Don't get caught out: engaging with agency supply teachers
How to reduce costs, gain control and increase the quality and consistency of teaching
As agency staff spend levels remain high across all areas, it is worth shining a light on how you can reduce and control this spend.
There are a number of reasons as to why schools engage agency workers, including emergency absence cover or perhaps as a mechanism to pay personal service workers as a result of IR35 tax regulations – but have you got the best deal for the service you require?
The IR35 tax regulations introduced in April 2017 dictates that most payments for personal service arrangements services must be made through PAYE, with tax and NI deducted at source. One solution to this is to transition these arrangements to agency supply. (We will cover IR35 in more detail in future articles.)
The majority of schools hire a supply teacher to cover a short term absence, with the intention of this being a temporary, short term arrangement. Occasionally, the initial absence lasts longer and the supply teacher is required to cover an extended period, leading to unplanned extended costs that weren’t part of your original deal with the agent.
Costly surprises can arise when a school either needs, or chooses, to take the teacher on permanently, or if the agency teacher applies for another vacant role advertised in the school. In these instances the agent will often charge the school a fee; this is known as a ‘temp to perm’ or ‘introduction’ fee. These fees can be 25-30% of salary – for a mid-range Main Pay Scale (MPS) teacher that is £7,000. However, often these fees can be avoided if they are negotiated upfront as part of the Terms and Conditions, providing significant opportunity for savings.
Areas for negotiation include: temp to perm fees, the amount of the temp to perm fee (based on the agency teacher’s length of service at the point of permanent engagement), and situations where the teacher independently applies for another advertised role in the school. Discounts can also be negotiated for long term temps, beyond the initial period of hire, where the agent is effectively completing a payroll service having earned their reward for the recruitment service in the early stage of the assignment (i.e. first 12 weeks). For a supply worker introduced to an agent by you, for assignments over 12 weeks or transition of personal service workers (IR35), you can negotiate a reduced agency margin from day one – again, on the basis that they are providing a payroll rather than a recruitment service.
But why stop at reducing perm fees when you can also reduce or avoid agency costs? If you have a well negotiated contract it may be more beneficial, both financially and in terms of the consistency and quality of teaching, to transfer any long term agency workers to a direct contract with your school. This can be either on a ‘relief-casual’ contract (if work continues to be ad hoc) or ‘fixed term’ if it has regularity but would still be forecast to be come to an end.
Whilst most agency assignments start off as short term emergency cover, have you considered whether having your own direct supply could be a better solution? You might be surprised to find that over the course of a year, ad hoc use turns into a level of regularity where having a small number of associate or contract teachers directly may offer you a better solution. This could be extended across a cluster of schools where supply could be shared and the benefits on the quality of teaching consistency and cost reduction is mutually realised.
If your school would like guidance on your agency terms and conditions and advice on how to reduce costs, please contact the Resourcing Solutions Team at email@example.com or call us 01609 535585.