Imposition of New IR35 Contracts on Locum Doctors
- 7 Apr 2017
The NHS Improvement agency (NHSI) has instructed NHS Trusts across the UK to apply an HMRC Rule known as IR35 incorrectly and unjustly to all self-employed health care workers who have been working in NHS organisations. They provide a crucial service filling in gaps caused by the severe lack of staffing in the NHS. Changes to locum doctors’ and nurses’ contracts which result in the loss of 30% to 50% of their income have been made with no discussion and with little or no warning.
The NHS is short-staffed. To fill the gaps the NHS brings in locum doctors – self-employed doctors who work through agencies. Locum doctors get a raw deal. Healthcare workers who are directly employed by the NHS enjoy full employment rights. Locums, in contrast, have no pension provision, no annual leave, no study leave, no sick leave, no maternity leave, no death-in-service benefits and no job security (contracts can be terminated with a week’s notice, sometimes just a day’s notice). Many have to travel long distances to work where they’re needed or spend time away from their families in temporary accommodation. They are often asked to work to job plans that are outside the professional Royal Colleges’ guidelines. And locums still have to pay the fees to attend courses and meetings to fulfil their annual appraisal requirements.
The disparity in benefits between the NHS’s permanent staff and its locums justify the higher pay rates that locums earn. But the new rules change everything. The imposition of IR35 treats locum doctors as ’employed’ for tax purposes. They lose the tax benefits of being self-employed but don’t enjoy any of the benefits of being ’employed’.
- Locums now have to pay national insurance contributions twice over – as employer and employee
- Locums now have income tax deducted at source and cannot claim relief for any of their legitimate expenses such as travel, accommodation, subsistence, training fees, professional subscription fees etc.
Within the past six months, locum doctor pay rates have been reduced or capped by NHS trusts. The IR35 contracts are cutting another 30% to 50% off their incomes. For many, being a locum is no longer a viable option. The changes make them worse off than NHS doctors in permanent employment, yet they’re expected to do the same vital work.
Many locum doctors have rejected the contracts and stopped working. Their association, the Locum Doctors Union, is preparing a legal challenge to the blanket imposition of the IR35 rule.
Notes to editors
Find out more about our work