnershipforum.org/about-spf/

[3]  www.stac.scot.nhs.uk/

[4] www.nhsconfed.org/regions-and-eu/welsh-nhs-confederation/nhs-wales-employers/our-work/welsh-partnership-forum

Collective bargaining is the official process through which trade unions negotiate with employers on behalf of their members. It can only occur where an employer recognises a trade union for the purpose of negotiation of wages and other terms and conditions.

Unions are recognised for collective bargaining in the NHS. However, the annual pay uplift is usually subject to the independent pay review body process (as above).

GP employers are independent contractors to the NHS and are not obliged to employ nursing staff on Agenda for Change contracts.  There is therefore no national pay scale for nursing staff working in general practice and they negotiate pay, terms and conditions on an individual basis.  

Some independent and voluntary sector employers base their pay structures on Agenda for Change, most set pay, terms and conditions independently.  Pay levels for many social care staff, including health care support workers are usually set at the national minimum wage or just above it. 

An independent NHS pay review body (PRB) makes recommendations to the government on pay awards for nurses, health professionals and other NHS staff. Trade unions, employers and UK governments submit evidence to the review body, based on data and surveys. The RCN submits written and oral evidence on the nursing workforce and co-ordinates the joint union submission for the whole Agenda for Change workforce, setting out trends and developments in recruitment, retention, morale and motivation.

As health is a devolved matter, final decisions on pay awards are made by the different UK governments who may choose to take different approaches.

The PRB’s last report was issued in July 2020. Because pay agreements were in place which run until 2021/22, the PRB was not asked to provide a recommendation for pay in 2020, but to monitor the implementation of the agreements.

The report stated that the PRB was struck by the workforce gap, for nursing staff. It said that the high level of vacancies impacts on staff and patient experience and creates risks for patient services and outcomes. 

The 'basic personal allowance' is the amount you can earn before income tax is applied. This means you don’t get taxed on the earnings up to the level of your allowance. 

In the example pay slip – this shows that the tax code is 1250L for a nursing assistant paid on Agenda for Change Band 3. This means that no tax is paid on the first £12,500 of this person’s salary.

6/10/2020 

Payslip
If you work in England, Wales or Northern Ireland, and you earn between £12,500 and £50,000, you pay the basic rate of income tax at 20% on that portion of salary between £12,500 and £50,000. The higher-rate threshold, when people start paying 40% income tax, is £50,000 in England, Wales and Northern Ireland, so all earnings over that amount are taxed at 40%. It is different in Scotland (as outlined further below).

For example, if you earn £30,000 (gross) per year, you will pay:

Nothing on the first £12,500
20% (£3,500) on the next £17,500
Total annual income tax = £3,500
Net pay = £26,500.

if you earn £55,000 (gross) per year, you will pay:

Nothing on the first £12,500
20% (£7,500) on the next £37,500
40% (£2,000) on the next £5,000
Total annual income tax = £9,500
Net pay = £40,500.

If you work in Scotland and earn between £12,500 and £14,585 you pay a starter rate of 19% income tax. The basic rate for the segment of earnings between £14,585 and £25,158 is 20%. If you earn between £25,158 and £43,430 there is an intermediate rate of 21% for that range of earnings. Those earning between £43,430 and £150,000 pay the higher rate of 41%, and earnings above £150,000 must pay the top rate of 46%.

For example, in Scotland, if you earn £30,000 (gross) per year, you will pay:

Nothing on the first £12,500
19% (£396.15) on the next £2,085
20% (£2,114.60) on the next £10,573
21% (£968.40) on the next £4,842
Total annual income tax = £3,479.15
Net pay = £26,520.85.

If you earn £55,000 (gross) per year, you will pay:

Nothing on the first £12,500
19% (£396.15) on the next £2,085
20% (£2,114.60) on the next £10,573
21% (£3,837.12) on the next £18,272
41% (£4,743.70) on the next £11,570
Total annual income tax = £11,091.57
Net pay = £43,908.43.

When you get a wage rise, you are liable to pay more tax and/or national insurance contributions. Adjustments are made automatically by your employer through your next pay packet.

The same happens with any pension increase as you are liable to pay more tax (but not more national insurance). 

The UK carries out a spending review, approximately every three years, to allocate funding to government departments including the Department for Health and Social Care. 

The devolved administrations in Scotland, Wales and Northern Ireland receive grants from the UK Government that fund most of their spending. The largest such grant is the ‘block grant’.

The Barnett formula calculates the annual change in the block grant.  The formula does not determine the total size of the block grant; just the yearly change. For devolved services, the Barnett formula aims to give each country the same pounds-per-person change in funding.

The Barnett formula’s main use comes at a spending review where it uses the change in UK Government departments’ budgets to calculate the annual change in the devolved administrations’ budgets. This works by taking the annual change in a UK Government department’s budget and applies two figures that take into account the relative population of the devolved administration (population proportion) and the extent to which the UK department’s services are devolved (comparability percentage). The calculation is carried out for each UK department and the amount reached is added to the devolved administrations’ block grant.

When we look at trends in earnings or salaries over time, we look at real wages as the most accurate way to measure the buying power of wages. Real earnings are adjusted for inflation. This contrasts with nominal or unadjusted earnings.

To say how much real wages or earnings have decreased, increased or stayed the same depends on different factors including how inflation has increased (see above), and how far back you go in time as your reference period. If your earnings had increased over the last year by 3% but RPI had also been 3% over the same time, then your purchasing power was the same – effectively the same as a wage freeze.

Following the recession in 2008, average wages for everyone in the UK labour market fell almost consistently in real terms (whichever measure of inflation is used) until around 2014. After that, inflation was low and wages picked up, but they didn’t catch up to pre-recession levels. 

The main measurements of inflation are the Retail Prices Index (RPI), the Consumer Prices Index (CPI) and the Consumer Prices Index including owner occupiers’ housing costs (CPIH)

One of the main differences between the measures is the inclusion of the cost of housing. RPI includes the costs of housing such as mortgage interest costs and council tax. The CPI does not include the cost of housing; while CPIH adds in housing costs for homeowners and council tax.

There are also mathematical differences in the way the measures are calculated. This tends to produce differences between CPI and RPI (with CPI usually being lower than RPI). This is why the government prefers to link the payments it makes (for example, pensions) to CPI and the payments it receives (for example, taxes) to RPI. CPIH is usually lower than CPI.

The Office of National Statistics no longer consider RPI an official statistic and have instead switched to CPIH as its preferred measure. However, RPI is still being commonly used to calculate annual increases for example in rail fares and student loan repayments. This why the RCN, and other unions, have, and continue, to use RPI as its preferred measure as we believe it is a more accurate measure of the true cost of living for members. Statistics do matter – and that is why we are sticking to RPI.

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