Two unions representing locum doctors, nurses and allied healthcare professionals have today succeeded in overturning a new tax rule imposed by NHS Improvement (NHSI) that risked thousands of agency workers leaving the NHS..

The Locum Doctors Union, who are supported by the Healthcare Professionals Union, an association that represents nurses and allied health care workers, threatened legal action against NHSI after it instructed NHS Trusts across the UK to apply an HMRC Rule known as IR35 to all self-employed NHS healthcare workers.

This change to the contracts of locum doctors, nurses and allied healthcare workers would have potentially resulted in the loss of between 30% to 50% of their income, because they would have been treated as employees rather than as self-employed for tax purposes.

Even though locum healthcare workers would be taxed as employed workers under the purported IR35 rule, they are still not entitled to the same employment rights that all other NHS staff receive.

Zero hours contracts

The NHS relies on locum healthcare workers to plug gaps in GP surgeries and hospitals. Locums have no pension provision, annual leave, study leave, sick leave, maternity leave or death-in-service benefits or job security – effectively placing them on zero hours contracts that can be terminated with a week’s or day’s notice.

Most locum workers operate on short-term contracts, often travelling long distances to work where they are needed and spend time away from their families in temporary accommodation.

Legal action

The Locum Doctors Union and Healthcare Professionals Union threatened legal action by invoking the pre-action protocol for judicial review against NHSI earlier this month after the new rule was imposed on all agency workers without any consultation from April 6.

On Friday, NSHI responded by issuing updated guidance entitled “Working through intermediaries: IR35 Update”, which states that the new tax rule should be imposed on a case-by-case basis, depending on each individual locum’s circumstances, rather than on a blanket basis.

While the new guidance suggested that NHSI is climbing down from imposing IR35 on all agency workers, it at the same time stated that if the rule can be applied to one locum in a particular role then this “will help inform the likely application of the test to another worker in the same role.”

While the two locum unions welcomed the move by NHSI to change its guidance, it did not go far enough, according to Alex Peebles of Duncan Lewis Solicitors, who is representing them.

Alex Peebles said: “The Locum Doctors Union has been forced to initiate the pre-action protocol for a claim for judicial review because of the unlawful and detrimental stance that has been taken by NHS Improvement. The LDU’s barrister, Michael Paulin, was instructed at the earliest stage in proceedings”.

“Locum staff, including locum doctors, nurses and allied Healthcare workers, are dedicated public servants. They often operate under personal service companies because doing so allows them to provide medical services up and down the country to the benefit of patients and the NHS.”

Mr. Peebles wrote to NHSI to ask for further clarity on its guidance before the deadline for filing a claim for judicial review, which is 26 May 2017.

NHS Improvement has today conceded to every substantive point made by the Locum Doctors Union. The new guidance specifically provides that NHS Providers may contract with locum doctors, nurses and allied Healthcare workers via personal service companies. NHSI have also clarified the importance of consulting with individual locum doctors, nurses and allied Healthcare workers, on a case-by-case basis, and of taking account of any representations they may wish to make.

Mr Stephen Mhiribidi and Dr Benedict Itsuokor, the two lead Claimant members of the Locum Doctors Union in the proposed judicial review claim, have stated:

“We are delighted that NHS Improvement has effectively conceded that their previous directive to NHS Providers was unlawful. Our members are dedicated public servants and we hope that, in light of our success in this case, we will be able to continue our service to the NHS without being further penalised in this difficult economic climate.

“We sincerely hope that NHS Providers will welcome this clarification, which means that it will be business as usual for the NHS. We wish to express our gratitude to our solicitor, Alex Peebles, and our barrister, Michael Paulin, both of whom have worked tirelessly to ensure that we obtained a just satisfaction to our claim”.

 ENDS

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