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https://radhr.org/policy/pay-policy/
Hi RadHR team, thanks so much for sharing this pay policy which is so detailed and takes into account so many ways in which workers may need support. My question is… how do we budget for and fund this? If we apply to a funder for project/core costs that include salary costs we cannot predict how much we will need to pay a worker as we may not have hired them yet or their situation may change. Should we budget for the highest possible salary (if all uplifts apply) and return the remainder? This seems almost impossible to fundraise for, especially as a team grows. As an organisation we have been trying to raise salaries for years but we continue to butt up against funder requirements that do not align with more radical ways of paying workers. Josie
Thanks Josie, these are really important questions. I don’t have all the answers, but I’ve talked to a few groups about this recently, and have some (longer-than-expected) thoughts:
Budgeting for new workers: At RadHR we assume a % uplift for any new starter that is a specific amount higher than the average uplift for the current staff, that figure right now is 9%. So if the average worker uplift was 11%, we assume a 20% uplift (11% + 9%) for new starters. I think it is probably important to adjust the additional 9% figure depending on whether your sense is that current workers are (or aren’t) using a lot of the uplifts, e.g. if your workers don’t claim many uplifts, you might want to make that 9% addition higher.
Budgeting for uplift changes: One thing the socially-just pay calculator (that we’re working on) does is give you a approximate figure for how much every extra 1% of uplift will cost the organisation (including pension and National Insurance contributions). This is something you can then use to budget for potential worker uplift increases. So if that 1% cost is £400 for a 4 day-per-week worker, you can then use that to budget for worker uplift increases, e.g. 10% = ~£4k, ~20% = ~£8k. The other thing you can do is to budget a certain % higher for each worker every year, but that effectively amounts to the same thing.
Budgeting generally: This kind of policy does make contingency funds / unexpected costs and reserves more important. I’m not sure there’s any way around that. The organisation needs to be putting some funds aside for potential changes in worker costs, even if the hope is that the uplifts and downlifts will even out a bit.
Fundraising: RadHR’s current funders are all okay with this policy, but we are mainly core funded and our funders are ones that are willing to fund this kind of work, so they are unlikely to be representative of the wider funding world. I think part of the answer has to come from funders changing their requirements, and from experience that often takes organisations pushing back on things, especially those in more of a position to do so. But that isn’t very helpful right now, and so I think it might end up being case-by-case based on the specific funder’s requirements and also coming back round to annual contingency budgets and reserves etc. “We run a socially just pay system which means worker rates vary between workers and are subject to changing circumstances, this explains rows ##-## and the contingency in row ##, any unspent contingency will go to XYZ.”?
The one other thing I will say—and I want to be clear this is not to downplay the difficult realities, to assume that this is relevant for your group, or to come across as some kind of acolyte of ‘The Secret’ or anything—is that as someone who grew up working class, for a long time I definitely had a strong scarcity mindset when it came to budgets and funders. In my last workplace that often meant colleagues had to challenge some of my instincts to keep salaries lower and assume funders wouldn’t fund non-poverty salaries or contingency/reserves etc. Rarely is that the problem, but from my experience, it can be part of the problem. So sometimes we need to sound out funders or just put things in applications and know that if a funder wants to fund the work, but something procedural is preventing that, they will more-often-than-not talk to you about it. Basically, from my own experience, I think it’s really easy to internalise some messed up values from the wider world on this stuff.
I’d be really happy to schedule a call to chat about this, and maybe others would be interested to join? I’m keen to hear what would and wouldn’t work for groups about this kind of policy, and what some of the funder blocks are etc. Maybe it could be a collective problem-solving session?
Hi Rich,
thanks so much for your extensive response.
There is so much in here that we have been grappling with and are working towards - from rejecting a scarcity mindset and pushing for change with funders to being left without any funding for the whole year in 2023 meaning everyone was unpaid and us having to take on extractive jobs to make ends meet…
A collective session would be very useful and we’d be happy to share our experiences and learn from others.
Warm wishes
Josie
So let’s host a discussion group at the lunch meet on Thursday (April 2nd, 2025)—all welcome to join!
Hello - very new here so this might be a bit clumsy. I had a query on this note in the appendix “That does not mean that they should automatically sacrifice all the protections and affordances of employee status. This is something RadHR would like to explore further.” I can’t find any employment law that technically prohibits providing a ‘discretionary sick pay’ to a self-employed worker on a contract. I do understand that there is a tension where an org mandates times/ place of work, whereby UK courts and tribunals can reclassify their status. The reality is that at any point, someone can become unable to work, even with control over their time/schedule. It feels more than appropriate to consider in the (freelancer) contract a fund to support this. Any thoughts on this? Are people doing this already? Would I maybe name it ‘emergency fund’ and outline that includes being unwell, as well as the other elements you’ve highlighted? Super thanks!
Good questions, @Ophelia_Kingshott! My understanding (not a lawyer or anything similar!), is that if HMRC could reasonably believe that you were providing employment benefits to a worker, without paying employer taxes, that it could be a problem. I definitely agree with your assessment that pay freelancers for sick leave would be a very reasonable and just thing to do, but worry that it gets into one of those areas where the law is anti-justice :-/
Wondering if @Abbie_PeopleSupport can clarify this?
Also wondering about if things like ‘emergency funds’ could be considered viable work-arounds?
Apologies for the slow reply. As Liam says, the main risk here is HMRC and whether they might categorise the working relationship as employment rather than freelance (this does happen and organisations can face hefty tax bills). The other aspect is employment law - which may be low risk in your context, but could theoretically include tribunal action for miscategorisation of status (depending on the specifics for any individuals involved). It’s also possible that HMRC could designate someone as employed for tax purposes even if they don’t have employment rights from the employment law side (it’s all very confusing and hinges on the specifics of the case).
There are many factors in consideration for HMRC and employment law tests, but a key point for both is whether the person is genuinely in business in their own right, which includes covering their own costs and not being eligible for company benefits. See: Employment status: Self-employed and contractor - GOV.UK (This includes definitions, and states “someone is probably self-employed if they’re self-employed for tax purposes and most of the following are true: …they do not get holiday or sick pay when they’re not working”.
We looked at this question of support for freelancers with a couple of organisations to see what options may be available, and while definitely not risk free (in terms of how HMRC would interpret it, or under employment law), both created a bursary-type fund open to volunteers / network members as well as freelancers to offer support during financial hardship (with an application process to decide case-by-case), so that as far as possible it was a general fund open to anyone and separated from being an entitlement connected to paid work, and therefore more likely to fit with a genuinely freelance relationship.
And just to add for anyone who doesn’t know about this, if you’re not sure, it’s worth using the HMRC online tool: Check employment status for tax - GOV.UK to see what it determines for any specific cases where you’re not sure if someone should be freelance or paid via PAYE.