In normal times, the pay of supply teachers who work for agencies and umbrella companies in England and Wales (this does not work in Scotland or Northern Ireland) is often structured as “minimum wage plus discretionary premiums”. This is done to ensure continuity of employment, but different wage rates depending on the work performed.
However, this structure causes a problem under the vacation rules. Discretionary bonuses are not included in vacation pay, so a lot of umbrella agencies (not all – we’ve heard reports of some who simply don’t contact staff and some who have always paid the full amount) are vacation teachers based on 80 % of salary if only the minimum wage is paid – which means very low incomes.
However, HMRC has changed its guidelines – you can see them locally on the government’s “Work out 80% of your employees’ wages” page. The most important paragraphs are:
“When you find out if a payment is not being made at your discretion, include only payments that you are contractually obliged to pay and that your employee had an enforceable right to make.
“If a contract stipulates variable payments and those payments are always made, those payments cannot be made at your discretion. If so, they should be factored in when calculating 80% of your employees’ wages.”
Hopefully this clears up the big problem for supply teachers in England and Wales. Now we hope that all companies take the right amounts of vacation.
Can vacation bonus payments be updated retrospectively?
We have checked and unfortunately post-holiday pay cannot be backdated at this time (although HMRC is informing us that they are working to change this).
How should care teachers use this information?
The agencies’ nervousness will come from the fact that while they may request that the higher amount be paid to vacation workers, it will be subject to a review later if it was done incorrectly, so they want comfort that they are doing the right thing based on their salaries. Hopefully the new guidelines should give them the confidence to take leave of the higher amount. So it is worth asking them again with this in mind (and having the instructions at hand).
But in the end, vacation isn’t mandatory, it’s up to the company. Yet even if we ignore the fact that it is the right thing to do instead of leaving employees with no income, there is an argument that treating the care teachers (i.e. their product) well is good for business in the long run once we do start going back to normal. This is an argument teachers may want to use politely.
Note. This applies to teachers in England and Wales.
In Scotland, supply teachers on temporary temporary assignments / contracts will not have a detrimental effect on pay, whereas those on short-term assignments between January 1, 2020 and March 31, 2020 are paid over an average of three months period.
In Northern Ireland, supply teachers are employed directly by the Department of Education, which has agreed to continue to pay its replacement teachers separately to the Coronavirus Job Retention Scheme.