Following on from my recent post discussing the significant impact of upcoming Employers’ National Insurance changes and the wider financial pressures within the social care sector, I want to delve deeper into a related, critical issue: the cost of temporary staffing, and the importance of due diligence when partnering with staffing agencies.
As we established, the combination of the much-deserved National Minimum Wage increases and the steep rise in Employers’ NI contributions from April 2025 drastically increases the baseline cost of employing care staff. We also highlighted the chronic underfunding that makes it difficult for providers to absorb these costs.
Understanding the true cost benchmark
Calculating the precise hourly cost of employment involves several factors beyond the basic wage: Employers’ NI, holiday pay accrual, pension contributions, Apprenticeship Levy (if applicable), and other statutory requirements. Based on the NMW and the upcoming NI rates, our calculations show that the effective cost to employ an individual on National Minimum Wage reaches approximately £16.20 per hour once they have worked beyond the initial weekly NI threshold (roughly the first 8 hours).
This £16.20 per hour figure represents the direct employment cost that must be covered for every subsequent hour worked within that week. This is before factoring in any agency overheads, administration costs, recruitment expenses, training costs, or profit margin. It serves as a critical benchmark.
Read our response to the Employers’ National Insurance changes.
A warning regarding unsustainably low agency rates
Given this reality, care providers need to exercise extreme caution when presented with agency charge rates that appear significantly below this baseline. If an agency is offering staff at a rate close to, or even below, the £16.20 per hour mark (adjusted for a reasonable agency margin), it should raise immediate questions about how they are achieving this.
While efficiency savings are possible, rates that seem ‘too good to be true’ often are. Such low pricing can be a significant red flag, potentially indicating that corners are being cut elsewhere – most worryingly, in the area of tax and National Insurance compliance for the workers they supply.
The end client’s responsibility: IR35 and tax liability
This brings us back to the crucial changes in the IR35 (off-payroll working) rules implemented in April 2021. As mentioned in my previous post, these rules place the responsibility squarely on the end client – the care provider – to ensure the correct employment status determination for contractors working through intermediaries (like Personal Service Companies).
If you engage workers through an agency whose pricing suggests potential non-compliance (i.e., workers are potentially not paying the correct tax and NI through the structure used), your organisation could be held liable by HMRC for those unpaid statutory contributions. This represents a significant financial and reputational risk.
Our commitment to compliance: The Unity Plus & Care Accounts assurance
At Unity Plus Healthcare, transparency and compliance are paramount. We established Care Accounts, operated by qualified Chartered Accountants, precisely to navigate these complexities and provide assurance.
Whether we supply staff directly employed by us (where all statutory costs are inherently covered in our rates) or facilitate engagements with independent professionals via Care Accounts, our structures are designed to be fully compliant. We ensure that appropriate status determinations are made and that mechanisms are in place for all necessary statutory deductions and payments. Our pricing reflects the true cost of compliant employment and engagement, plus a fair margin for the value-added services we provide.
We firmly believe that cutting corners on compliance is not a sustainable or ethical business practice. It puts workers at risk and exposes client providers to substantial financial jeopardy.
Read our guide to the potential mental health challenges faced by healthcare workers.
Protecting your organisation
I urge all care providers engaging temporary staff to conduct thorough due diligence:
- Question any unusually low charge rates. Ask agencies to explain their pricing structure and how they ensure full compliance with NMW, holiday pay, pension contributions, and particularly Employers’ NI under the new rules.
- Seek assurances about their IR35 processes. How do they determine employment status? What mechanisms are in place to ensure tax and NI obligations are met for workers operating outside direct payroll?
- Partner with agencies that prioritise transparency and compliance. Look for evidence of robust systems, like our Care Accounts model, designed to mitigate risks for all parties.
Partner with Unity Plus and Care Accounts: The best choice for compliance and value
We understand that accessing flexible, skilled workers who operate outside traditional payroll is often essential. However, the compliance burden, particularly regarding IR35, rightly causes concern.
If you are a care provider looking to partner with an agency that can guarantee all legal and statutory positions are meticulously covered, ensuring you receive not just staff, but genuine peace of mind, then look no further.
Rest assured that Unity Plus Healthcare, through our specialist partnership with Care Accounts, is the agency built to meet these critical needs. While we may not always present the absolute cheapest headline rate, the comprehensive compliance measures, expert oversight, and risk mitigation we provide represent outstanding value. We believe that by ensuring complete compliance and protecting you from significant financial liabilities, we are the best choice for providers who prioritise security and ethical practice.
Get in touch with us today to discuss how we can become your trusted partner for compliant, high-quality staffing solutions.
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