The Bottom Line
- Locum headline rates look higher, but <strong>the real comparison is effective hourly rate after all costs</strong>.
- Salaried roles include <strong>hidden value</strong>: NHS Pension employer contribution (~23.7%), study leave, sick pay, annual leave, and indemnity.
- The break-even point is higher than most locums think — <strong>model it before deciding</strong>.
The locum-vs-salaried decision is the most common financial question doctors ask — and it is almost always answered with vibes rather than numbers. The headline locum rate looks dramatically higher than a salaried salary. But when you subtract: pension loss, indemnity, admin time, unpaid leave, gaps between bookings, accounting fees, and tax structure differences, the gap narrows significantly. For some doctors, salaried work is actually better-paid once you account for total compensation.
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Step 1 — Calculate true salaried compensation (not just salary)
Take your gross salary. Add: NHS Pension employer contribution (~23.7% of pensionable pay), indemnity (if employer-provided), paid annual leave value (27–33 days), paid study leave, paid sick leave, and any other benefits (childcare vouchers, cycle scheme, etc.). This gives your 'Total Reward' figure. For a salaried GP earning £70K, total compensation is often £90K+ when employer pension is included.
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Step 2 — Calculate true locum compensation
Take your locum gross income (realistic booked weeks × daily rate × days/week). Subtract: indemnity/malpractice, GMC/professional fees, accounting costs, pension contributions (if self-funding), travel, equipment, and your own admin time valued at your hourly rate. Also subtract: unpaid annual leave (you need to earn enough to cover your time off), CPD costs, and gaps between bookings. The result is your 'Effective Locum Income'.
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Step 3 — Compare like-for-like
Divide both figures by total hours worked (including admin). Salaried: clinical hours + SPA + admin within job plan. Locum: clinical hours + booking admin + invoicing + compliance admin + travel. Your effective hourly rate is the fair comparison — not headline numbers.
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Step 4 — Model the pension gap specifically
The NHS Pension employer contribution is approximately 23.7% of pensionable pay. If you earn £70K salaried, the employer puts ~£16,600/year into your pension on top of your salary. To replicate this as a locum, you need to invest that amount from your own post-tax income. Most locums do not do this — which means they are silently accepting a lower total compensation.
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Step 5 — Factor in career trajectory
Salaried roles offer: progression through pay scales, training posts that lead to CCT/specialist status, and references for future career moves. Locum work offers: immediate income maximisation, flexibility, and portfolio experience. The financial comparison changes depending on your career stage — locum work during training can slow progression; locum work post-CCT may be optimal.
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Step 6 — The hybrid model
Many doctors optimise by combining: a part-time salaried role (pension, leave, stability) with locum sessions (income top-up, flexibility). This captures most of the salaried benefits while allowing locum income. Model the numbers for your specific situation — the optimal split depends on your tax position, pension status, and lifestyle needs.
Quick rule of thumb
As a rough guide, a locum needs to earn approximately 30–40% more than an equivalent salaried gross salary to achieve the same total compensation once pension, leave, and costs are accounted for. If salaried pays £70K, the locum equivalent is approximately £90–100K gross before costs. Run the actual numbers for your situation.
Practice
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