The Trouble with Locums
19.12.2018 , BY Kate Perry
19.12.2018 , BY Kate Perry
The news is currently full of articles relating to issues with regard to independent workers in the Gig economy, but doctors’ practices are likely to have similar issues with regard to GP locums. Engaging locums is becoming more and more problematic, not only are they beginning to be a very expensive option, but they now come along with other issues.
Locum or Employee?
There has always been the question of whether you can treat a locum as self-employed or whether you need to treat them as an employee.
As for any self-employed individual, the position is a matter of fact and not choice and the main criteria have always been as follows:
Locums can pay into the NHS pension scheme using the A and B locum forms and the engaging practice has to pay the employer’s element in addition to the locum invoice. However, this can only be done for a period of six months. After this, a locum is considered to be long-term and is no longer eligible to complete the A and B locum forms. If they wish to continue being in the pension scheme, they must be declared to the NHS by the engaging practice and payments are made to their pension by deduction from the practice’s monthly income on the Open Exeter statements in the same way as it is for a salaried GP. We are now beginning to see this becoming a more common situation because of the shortage of GPs in general. The problem with this, however, is that, if HMRC were to see this, they would automatically assume that this implies employment, particularly as, normally, only employees have payments made towards their pension.
We recommend that a locum who works for more than six months should become an employee as the risk to the practice for not doing so is significant. If the practice were to have a PAYE inspection and HMRC decided that a locum should have been treated as an employee, then the payments to the locum would be treated as net of tax and NI payments and the practice would have to pay the tax and NI in respect of these payments, together with late payment interest and penalties.
It should be noted, however, that HMRC are able to use the payments already made by the locum for tax and NI can be used to offset these amounts. There is then always the worry that the GP will then request employee rights such as holiday and sick pay.
To enable the continued use of a self-employed locum, we recommend the following in addition to the points already stated above:
Locums Working Through Limited Companies - IR 35
As a reminder, GPs working as locums through limited companies can still be used safely if they fulfil the same rules as for a self-employed locum. However, we would tend to recommend that they are only used on an ad-hoc basis to cover holidays or periods of short-term sickness.
Shortage of GPs - A Word of Warning
We are all too aware of the difficulty in finding partners and salaried GPs, particularly in London. This then often leaves practices with no option but to take on the services of GP locums who are more easily able to dictate the prices they charge. When we see practices’ profits reduce, it is often the case that locum costs have been allowed to escalate.
To avoid this situation occurring in your practice, you should: