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Recent employment tribunal rulings have challenged the self-employed status of locums, causing ripples of concern to spread through the sector...

ALMOST ALL LOCUMS are treated as self-employed. This usually suits both parties because locums can treat certain expenses as tax deductible, they do not acquire unfair dismissal rights and there is a saving in national insurance contributions. However the case of Wooler v Paydens, decided by Ashford employment tribunal at the end of last year, has set alarm bells ringing.

Ms Wooler had a written contract entitled €Agreement for services€. She was described as a locum pharmacist, paid gross and made her own arrangements to pay income tax and NI contributions. On some occasions she chose not to work. The tribunal held that Ms Wooler was not an employee or self-employed, but that she was a worker and could pursue a claim for holiday pay.

Locums' status is a time bomb ticking away under many pharmacies

The Working Time Regulations 1998 (which deal with holiday pay and working hours) apply to employees and workers. Locums may even be employees with full employment rights. The question of their status is a time bomb ticking away under many pharmacies.

Unfair dismissal

In another employment tribunal case, the services of a superintendent pharmacist had been engaged through the superintendent's company, which invoiced the pharmacy for the superintendent's fees. There was a written contract for services between the pharmacy owner and the superintendent's company, not a contract of employment The superintendent paid her own national insurance and tax.

When the parties fell out, the superintendent made a claim for compensation for unfair dismissal. The employment tribunal held that the superintendent was an employee and entitled to make a claim, while sympathising with the pharmacy owner that the superintendent was able to €have her cake and eat it€, and suggesting that HMRC might wish to revisit her tax affairs.

There is a high risk that a pharmacist who works on a long-term basis for the same owner or in the same pharmacy is not genuinely self-employed. Even if the pharmacist has paid tax, the owner is exposed to a claim by HMRC for an employer's national insurance contributions and penalties.

HMRC's position

A number of factors need to be taken into account when deciding whether a locum is an employee, worker or selfemployed. HMRC considers a locum is likely to be genuinely self-employed if he or she is:

€¢ Engaged on a sessional or daily basis

€¢ Performs only the statutory requirements of a pharmacist's job, which is essentially dispensing and supervision of the sale of P medicines, and advising on medicines for the treatment of common ailments.

HMRC is more likely to consider a locum an employee if the locum takes over the full range of duties of an employed pharmacist, which may include:

€¢ Supervision of staff more generally

€¢ Cashing-up

€¢ Re-ordering non-pharmacy stock (e.g. perfumes, sunglasses, toothpaste).

HMRC considers a locum is probably self-employed if a standard NPA or PDA contract has been signed. The terms of any contract must be followed to ensure the arrangement is not a €sham€. However, standard contracts do what they say on the tin. They do not fit all circumstances, so it is important that owners and locums set out their work arrangements in writing and that their contracts reflect what actually happens. Merely using labels such as €contract for services€ or €self-employed€ are not good enough.