Without prejudice, the IHPA hereby gives permission to all/any NHS Trusts (only) to disclose, upon receipt of a valid Freedom of Information Act request, the contents of the Direct Engagement VAT Mitigation Letter sent to their Trust by the IHPA in May 2018 and, for the purposes of the Freedom of Information Act 2000 only, IHPA waives any commercial interest, breach of confidence, or legal privilege considerations in respect of this document .
Of unlawful deduction's of Class 1 secondary NICs & apprenticeship levy, & lack of 'employment' rights for 'deemed employees' in the NHS (they really don't have any in some models);
The message is beginning to filter through to the right people and through the appropriate channels- in a fair and measured manner. More to follow after other meetings going forward.
There is hope for contractors under #FalseEmployment and paying both their employee and employer taxes- watch this space people and get on board to sort out this mess and injustice.
All that is required is proper assessment by appropriately qualified professionals & for abusive models to stop!
We set up the locum doctors union on the 25th of March 2017 to defend the right of the locum doctors.
On the 27th of February, Jim Mackey wrote a letter to all the trust and said – ‘As a result of these new rules, we anticipate that providers will need to ensure all locum, agency and bank staff are subject to PAYE and on payroll from 1 April 2017. He further stated that Providers are strongly encouraged to ensure that all staff are contractually paid via PAYE mechanisms. Where this is not the case, trusts should seek approval from NHS Improvement to pay via alternative means’.
This was wrong and NHSI acknowledged this in their surrender letter to our legal counsel.
The NHS authority is thus under a statutory duty to determine, whether or not if the services were provided under a contract directly between the client and the locum doctor, the worker would be regarded for income tax purposes as an employee of the client or the holder of an office under the client, or not as the case may be. A specific duty is thus created by the new legislation, which is one that requires the public authority in question to reach a conclusion as to whether or not the condition is satisfied in each specific case.
It is obvious that the NHSI acted irrationally in the above regard. Mr Mackey’s purported decision that all locums fall within the new IR35 represent a wholesale violation of its statutory duty. It does not exist within the ambit of their statutory framework.
We sought an interim injunction and a quashing order to Jim Mackey decision. NHSI responded on 19th of may, 2017 but rather ambiguously.
On the 8th of May, we instructed Alex Pebbles of Duncan Lewis solicitors and Michael Paulin with the involvement of a QC – Owain Thomas to challenge the decision of NHSI improvement to apply the IR35 scheme to all locum doctors and allied health workers
On May 26th, 2017, the NHSI granted us concessions but did not notify the Trusts. They however changed their guidance.
On May 27th, 2017, we issued instructions to our legal team to accept the new guidance in settlement of our proposed claim for judicial review. we accepted the NHSI concession and surrender.
In light of the material concession, we agree with NHSI that a claim for judicial review was unnecessary at the time but it can be brought back to the table because we reserve the right with respect to any purported and adverse decision taken by NHS providers.
However, NHSI did not communicate their concession to the trusts and hence this line of action
We have decided to inform all Trusts through our legal counsel about the NSHI concession and we are prepared to send out that concession letter if need be. We have released this guidance and is being sent out to all trust in the UK.
Dr Ben Itsuokor
The unlawful imposition of IR35 rules without recourse to challenge or consultation was met with mixed views. I am sure independent health professionals gasp in astonishment when NHSI state that capping agency spend provides “fairness to substantive staff“.
Agency and Independent health professionals do not enjoy any of the benefits that their substantive colleagues have
- Sick pay
- Paid annual leave
- Paid maternity leave
- Paid appraisal and training
- Death in service benefits
- Access to NHS pension
- No recourse to employee protection
and being taxed as an employee means that locum doctors will be put in positions where they have to fund all their work related expenses out of their own pocket.
This statement from an independent doctor captures the mood in the health service.
“Independent Doctors support their substantive colleagues, we’re all exposed to the same workplace pressures. More of them are being forced to strike out as Locums because pay and working conditions for substantive colleagues are intolerable. Rate caps won’t solve our substantive colleagues problems but rather deny them relief worker help – in turn making conditions worse and driving rates at which people will take extra hours up, not down. Our rates are governed by workplace environment, and what is driving them up is how horrendous the working conditions are. We will continue to advocate for our substantive colleagues to have better pay and conditions and support those who find the conditions of substantive work so intolerable that they strike out on their own.”
There has been a retention crisis in the NHS which has been made worse by the Secretary of State pushing the 7 day working agenda despite reservations from all corners. This led to the junior doctors contract disputes of 2017, the first full scale walkout of doctors in decades. Morale within the NHS is at an all time low, a decline that has been evident for several years. The root causes of the disaffection remains untackled yet, locum doctors and independent agency workers are seen as the easy scapegoats to apportion the blame on.
Locum doctors and nurses succeed in overturning unfair tax rule
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.
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”.
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Life as a locum doctor through the eyes a locum doctor
When doctors complete their training, they are under a lot of pressure to land their first “real job” quickly. Student loan deferments end shortly after training, and whopping debt faces many of them.
But choosing a job that is a good long-term fit can be difficult, and gaining a broader exposure to the wide variety of options is key to success. That’s why “try before you buy” can be an excellent strategy for young physicians.
How Locum Placement Works
Locum agencies work with healthcare organizations and practice locations across the country to offer a variety of temporary assignments for physicians.
These agencies negotiate your salary and call schedule. They are not covering the costs of logists, travel and accommodations. Once the doctor and the facility agree to terms, the physician simply arrives on the required date(s) and takes on the responsibilities requested. It’s a commitment arrangement that pays an hourly or daily rate for work.
Locum providers are given the convenient option to receive direct deposits to their bank accounts at regular intervals. Physicians can travel as broadly as they like for assignments.
Taking Locum Jobs Helps Care Providers Grow
I enjoyed “living la vida locum” for 3years now. That’s a long time to be living out of a suitcase, and I doubt that most of my peers would want to do it for that long of a stretch. But an amazing thing happened during those years: With each new hospital experience, I gained insight and knowledge about my specialty. By rubbing elbows and networking with a wide swath of patients and experts across the country, I became a sought-after physician in my own right.
I experienced different ways of delivering healthcare — from critical access hospitals to bustling academic centers. I learned about best practices and creative solutions that administrators and clinical staff had discovered to improve care quality, given the limitations and restrictions of public services.
When I will eventually decide that I need to be “hired”, I believe I will be armed with creative ideas and a wealth of experience to draw from. I would have been seen as a highly seasoned physician who had been exposed to the widest variety of patient populations and practice styles. I would know all about the unique struggles, successes and solutions. I would then leverage that experience to drive change at my work place, and I will be virtually unfazed by new problems and challenges.
The career value of locum doctors work is extraordinary. Gives us the time to look around us at each assignment. To learn what works and what doesn’t work, and to file it away for future reference.
Like a bumblebee cross-pollinating hospital or medical practice “flowers,” locum doctors have the potential to drive change like no one else. When you’ve seen it all, your insights become invaluable, and you gain the maturity to know when a full-time job is the right cultural fit. Choosing the right job, on your terms and in your time, is the key to finding happiness in healthcare.
Many of you may have read a piece about locums by Shaun Lintern for the Health Service Journal. Well I have responded to his article by sending him the following email; to which he has responded. Slowly but surely, we are making people aware. The enlightenment has just begun and there is a long road ahead.
It is with regret that we have to address the media at a time when we should all be concentrating on improving the care that our community receives from our treasured and highly essential National Health Service. We are multiple groups of agency and locum healthcare workers who have sought to join hearts and minds, as it has become abundantly clear that we are under constant attack from the powers that be. Now, we use the term “powers that be” as we are unclear as to which body is responsible for all the spurious, malicious and downright unacceptable claims.
All this kerfuffle has been caused by the ill-advised guidance issued by HMRC to public bodies, including the NHS. Let’s be absolutely clear about this next point- we, as locums/agency wholly and unreservedly support HMRC in its bid to collect unpaid taxes from tax avoidance schemes and from tax evasion too! Unfortunately, it is our belief, and many other stakeholders too, that HMRC has hurriedly issued this guidance to ill-equipped and under qualified public bodies, without the requisite consultation process and impact assessment tests- indeed these very public bodies believe this to be the case too. It has subsequently become apparent too, that certain elements in these public bodies have sought to use this to effect the labour market in ways that may benefit them (or so they think) without considering the fallout that this might bring, and the ultimate negative impact on the very reason we are all in this- the NHS service users. Management in the NHS has taken some very brush and ill-thought out decisions since the release of the guidance- one would be forgiven for thinking that these public bodies were in cahoots with HMRC as the timing of all these poor decisions is too coincidental to be believed. It is accepted all round that HMRC’s primary role is to collect taxes and administer other regulatory roles in relation to the treasury’s fiscal activities; however, it seems that their role has been highly politicised in such a way as to have a direct effect on the labour market and to lower wages across the board- not just for agency staff, but for substantive NHS employees too.
This is evidenced by the approach of the National Health Service Improvement (NHSI) and its CEO, Jim Mackey. Indeed there have been communiques to NHS Trust CEOs informing them that these measures would inevitably “push all agency workers back into substantive employment” and lower the spend of the NHS in general. Nothing wrong with reducing the costs of the NHS, but it has to be done in such a way as not to adversely affect patient care. In fact, NHS Trusts have been told to be steadfast in the face of growing staff disenfranchisement, both agency and substantive, whilst they weather the storm i.e. let waiting lists shoot up, close whole departments, and at worst hospitals. NHSI actually believe that this approach would somehow fix all the staffing problems of the NHS- this shows a clear lack of reasoned, educated and evidence-based thinking. To further reiterate the short-sightedness of this body, their CEO had issued guidance to all Trusts to the effect that all substantive staff were no longer allowed to take on extra shifts within the NHS at agency rates? They subsequently received feedback from Trusts and bodies like the Royal College of Nursing (RCN) telling them that this was simply unworkable- and of course they withdrew. One would think that such a body would have highly qualified and experienced people to stop them from making such brush, short-sighted and moronic decisions.
This idea that agency workers are milking the system is completely and utterly false! Obviously there will be one or two ridiculous examples banded about as in any industry; to brush everyone with the same brush is simply wrong and an inaccurate reflection of reality. Just as an example, a top of band 7 nurse will earn £20.95 per hour whereas the agency worker will earn a maximum of £27 per hour. Likewise, a consultant would earn £48.64 per hour, whilst the locum consultant would earn £70 per hour. NHSI, through its previous constructs, Monitor and the Trust Development Authority (TDA) put a cap on what agency workers could be paid- this was pegged at 55% (for the agency, not the worker) above the maximum Agenda for Change (AfC) rate paid to substantive staff. The reasoning for this was that this was adequate recompense for the lack of statutory provisions amongst agency staff i.e. agency staff do NOT get sick leave/pay, holiday pay, pension etc., and above all, the luxury of job security- they have to arrange and fund all these provisions themselves. Coupled with this, agency staff fill in the massive gaps left by the ever increasing sickness rate in the NHS- not caused by the agency staff by the way, but by the ridiculous amount of beauracracy and administrative work lumbered on clinical staff by the top heavy management structures in the NHS. In fact, there is a reasonable argument to say that agency staff are actually cheaper than substantive staff at the end of the day. The obvious question in most people’s minds would be: why would anyone want to work as agency if it is not purely for “ridiculous” pay rates? Simple really- this is a lifestyle choice not purely based on money. This gives the agency workers the convenience to have a proper home-work life balance and actually concentrate on the important aspect of the job- the patient!
Back to the latest HMRC guidance that is the bone of contention; it was designed to target off-payroll workers that were “disguised” as self-employed people. The trouble with this is that there is a theorising of contract law here in order to favour the tax authorities i.e. an absurd situation where one is given a contract for services that clearly shows NO intention to create legal relations to the effect of employee/employer, yet the courts construe it as such, just so you can be taxed at a premium rate. Even worse is the fact that you are not entitled to any employment rights or entitlements if you are classed as an employee for tax purposes. As the courts state, “employment tax laws and employment rights have no direct link”. To be fair to HMRC, the guidance requires all public bodies to assess each contract on a case by case basis with reasonable care, and they have provided an online tool, the Employment Status Service (ESS) to assist with this (deemed not fit for purpose by stakeholders and inadequate for employment status determination by the courts); however, the NHS, under specific direction from NHSI, has sought to class all agency workers/locums as being “employees” for tax purposes- contrary to HMRC’s guidance by the way. Even more abhorrent is the fact that they are lowering agency rates even further in order to pay the employer National Insurance Contributions (NICs). To be clear, if one is classed as an “employee” for tax purposes, they can be paid into their Personal Service Company (PSC), or via PAYE or umbrella company- this is per the guidance of HMRC. It is the responsibility of the public body to pay employer NICs whereas the “employee” pays employee NICs and income tax. However, the agency worker is still paying both employer and employee NICs in the form of a rate cut if under PAYE schemes! With umbrella schemes, it is pretty straight forward as everybody knows that the “employee pays both- ironically the umbrella company model is frowned upon by HMRC and has been the subject of recent press vilification! To put this into perspective, the agency worker now pays:
- 13.8% of gross as employer NIC
- 7-12% of gross as employee NIC
- Then whatever tax band on remaining income
There have also been claims that agency workers/locums are demanding up to 50% higher rates in order to work under this new regime-again false. It is actually Trusts that are offering this in order to tempt locums to work under this new regime- and locums are refusing this. They simply want to continue working as self-employed professionals as they rightly are- not as virtual employees with virtual employers- whist also paying double NICs. So what better strategy than to falsely claim that it is the locums that are pushing for this! Naturally though, there will be others that will justifiably try to do this as adequate recompense for been made to pay more tax than they are required to in law!
Traditionally, agency workers have been quite flexible in travelling to hospitals that are quite a distance from their homes, and they have been able to off-set these on their tax liabilities as business expenses. This has been stopped as they are now been “blanketed” as employees by the NHS, and as such, it would no longer be financially viable for them to still travel in order to cover all these vacant shifts. Somebody asked the question- why can MPs still claim these and we cannot? Are MPs self-employed and have they been assessed with the ESS?
Anyway, certain elements within these public bodies have false labelled all agency workers/locums as tax avoiders! This is a very serious and unsubstantiated claim- in any professional demography, whether it is healthcare, finance, the media, politicians etc., there will always be a few who fall foul of the rules. Indeed, a number of politicians behind this guidance have been using similar constructs to streamline their tax activities- or maybe just to get a better home-work balance like the rest of us? It is high time the public hear the other side of the story. Over the last year, agency workers/locums have seen their fees cut by half, and now they are getting hit again rather unjustly through this so-called disguised self-employment- absolutely ridiculous. Surely in a modern, democratic and free market society, everybody should be free to choose how they work, free from any government interference or undue pressure from any public body or otherwise- unless of course they are involved in illegal acts! This is clearly an ill-conceived attempt to destroy the self-employment industry by targeting the weakest people in the chain. Might we also add that it is a fallacy to suggest that the agency spend is the cause of the NHS’s financial woes? Anyway, this is an argument for another day. For now, we just had to set the record straight:
I. Agency workers/locums are NOT all tax dodgers as suggested. The majority pay their taxes like everybody else
II. Agency workers/locums are NOT milking the NHS as claimed. They were earning a reasonable amount that made up for the lack of employment rights and entitlements- until the Monitor and TDA caps of course
III. Agency workers/locums are NOT detached from patients as claimed. In fact, the majority are people with unparalleled experience, and have in fact brought a lot to the department they locum in
IV. Agency workers/locums have the interests of the NHS and patients at heart just like the substantive staff.
Agency Workers and Locums
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
The Locum Doctors Union (LDU) is the voice of self-employed doctors who provide services under short-term contracts to the NHS and other healthcare organisations in the UK. The LDU is a newly formed and apolitical professional organisation, and an independent trade association. It represents locum junior and senior doctors from all branches of medicine across the UK helping them deliver the highest standards of care.