“Lo-commotion” – Changes in Revenue practice for Locum workers
Healthcare workers working in locum positions may now be deemed by Revenue to be employees rather than contractors for income tax purposes. Healthcare practices engaging locums are often brought in as self-employed/contractors, as opposed to employees, and so the practice was not liable to deduct PAYE. This arrangement allowed flexibility in the practice. The locum doctors generally received a payment each week/month and were then accountable for their own tax.
Healthcare practices where the contractor arrangement was common included amongst others, doctors, physiotherapists, pharmacists and dentists.
According to a December 2009 update from Revenue on “Locums engaged in the fields of Medicine, Health Care & Pharmacy”, Revenue is basing its assessment of the situation on the “Code of Practice for Determining Employment or Self-Employment Status of Individuals”. The update states that Revenue are looking at the matter in conjunction with the Department of Social and Family Affairs and the National Employment Rights Agency (NERA). The Code states that the decision as to whether someone is an employee or self - employed is dependent on the job as a whole, including working conditions and the reality of the relationship. It states that “the overriding consideration or test will always be whether the person performing the work does so as a person in business on their own account”. The fact that a person is described as a “locum” is immaterial and Revenue will place no importance on the title given to the individual. Rather, the fundamental consideration is whether the individual should properly be regarded as being engaged under:
(a) a contract of service, i.e. an employee, or
(b) a contract for services, i.e. self employed contractor.
Under Irish law only a Court can ultimately decide whether a person is an employee or self – employed and therefore it is very important that the facts of each relationship be looked at rather than attributing the same status to all workers. In certain situations a contractor arrangement may be a legitimate way of engaging a worker. A number of tests have been laid down by the Courts which assist in determining the status of the individual, including (but not limited to), the Control Test, the Enterprise/Entrepreneur Test, the Integration/Organisation Test etc.
We would advise that from all perspectives (employer/employee/contractor) that advice is sought as early as possible to get your house in order to ensure best practice and be well placed in advance of any Revenue Audit. Hayes has considerable experience in advising on these matters and challenging interpretations placed on the contractual relationship.
If you have any queries in relation to the above, or for further information, please contact Anne Lyne, Solicitor alyne@hayes-solicitors.ie