Workplace Report November 2013


NHS unions don’t want poisoned pill from pay review body

Agenda for Change, the national agreement for those NHS staff covered by the NHS Pay Review Body is almost 10-years old. Under the coalition government, there have been years of pay freeze and the 1% cap, rising workloads, and sinking morale and confidence. Workplace Report takes the temperature on what’s happening to NHS pay and conditions.

Whether there will be even a 1% pay rise next April seems uncertain, as does the outlook for pay progression. A lot is riding on what the NHS Pay Review Body (NHSPRB) recommends sometime in February, but a solution to competition and privatisation which is now driving health workers out of NHS jobs, depends on political change.

Like many other parts of the public sector the NHS has been subject to pay freezes above £21,000 with just a £250 rise below that cut-off point, and a 1% pay cap, which has now been extended to 2015-16.

The Department of Health (DoH) recognises that staff engagement is “critical” if employers are to carry staff with them after revelations in the Francis report over care at Mid-Staffordshire NHS Foundation Trust.

Pay restraint

However, with the service facing the biggest financial challenge in its history, the DoH has told NHSPRB that pay restraint continues to be key in delivering “improved value from the taxpayers’ investment”. The 1% available for next year should be used to support “modernisation of national pay frameworks” and it “cannot afford” to pay a 1% rise on top of “time served” — incremental pay progression.

Dr Peter Carter, chief executive and general secretary of the RCN nursing union said: “It is demoralising for nursing staff to discover that, while senior managers have enjoyed a pay increase of 13% since 2009, the government is asking frontline staff to take another pay freeze to save the NHS money.”

Unions calculate that some health workers have lost up to 12% of their purchasing power since 2006, while others have lost a lot more, due to changes to terms and conditions like unsocial hours payments and recruitment and retention premia.

One particular concern this year is that with funding severely limited, decisions by governments in Edinburgh, Cardiff and Belfast could lead to diverging rates of pay. The Scottish government has called for an increase in basic pay for all staff subject to an overall cost cap of 1%, although there is no assumption that this will equate to a 1% uplift. But that cap does not include pay progression, which should be treated separately from the pay settlement. Nor does it include a minimum uplift of £300 for staff earning under £21,000.

Edinburgh remains committed to the Living Wage (by making Point 1 on the national pay spine unavailable for use) and to no compulsory redundancies.

The Welsh government has said that the NHSPRB should consider “confining” any award to raising starting rates to Living Wage level and awards to staff on lower pay bands, while deciding “whether” staff should receive an annual award in addition to their increment.

The Northern Ireland Department of Health, Social Services and Public Safety has recognised many staff have “clear contractual entitlements to progression /performance pay” but said there was no flexibility for a 1% increase without impacting directly on patient care.

For their part, the unions are looking for a UK-wide recommendation from NHSPRB and, in a joint submission, have called for all staff to receive a pay uplift of 1%, with at least 1% on high cost area supplements, and the minimum set at Living Wage level. The Living Wage is at present paid at only a limited range of English trusts including Plymouth, the North East Ambulance Service and Barts Health.

Sara Gorton, deputy head of health at the public services union UNISON, believes there is a change of thinking among health workers, with people starting to raise pay as a concern this year. Meanwhile, Rachael Maskell, Unite’s head of health, has called for an equal pay increase for all NHS staff.

Unions are also firm on the issue of pay progression. UNISON has warned that withholding it would be highly divisive and may have unintended consequences in relation to morale and motivation. It wants the NHSPRB to confirm that incremental pay progression is not a substitute for annual pay increases, pointing out that 42% of staff are at the top of their band (including 84% of the lowest paid staff on band 1) and wholly dependent on the annual pay uplift. Progression, it adds, represents “a staggering of payments to reach the correct rate for the job, not an annual award”.

Whatever the outcome it is clear that any pay rise in 2014 will be well below the rate of inflation. What is less certain, in a rapidly changing NHS, is what will happen to nationally negotiated terms and conditions.

Impact of Health and Social Care Act

As a result of the 2012 Health and Social Care Act, the service is changing structurally, with primary care trusts and strategic health authorities being replaced by clinical commissioning groups (CCGs). And this has led to the number of separate organisations in the service multiplying.

It’s also changing its format, with an expectation that the vast majority of hospitals and other trusts will become foundation trusts by 2014, giving them more “freedom” to move away from AfC. Local authorities are taking on a bigger role, assuming responsibility for budgets for public health, and services are being opened up to competition through commissioning to Any Qualified Provider, opening the door to privatisation.

Figures provided to UNISON by the department of Health suggest that the proportion of “market share” going to the private sector is still limited, at between 5% and 10%.

However, between April and August, the NHS Support Federation identified nearly 200 contracts worth £2.5 billion in the pipeline. Among those awarded so far, 21 went to the private sector with only four going to the public sector.

Companies like Virgin and Serco, along with social enterprises or community interest companies like Sirona Care & Health CIC (an independent non-profit provider formed by the local Primary Care Trust and Council) are playing a growing role.

In the South West, scene of a bitter struggle to defend nationally negotiated terms and conditions, most of the community service (district and children’s nurses) is already in the private or social enterprise sector.

Sirona, for example, won the adult community health services contract from the South Gloucestershire CCG commissioning group, and is responsible for community healthcare and adult social care services previously provided by Bath and North East Somerset PCT and the council respectively.

And, in a vivid demonstration of the way the service is becoming more market-driven, it was the Competition Commission quango that recently halted the merger of two trusts, Poole and Royal Bournemouth.

It is possible that new private providers will follow Agenda for Change terms and conditions for their staff. In the South West, Virgin Healthcare paid the last pay uplift and seems to be sticking to AfC, but there is no guarantee. Serco is said to have offered a 1% pay rise, but with no further negotiations for two years, and new staff are being put on new conditions.

Exactly how pay and conditions develop in this fast-changing environment remains to be seen. In the row over pay progression, the AfC pay system has been described as “antiquated”, “time served” and in need of modernisation. But Peter Finch, assistant director at the Chartered Society of Physiotherapy (CSP), pointed out that the agreement is not yet 10-years old and is not set in tablets of stone.

“AfC was developed to replace an earlier inflexible and antiquated pay system (Whitley) and designed to deliver a pay system which provided for equal pay for work of equal value and paid you for what you did, not what you were called,” he said. He highlighted a recent report by the Work Foundation which concluded that any concerted effort to dismantle AfC as a national framework would be “seriously misplaced” and that one of its strengths is as a “flexible adaptive system” capable of evolving and adapting to the changed environment.

Defeating South West cartel

The resilience of these union-negotiated national terms and conditions was proved in the clash with a “cartel” of employers in the South West last year. Their attempt to review incremental progression, pay rates, working hours, leave, sick leave and unsocial hours payments was ultimately defeated. Tracey Roberts, RCN regional communications manager, told Workplace Report:

“The final report produced by the South West cartel was not what they originally intended - it detailed no more than the status quo; what they could have done all along, given the flexibilities that already exist within AfC. The unions’ comprehensive campaign, targeting MPs, resulted in announcements by the Department of Health and the chancellor of the exchequer which made it clear that the implementation of local pay would not be supported by the government. It was difficult for the cartel to come back from this and its collapse was a massive victory for the unions.”

The cartel no longer formally exists, but the trusts concerned have continued to look for savings.

A GMB rep from Bristol confirmed that their employer is still meeting with South West cartel members and that they are determined as a group to “push every crack open and grab as much as they can”.

Unions were also successful in seeing off a challenge to AfC at North Tees and Hartlepool NHS Foundation Trust, proving that it wasn’t just a South West phenomenon. In that case, management tried to unilaterally vary sick pay enhancements, threatening to dismiss and re-engage up to 5,452 staff if they refused to sign new contracts.

Modifications to Agenda for Change

But while Agenda for Change has proved to be resilient, it has not survived unchanged. Over the years there have been changes in unsocial hours payments, recruitment and retention premia and on-call payments, to name just three. A further package of changes was introduced in April this year, in the wake of the battle against regional pay and the South West cartel, but only applies at trusts in England.

One of those changes affected sick pay which is now payable at basic salary level, not including any allowance or payments linked to working patterns or additional work commitments, that did not apply to the lowest-paid on spine points 1 – 8 or to those whose absence was due to work-related injury or disease. However the change has had a particularly significant impact on ambulance service workers, who stood to lose up to 25% from their salaries, and was being disputed by UNISON, GMB and Unite. Industrial action ballots were recently suspended, when employers agreed to suspend deductions.

Another change has affected incremental pay progression (under a framework set out in Annex W, see box below). Existing arrangements, which still apply in Wales, Scotland and Northern Ireland, allow workers to progress on an annual basis to the top of their band, passing though a “foundation gateway” and “second gateway” provided that their performance is satisfactory and they demonstrate agreed knowledge and skills (KSF). Accelerated progression applies for band 5 new entrants. There is a “normal expectation” of progression, no national or local quotas, and a “robust, jointly agreed process for checking managers’ decisions”.

Under a new English arrangement, progression through all pay points is conditional on individuals demonstrating that they meet locally agreed performance requirements. In addition, progression to the last two points in pay bands 8C, 8D and 9 (for higher paid staff) has to be annually earned and is only retained where the required performance level is reached in a given year. Progression should ordinarily not be deferred on performance grounds unless there has been a prior documented discussion with the person undertaking the review. Other “relevant competency frameworks” can be used alongside KSF and requirements can be reviewed when posts become vacant or changes need to take place.

These variations to AfC were agreed, but were strongly opposed by Unite and four other unions and continue to be so. Of the two largest unions, the RCN said recent amendments “have gone far enough and that any further centrally directed changes, particularly suggestions that nurses’ pay should be tied to how well they look after patients, are unnecessary”.

UNISON’s Sara Gorton believes there has been a “dramatic reduction” in the number of trusts looking to break away, following the changes, although there is still an “anti” national terms and conditions current among the employers.

Local agreements

There is only limited evidence so far of local agreements being concluded on how English incremental progression arrangements should work, although some trusts were evidently ready with proposals from the word go in April.

The CSP’s Peter Finch told Workplace Report that the union was aware of only a few local policies being signed off, with Cheshire and Wirral, Burton, Dudley, and Derbyshire Community mentioned. That was surprising, given the urgency that employers placed on the changes, but consistent with previous experience of local flexibilities on on-call payments. Wales, Scotland and Northern Ireland have country-wide on-call agreements, but progress in England has been almost glacial.

“It is now over two years since the agreement allowed local on-call arrangements to be negotiated and it would seem a major issue here is HR capacity to deliver on these issues at local level,” Finch said. “This clearly suggests a problem if there is any further shift in bargaining from national to local, it would also seem to undermine the argument put forward by government that Agenda for Change is not fit for purpose”.

And the on-call issue still has the power to provoke disputes. Wirral University Teaching Hospital NHS Foundation Trust has changed its on-call agreements in the radiology and pathology and blood science departments. But, as of early November, it was said to be threatening to issue statutory notice to staff in bio-chemistry regarding their refusal to undertake contractual on-call work that is currently voluntary.

Outside Agenda for Change

Only one trust, Southend University Foundation NHS Trust, remains outside Agenda for Change (AfC) and it was already on local conditions when AfC was launched in 2004. At the time, unions insisted that employees be given a choice on whether to go onto AfC terms and conditions, and UNISON had a big push to advise members to opt for AfC.

Initially, local pay was higher, but that is no longer the case. Salaries start at £13,667 compared with £14,294 under AfC and UNISON says that for every pay band the Trust pays at least £92 less up to a maximum of £1,380 less. Each year, the union tries to get rid of local conditions and go over to AfC, arguing that negotiating locally is a waste time and money, but only around 200 members are now on AfC rates with the remainder — about 3,800 staff — on local terms.

Pay progression

Turning back to the issue of progression, trusts that have done least to implement KSF, or don’t have regular appraisals, will have further to go in implementing this policy: The Scottish government’s evidence to the pay review body indicates that only 55% of staff (excluding bank staff) had received appraisals. But, while management readiness and capacity, or the lack of it, for performance-related progression may be one factor the stance taken by union reps could be another.

The RCN has been holding the line that there should be no local agreements until national guidelines have been issued. UNISON says all the parties to AfC have developed their own advice on the agreement but wants core principles to be agreed in the Staff Council. But it also points out that some trusts are putting forward crude “proxies” as a yardstick for performance.

That seems to be confirmed by the GMB which reports that one Bristol-based trust is pushing to include disciplinary proceedings, sickness and capability as reasons for non-progression: “We do not accept this and have pointed out that any decision is required to be agreed in partnership”, the union told Workplace Report. It also had information on a Newcastle trust that has a local performance review system which can stop a staff member receiving an incremental rise.

Framework for pay progression in England: Annex W

The NHS Terms and Conditions of Service Handbook now includes a framework (Annex W) that calls for local performance and pay progression policies to be developed in partnership. It envisages regular appraisal, performance and/or development reviews as the basis for determining whether an individual has met the required standards. All staff demonstrating and applying required levels of performance and delivery consistently benefit from progression.

Employers can not only decide whether objectives have been achieved, but also how they were achieved. There should be a right to seek a review of any decision where the required level of performance is deemed not to have been met. Local systems have to be equality assessed and apply equally to all staff covered by the agreement, and every line manager undertaking appraisal should have access to appropriate training and development.

An effective process for objective, evidence-based performance appraisal, development and review is needed, recognising team work wherever this is appropriate. Individual performance should be monitored throughout the year so that under-performance is identified and addressed appropriately as soon as possible (and the undue influence of experiences close to the review are avoided). KSF and other relevant competency frameworks continue to be the basis for the annual systems of review and development. There should be timely recognition of accomplishment, with line managers mindful of factors outside the control of individual staff.

Local schemes should be jointly discussed and adequately communicated to all staff. They should minimise the administrative burden on all staff; be as simple as possible and focused on organisational values and objectives linked to patient care. They should be jointly monitored and reviewed regularly; and provide appropriate training and support for staff who fail to meet performance requirements. They should use the views of patients and colleagues to inform performance reviews, while the views of other managers and staff can broaden, inform and validate line manager and staff experiences.


A further change in England, introduced in April, was a set of rules, known as Annex X, to be followed by organisations when they are looking at organisational change. It covers workforce re-profiling, use of the NHS Job Evaluation Handbook, and local organisational change policies to protect staff in cases of redeployment into lower grade posts (often referred to as down-banding). The Francis report on Mid-Staffordshire was one of the drivers for this.

Staffing changes in the shape of down-banding are certainly generating some heat. Derek Jones, staff side chair and Unite senior rep at Wirral University Teaching Hospital NHS Foundation Trust reported that there had been a “concerted effort” to push down bandings.

“We are currently fighting this process in a number of disciplines including cardiology, integrated discharge team and secretarial support,” he said “We have successfully fought off the same process in theatres ,but we are sure we will be fighting more of the same effort by the trust to down-band our members in the future.”

North Cumbria University Hospitals NHS Trust has also been down-banding, in this case moving nurses from band 6 to band 5, despite vigorous opposition by the RCN which argues it is cost-driven not quality driven.

This puts AfC procedures to the test. UNISON said that nearly every major London trust has been re-visiting bandings and pay protection over the last 12 months, including Barts, and the union has issued guidelines on handing the reconfiguring of bandings in conjunction with the employers.

All of these developments in AfC are challenging. The fragmentation and privatisation of the workforce is probably the one least amenable to negotiation, depending on the repeal of the Health and Social Care Act and restoration of the NHS as the preferred provider (as Labour is committed to doing if it wins the 2015 general election). But another useful measure, UNISON’s Sara Gorton argues, would be a prescription for all health service staff to be protected by AfC or mirror NHS rates.

Behind that idea lies the conviction that AfC has “intrinsic value” and can play an even greater role in helping the NHS adjust in straitened times, given the chance.

AfC is still highly prized by the unions, but members will also be expecting it, and the system of NHSPRB recommendations on which it rests, to deliver on pay too.