Is there a doctor on the payroll?

There is an increasing trend towards employment of doctors in the private hospital sector, marking a shift away from traditional models of self-employment. James

James Rhodes, partner at international law firm DAC Beachcroft LLP

Rhodes, partner at international law firm, DAC Beachcroft LLP, takes a look at those factors and the employment law implications for organisations in the sector.

In recent years, more and more private healthcare providers in the UK have been reviewing how they engage with their doctors, with the emergence of a trend away from traditional self-employed, fee-for-service models towards greater use of salaried employment. This follows a similar shift in the US.
There are a number of factors driving this including, in no particular order, the following:

Commercial drivers – the use of employed, rather than self-employed, doctors gives hospitals scope to exercise greater control over such issues as cost, working hours, quality, working for competitors etc which in turn can give a competitive edge. Seeking to impose such controls on self-employed doctors, however, exposes organisations to a risk of inadvertently creating unbudgeted tax and/or employment law liabilities.
Tax issues – over the last few years, HMRC has cracked down on tax avoidance in the NHS with a number of measures that have affected self-employed doctors. These include restrictions on off-payroll engagements and so-called IR35 arrangements (those which typically involve a doctor offering his/her services via an intermediary such as a personal service company or an agency). Although these measures have so far been directed at the NHS, the Chancellor announced in the November 2017 budget that the government intends to consult on extending the IR35 crackdown to the private sector. Further, private sector organisations partnering with NHS providers are likely to face greater exposure to the stricter regime which currently applies to the public sector.
Demographics – younger doctors are more likely to favour employment over self-employment as the former is likely to give greater security and consistency of working hours as well as providing access to benefits such as paid holiday and family-related leave, even if it comes at a cost of loss of autonomy. The cost and administrative burden of establishing an independent practice can also be off-putting in an increasingly regulated environment.
Regulatory issues – increased regulatory burdens on healthcare providers require a degree of control over their personnel which is not always easy to reconcile with a self-employed model.
Employment law developments – recent employment law decisions, both domestic and European, have encroached further on the concept of what it is to be genuinely self-employed. Although these decisions have been mainly concerned with the so-called gig economy, they have potentially wider implications for those who rely on the services of self-employed persons in all sectors.

The implications

For these reasons, private sector organisations (if they are not doing so already) should be reviewing the arrangements they have with their doctors to ensure that they are fit for purpose both in terms of current needs but also likely future developments, such as possible IR35 restrictions and the changing preferences of the workforce.
Moving towards greater use of employed doctors does of course give rise to a number of employment law implications and care will need to be taken to avoid triggering potential historic liabilities. Salaried doctors will gain access to the full range of protections and rights afforded to both employees and workers, which they would not previously have enjoyed in self-employment. Principal amongst those rights are:
Paid holidays
Statutory maternity, paternity and adoption leave
Restrictions on working hours and entitlements to minimum periods of rest
Protection against unlawful discrimination
Whistle-blowing protection
The right not to be unfairly dismissed and the right to receive a redundancy payment (each after two years’ continuous service).

Implementation

In implementing any new model of engagement, one of the challenges will be the retention of existing doctors, some of whom will have well-established practices which they will be reluctant to give up in return for what they may regard as being the constraints of employment. Contingency plans will need to be made for those who are unwilling to engage on a different basis.
Whatever new models are adopted, it will be important to engage with the affected doctors and sell to them the benefits of what is being proposed in order to smooth the transition and reduce the scope for dispute and challenge.
Finally, contractual and policy documentation will be to be reviewed and refreshed to adequately reflect new working practices. Organisations may also need to review their revalidation arrangements with some doctors who may previously have been revalidated elsewhere.