Do Locum Agencies Take a Cut of Your Pay?

If you’re working as a locum healthcare professional or considering making the move, pay is probably one of your top priorities. One question that often comes up is whether locum agencies take a cut of your pay — and if so, how much.

The short answer is: yes, in most cases, agencies do take a cut. But understanding how it happens, what it means for your overall earnings, and what alternatives exist can help you make better decisions about your career.

Let’s explore exactly how agency pay structures work, what hidden deductions to watch for, and how you can take greater control over your income.

How Locum Agency Pay Typically Works

When you work through a locum agency, the agency acts as the middleman between you and the healthcare organisation that needs staffing.

The hospital or Trust agrees to pay the agency a set fee for your work. This fee is often much higher than the rate you will personally receive. After taking their cut — often called a commission or margin — the agency passes the remaining amount on to you.

You usually won’t see a line item showing the agency’s margin. It’s built into the arrangement behind the scenes. This is one of the reasons why agency rates might look high at first glance, but your final take-home pay may not be as impressive once everything is factored in.

Common Ways Agencies Take a Cut

• Markup on Hourly Rate: The agency charges the healthcare organisation a much higher rate than they pay you. For example, they may bill the Trust £50 per hour but only pay you £30 per hour.
• Umbrella Company Deductions: Many agencies require you to work through an umbrella company. This setup can involve extra administrative fees, insurance costs, and National Insurance contributions being deducted from your pay.
• Limited Company Hassles: Some locum workers choose to set up their own limited companies to avoid umbrella deductions. While this can sometimes increase take-home pay, it also brings complex tax responsibilities, accounting fees, and regulatory risks.
• Hidden Compliance Costs: Agencies may pass costs for DBS checks, training updates, or occupational health clearances onto you.

The True Impact on Your Income

At first glance, a locum shift that advertises £40 per hour might seem like a fantastic opportunity. But after agency margins, umbrella fees, and potential compliance costs, your effective hourly rate could end up significantly lower.

In some cases, workers find they’re taking home 20–30% less than the original headline rate suggested. When you’re relying on regular locum shifts to support your income, this gap can have a big impact on your financial stability.

It’s important to remember that agencies are businesses. They build their costs into the rates they offer. This doesn’t make them wrong, but it does mean you need to be realistic about what you’re actually earning compared to what the healthcare organisation is paying for your time.

Why It Matters for Your Career

• Reduced Financial Flexibility: Lower take-home pay limits your ability to save, invest, or manage periods of reduced work availability.
• More Shift-Chasing: You may feel pressure to work more shifts just to meet your income needs, increasing burnout risk.
• Limited Career Progression: Agency work often lacks structured career development, mentorship, or skill-building.

Alternatives to Traditional Agency Work

Collaborative Staff Banks

Collaborative banks connect healthcare professionals directly with NHS Trusts, cutting out the middleman. This means there are no agency margins deducted from your pay.

You are often paid directly through NHS payroll systems, and you may benefit from NHS pension access, paid leave entitlement, and priority shift booking.

Smart Matching and Compliance

Modern platforms let you upload your documents once and keep them updated automatically, avoiding repeated paperwork and hidden compliance costs.

Direct Communication

Collaborative platforms allow for direct communication with Trusts about shift needs and preferences.

More Control Over Your Career

You decide when, where, and how much you work, without financial surprises along the way.

What to Ask Before Taking Locum Agency Shifts

• What is the full hourly rate being charged to the Trust, and what will I actually be paid?
• Will I be working through an umbrella company, and what fees apply?
• What compliance or administrative costs will I need to pay?
• Are there any additional hidden deductions from my pay?
• How regularly will I be paid?

Final Thoughts

Locum agencies can offer convenience and sometimes immediate access to shifts. But it’s important to go into agency work with a clear view of how the financial model operates.

Yes, agencies usually take a cut of your pay — often more than many healthcare professionals realise. Over time, those hidden costs can impact your financial security and career satisfaction.

If you’re looking for a fairer, more transparent way to work flexibly in healthcare, collaborative staff banks offer a better alternative. You get to keep more of what you earn, access a wider range of shifts, and stay in control of your working life.