Louise Beddow seeks advice and clarity on the implications of the review into associates’ employment status…
There have been several indicators recently that change could be afoot for associates in terms of their self-employed status. In the courts, Uber lost an appeal against a ruling that two of its drivers were ‘workers’ rather than self-employed, and then Pimlico Plumbers also lost its case arguing that one of its ‘workers’ was self-employed. In between these cases, HMRC sent a letter to associates to say they were instigating a review into their employment status.
To gain further understanding about this issue and the potential consequences for principals and associates, I asked Michael Copeland, senior area manager for dentists at specialist financial services mutual Wesleyan, five key questions about the review by HMRC:
What is the review?
Earlier this year HMRC wrote to associates announcing a review into their employment status. This came on the back of several high-profile court cases where firms, including the above-mentioned Uber and Pimlico Plumbers, were challenged over the employment status of their workforce.
These cases have tried to answer questions about what it means to be self-employed, and what rights – and responsibilities – workers and employers have.
Much of the talk has focused on casual workers in the gig economy, but the review is having a wide-reaching impact across other professions where contract or self-employed associates have been the norm, including dentistry.
Why does it matter?
The review by HMRC is an important assessment into the rights of associates and it could – if it results in legislation or change in policy – mean new employment regulations for dental practices and practitioners.
Currently, dental associates are classed as self-employed by HMRC and this brings with it pros and cons for both principals and associates.
From a principal’s perspective, they don’t have to pay the 13.8% employer’s National Insurance Contributions on associates’ earnings, or provide additional employee benefits, if the associate is self-employed. This means lower practice running costs. From an associate’s perspective, they pay less tax and national insurance.
While the outcome of the review is still to be determined, any future changes could result in outcomes such as different tax liabilities for individuals, additional costs for the practices and changing responsibilities for locum cover and indemnity policies.
What do practices need to consider?
Every practice will need to make sure it has the correct agreements in place with its associates and be able to evidence that these agreements are being adhered to.
These agreements should outline the responsibilities that sit with the associate and those that are managed by the principal.
One of the key things to look out for here is the ‘Locum Clause’. This clause places responsibility for locum cover with the associate, although the practice can provide it at a cost to the associate.
Practices also need to consider what the financial implication of any changes to employment status could mean for their business. It may result in increased staff costs, new insurance requirements and additional expenditure for locum cover.
Any changes to monthly running costs will need to be carefully managed and practices should speak to a financial adviser in the first instance to make sure they understand the potential impact to their cost-base.
What does the review mean for associates?
The implications for associates are as far-ranging as they are for principals. The review could lead to an overhaul of an employment contract, which may have consequences on an associate’s tax liability, freedom to choose where they work, working hours and professional responsibilities.
Being classed as employed could bring some additional benefits such as maternity and paternity leave and holiday entitlement but the associate may lose the freedom to select their own work patterns.
The review may also have different implications depending on how much work is NHS or private. Anyone who is unsure of what to do next should take professional advice to make sure they are clear on what the review could mean for their income.
When will I find out more?
While the outcome of the review is still to be determined, we’d expect more details to come to light in the coming weeks and months. For regular updates, you can visit the British Dental Association’s website, or call us on 0800 0921990.
Michael is a senior area manager for dentists.
Wesleyan is a financial mutual which specialises in providing services to dentists, doctors, teachers and lawyers. For more information, visit www.wesleyan.co.uk
This article is provided for information only and not advice. No liability is accepted for any consequence arising from any action or decision taken or not taken resulting from the content of this article.