Worker Status for Associates – April 2023 update

HMRC has for many years accepted that associate dentists are almost always self-employed, and their guidance reflected this.

As of April 2023, this guidance has been withdrawn, which has created some confusion and uncertainty in the industry.

After consulting our solicitors and scrutinising all the information available to us, we believe that the withdrawal of this old guidance has no impact on the self-employed status for most associate dentists and our current agreement templates continue to be fit for purpose. HMRC have commented that this is a change to their guidance, not a change to the self-employment status of associate dentists.

To reiterate, there has been no major change in rules or regulations, and the way associates are taxed is not changing. However, the way the dental industry manages its relationships with associates is being recognised increasingly often as more of an employer/employee relationship unintentionally.

Why is there confusion in the Dental Industry?

What can make this topic more confusing for all involved is that usually, both the associate and the practice are happy for the associate to be considered self-employed. Unfortunately, in nearly every single claim brought by associates, as with many claims that end up in court, they arise in circumstances which are unforeseen when a contract is signed. The way the Employment Tribunals assess the status is by reviewing the reality of the arrangements the parties have and the level of freedom an associate is awarded.

There are three main types of employment for employment law purposes:

• Employee
• Worker
• Self-Employed

Most dental associates fall into the self-employed category. Increasingly more cases involving claims brought by dental associates against their practices have emerged in recent years which has caused the law regarding the status of associates to be examined and begin evolving. It is judgment from recent case law that provides us with guidance as to what factors affect the status of an associate. Before looking at that in more detail, it may be helpful to consider the non-industry specific advice which ACAS provide with regard to the qualities that make a person self-employed for legal purposes:

• There is no obligation to perform personal service
• There is no mutuality of obligation. They are carrying out a business and the other party is the customer (e.g., the practice is a customer)
• The employer/customer (or, practice, in this case) does not exert a high level of control over the individual
• The individual is not integrated into the ‘employer’s’ business
• The individual actively markets their own services
• The individual is in business for themselves, and they are responsible for the success of their business (they can make a loss or a profit).
• The individual invoices for their fees
• The individual has autonomy over the work they do- they can decide what work they do, when they do it, where and how to do it, subject to terms with any customer/practice)
• They can hire someone else to do their work
• They are responsible for fixing unsatisfactory work
• They can work for more than one customer(/practice) at a time HMRC may challenge employment status if it finds a discrepancy between your contract/agreement and the nature of your working relationship.
  

Personal Service

The key element that the courts have outlined in recent years, and which are relevant to dental associate status is that the right to substitute must be ‘unfettered’ for the associate to be considered self-employed.

They go on to further define circumstances in which it is likely that the right to substitute will be considered fettered. If the right of substitution is conditional i.e. there are only specified circumstances when an associate can obtain a locum to perform their services such as when they are absent for certain period of time or when they are ill, then the right is fettered.

The circumstances provided by the courts by way of example are:

• if an associate is only allowed to obtain a locum/ replacement when they are unable to (e.g. when ill or otherwise incapacitated), then that is not deemed to accord with personal service, and they are likely to be deemed a worker
• If the only requirement is that the associate must show that the locum is suitably qualified, then that will not be considered to have fettered the right and they can still be considered self-employed.
• if the associate can only obtain a locum where the practice must consent to the locum and in theory the practice holds the right to withhold that consent other than on grounds of not having the required qualification, then the right is fettered, and the associate likely to
  be considered a worker
• Where previously tribunals tended to ask only whether there had to be personal service by the associate of the treatment. If their practice allowed them to replace themselves with a locum, then the answer was no, and they could be deemed self employed as a result

The agreement templates in iComply do outline when the locum clause may come into effect for the purpose of operational practice planning, for example the minimum use period and number of non-clinical days, but there does need to be flexibility and freedom surrounding this, to ensure an associate can maintain their self-employed status.

More recently, the tribunals take a much more holistic view of the arrangements. They will ask questions such as:

• Do the patients of the associate probably take the view that they have a contract with the practice or with their individual dentist?
• Does the practice arrange for replacement services if the associate cannot perform them, even if it states they should arrange for a locum themselves in the contract?
• Does the practice exert a lot of control the way in which the associate works such as timings and how much?

Does the practice exert a lot of control the way in which the associate works such as timings and how much?

If the day to day running of the practice means that the average patient is likely to think that they have agreement with the practice and not the individual dentist, then the courts will lean more towards giving the associate worker status.

To summarise there has been no major change in rules or regulations and the way associates are taxed is not changing and you can continue to use the current iComply agreements. However, the way the dental industry manages its relationships with associates is being recognised increasingly often as more of an employer/employee relationship unintentionally.

What actions are required?

Principal Dentists and practice owners are advised to review contracts/agreements for all selfemployed workers, and to use a standard agreement, such as those available on iComply. Ensure each contract reflects the true nature of the engagement and relationship.

Associate dentists, hygienists and other dental therapists should also review their contracts/agreements.

The Check Employment Status for Tax service can help determine if the off payroll working rules apply.

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