Locum vs Salaried: The Financial Comparison You Should Actually Do: medical career toolkit (2026)

Key points

Locum headline rates look higher, but the real comparison is effective hourly rate after all costs.
Salaried roles include hidden value: NHS Pension employer contribution (~23.7%), study leave, sick pay, annual leave, and indemnity.
The break-even point is higher than most locums think — model it before deciding.

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.

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.

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'.

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.

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.

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.

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.

The lifestyle premium is real — but price it

Many doctors choose locum work for flexibility, autonomy, and variety. These are legitimate values. But price them: 'I am paying £15K/year in lost pension and benefits for the flexibility of locum work.' If that trade-off is worth it to you, great. If you didn't realise you were making it, that's a problem.

References

NHSBSA — NHS Pension employer contribution rates

BMA — Locum GP guidance

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Work through this guide (6 steps)

Use the actions from this article to track what you have worked through.

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.
Return to this section
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'.
Return to this section
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.
Return to this section
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.
Return to this section
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.
Return to this section
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.
Return to this section

Finances · Article 15 of 16

Locum vs Salaried: The Financial Comparison You Should Actually Do