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Performance-related pay and equal pay claims

by in HR - Human Resources, Pay gap, Salary

Performance-related pay and equal pay claimsThe Agenda for Change system is currently going through a major overhaul, and as it implements pay increases, in order to remain attractive to the healthcare workforce, it’s also trying to find ways to save money by only giving incremental increases to those staff members who perform to an acceptable standard.

Up until now, staff have been required to undergo an annual appraisal and to have been deemed competent to pass through the first and last incremental ‘gateways’ in a pay band. All other incremental increases are currently automatic.

For those of us working in HR, this has always been a laughing matter due to the minimal impact of the system. If a manager had a staff member who was underperforming in the first year, we’d hope they’d be performance-managed and would either improve to the required standard or be managed out. If a manager had a staff member who was due their final increment to reach the top of their band, they would generally have been in post for a good number of years and one would hope that any performance issues had been addressed. This is assuming that the managers themselves were confident enough to deal with any underperformance or refuse someone their increment.

Put it this way, I’d worked in HR for five years in three different organisations – two of which were large acute Trusts – and I never came across anyone who was refused those gateway increments.

So are managers suddenly going to start implementing performance-related pay? Are they going to prevent staff from gaining an increment if they’re not achieving the required standard? I’d love to think they would, but I don’t have high expectations!

So can we as GP practices implement performance-related pay?

Essentially, unless you’ve signed up to Agenda for Change, or have some kind of collective bargaining in place, you can do whatever you like! If you don’t currently have it in your contracts, you can consult with staff to bring it in. Generally contracts have a clause that states “staff may or may not be awarded a bonus or salary increase” and “salaries are reviewed annually”, blah blah blah… Basically, it’s up to you.

But you must ensure that measuring performance across your organisation is fair and equitable in the way it’s carried out. This doesn’t mean there’s one unit of measurement for each role. Each kind of role may have different measures of success. For example, nurses could be measured on how much QOF activity they bring in; receptionists could be measured on call stats; GPs could be measured on appointment duration or patient feedback, etc. Provided each employee knows what’s expected of them and what good service looks like, it’s up to you what you do!

What are the advantage and disadvantages of performance-related pay?

It allows you, as a manager, to set a defined framework for achievement – the employee knows what they’re expected to achieve. This can help focus the employee, improve productivity and motivate staff as their objective is clear. Pay is also a great incentive and motivator; if staff know there’s likely to be a financial reward for high achievement, they’re more likely to try and attain it. A good system will always reward the high performers – which in turn can set an example to those who are less motivated. Rewards can also help to retain staff and act as an incentive to entice new applicants into the organisation.

As with most systems, there can be some downsides if not managed well. Team spirit and cooperation can be affected if targets are too focused on the individual and ‘friendly competition’ can turn into rivalry (although I imagine this is rare!). There’s also the danger that staff may come to expect an annual increase or bonus, which can reduce the amount done on goodwill. When finances are tight and bonuses can’t be afforded, will the productivity of the workforce decrease? If the scheme isn’t operated fairly or if objectives aren’t clear, employees can become demotivated and employers could risk equal pay claims.

Are all staff entitled to the same amount of money?

No. It allows you to pay some staff more than others depending on their achievements. But remember, any variation in payment should solely be down to the performance of the individual (i.e. you shouldn’t give two members of staff who achieve the same standards different rewards). Let’s work through an example:

Nurse A takes the lead for Respiratory Disease in your practice. She’s responsible for her own QOF achievement in this area and arranges her own call and recall of patients. There are 250 patients on the register for COPD and Asthma.

Nurse B takes the lead for Diabetes. She’s also responsible for her own QOF achievement and also has 250 diabetic patients on the register.

Nurse A has been in your practice for 25 years whereas Nurse B joined 10 years ago. Nurse A earns a higher salary due to her length of service and due to the fact she’s the Infection Control Lead for the practice and is responsible for supervising the HCA team. Nurse A also works seven more hours per week than Nurse B.

You decide to implement performance-related pay in the form of an annual bonus for QOF achievement.

Both nurses achieve 96% of their registered patients.

Do you pay them the same bonus or does one get more than the other?

Key factors to consider:

  • The task being carried out
  • The level of success achieved
  • Expertise, skills and knowledge
  • The amount of time taken to carry out the task

The task being carried out by both nurses is essentially the same. They both have to identify patients who are eligible for QOF, invite them for a review, carry out each review, document it and exception-report any patients who don’t qualify. Both of them have been trained in their specialist disease areas to the same level – one area is not more important than the other. There may be a difference in the value of each QOF point but this isn’t something the individuals themselves have control over, so it would be unfair to penalise them for that. Both annual review appointments take roughly the same amount of time.

So in terms of a lump-sum bonus payment, I’d be inclined to give them both the same, especially as an equal amount of effort, knowledge and skills went into the task and the output was also the same. Nurse A’s lead roles don’t factor in her QOF output.

So can you pay staff carrying out the same role different salaries?

Yes, you can, provided this isn’t discriminatory.

In the example above, you can see that Nurse A earns a higher salary, but this is because of the additional roles she’s acquired (infection control lead, supervisory duties) and also her length of service (as you can imagine, she’ll have accumulated more ‘cost of living’ increases than Nurse B).

You might fall foul of the Equality Act if you had, for example, two nurses, both with lead roles for long-term condition management and both with lead roles in another area (e.g. one does travel clinics but the other does childhood immunisations); they both have a similar level of knowledge and experience (and, remember, this doesn’t relate to age – one may have worked in primary care for a long time but the other may have done significantly more CPD and have some advanced skills under their belt)… but one of them is a man and one is a woman, and they’re being paid different rates.

This links back to Equal Pay under the Equality Act 2010 – “equal work of equal value”. This generally relates to gender differences between two employees, although more and more cases are being brought to tribunal around ethnicity and disability.

How do you protect yourself from an equal pay claim?

Agenda for Change is fabulous in that they use a job evaluation system. This in itself is a protection against equal pay claims. All job descriptions go through an evaluation or matching process, where 16 different criteria are considered before a pay band is attributed to the role. Job descriptions are drafted by managers and sent to a panel of trained job evaluators who objectively evaluate or match the job description to determine its banding. Training lasts two days’ minimum, and I can confirm it’s very interesting!

Staff also have the ability to challenge the banding of their role, as part of the Agenda for Change, if they feel the job’s changed significantly from their original job description or if they feel the job was inappropriately banded in the first place. When the job description is being reviewed, only what is required by the post is considered – not who is currently in the post (e.g. you may have an administrator in post who has a degree, but if the role doesn’t require the postholder to have a degree, it doesn’t matter! Many staff members submit for re-banding on the basis that they have more qualifications than what’s required and are then disappointed to find that it makes no difference to the banding as the qualification isn’t necessary.)

If an employee submits an equal pay claim to a tribunal, the employing organisation has this process to fall back on (provided they’ve actually followed it, of course!) and it’s rare that the employee will win if that’s the case. There are very few equal pay claims that go to tribunal for the NHS. Other public sector organisations use a different evaluation framework based on the same principles.

But what if you’re not on Agenda for Change? What should you do?

First, look at your own organisation. What do you already have in place? If you’re recruiting to an existing role, what did the predecessor have? If it’s a new role you’ve never had before, what are similar organisations doing? Is there a job description you can replicate? Check out NHS Jobs for similar posts and review best practice.

What are the implications for existing staff in similar roles?

For me, whenever I take on a new receptionist, the same criteria apply. Whenever my reception team get a pay rise, they all get the same. The role doesn’t require additional skills, extra responsibility, massive professional development, etc. so I aim to recruit people with the same skill set and capabilities as my existing staff.

If it was a clinician or an administrator, however, I’d be looking at what level of applicant I wanted. Do I need someone already trained? Can I take on a newly-qualified person or an apprentice? The salary would then reflect the level of experience and would need to increase as their experience and skills increased.

Then you need to consider who you have in similar posts. If I’m recruiting an HCA and I’ve got a female HCA already on £10 per hour, and I bring in a male with the same level of experience to do the same job, I’m going to have to pay him £10 per hour too.

Be prepared to justify any salary differences. If you take on a salaried GP who has plenty of additional experience and you’re willing to pay them more than another salaried GP – especially if they’re of a different protected characteristic – you need to be able to justify why they’re entitled to a higher salary.

For more information on how job evaluation works and the 16 criteria used when considering banding, visit NHS Employers: http://www.nhsemployers.org/~/media/Employers/Publications/NHS_Job_Evaluation_Handbook.pdf

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