We need to talk – employed or self employed?

self-employed dentistJane Lelean discusses the employment status of dentists and things associates need to stay aware of.

There is so much unhappiness and discontent within the dental profession and a resistance to change.

If you do what you have always done you will always get the same results.

Einstein is quoted as saying: ‘Insanity is doing the same thing over and over and expecting a different result.’

Change is essential

Dental recruitment, remuneration, and retention is a big issue at the moment. I don’t make any claims to be able to answer your questions or solve all your problems in one article.

I do hope to provoke thought and raise more questions. That way you’re in control of making the changes that enable you to create the change you want to see.

Historically, associates and hygienists are self-employed contractors often on a fixed percentage of gross.

This has become the pattern of how things are done. Few people question if this package suits them personally, their practice, or the profession as a whole.

My understanding is at dental school or during the FD year, employment status is not discussed. Consequently, young dentists don’t understand the difference between, employed, self-employed, or worker status. They are unaware of the benefits, risks, and responsibilities of each option.

Clinicians take their first job unquestioningly following the pattern of what has happened before. And so the cycle of sleep walking into self-employment starts.

On the other hand, principals are looking for associates. Few look at their business model and offer self-employment. They haven’t thought about alternative engagement packages. And they’re fearful of not recruiting if they offer a different package.

COVID pandemic

The pandemic has brought into focus the vulnerability of being self-employed; no output, no income.

CMP240The Chancellor of the Exchequer indicated, as he offered support packages to the self employed, that he would look at the tax situation and bring it in line with employees.

We can expect the tax benefits of a self-employed status to diminish or disappear.

With contract reform on the horizon, if there was ever a time when, as individuals, as a team, and as a profession, we need to look at team engagement, it is now.

The perfect time to explore alternative recruitment packages, have honest conversations about the economics of dental practice and the factors other than money that make a position attractive.

Employed status

Many fear that if they employ a clinician on a salary basis, they will twiddle their thumbs, and not bring in sufficient revenue to make the practice solvent.

Experience shows that when a practice has a shared vision, values, philosophy, and culture, all team members work hard and the practice is more than financially viable, it is successful.

Conversely, in a practice that is driven by money and output disregarding the wellbeing of team, and individuals are more likely to thumb twiddle.

Team members don’t leave a job they love, they leave a toxic environment.

Others are concerned that employment will mean a lower income.

Yes, take home wages are different if you are employed. The benefits of employment such as paid holiday, sick pay, paid maternity, pensions, and other costs to the practice are built into the whole remuneration package.

Right to work

Some self-employed team members assert their right to work the hours they choose by cancelling patients at short notice.

This concerns practice owners about the impact this has on the practice reputation. As well as the knock-on effect this has on attracting and retaining patients. And their ability to provide work for their associates.

Is addressing this issue and agreeing that patients are not moved or cancelled at short notice, exerting control, undermining the self-employed status? Or is it a professional discussion that demonstrates a culture of shared respect for the patients and practice?

The locum clause

HMRC is unequivocal about this. If you are self-employed you must have the ability to hire someone else to do your work. If you can’t, you are employed and should receive a salary.

Your contract must include this clause. And be in use.

One day HMRC may ask your principal to justify why specific team members, you, are not on their pay role.

HMRC is interested in congruity between actions and words. If you have a five-week break, been on maternity, long-term sick etc and not engaged a locum, you are undermining your self-employed status.

There are several aspects that the HMRC will use to assess if you are self-employed or not. And you and your principal have a responsibility to demonstrate that the agreement is justifiable and the intention is honest. Not a vehicle to avoid tax.

Which of these apply to you?

  • I am in business for myself, I am responsible for the success or failure of my self-employed business and I can make a loss or a profit
  • I can decide what work I do and when, where, or how to do it
  • When I want, I can hire someone else to do the work
  • I am responsible for fixing any unsatisfactory work in my own time
  • I agree with my employer a fixed price for my work. It doesn’t depend on how long the job takes to finish
  • My own money covers business assets, covers running costs, and provides tools and equipment for my work
  • I can work for more than one client.

As a self-employed contractor:

  • Does your practice tell you who you treat?
  • Do you buy equipment and materials?
  • And do you pay the practice for surgery rental and staffing costs when you are fixing unsatisfactory work?
  • Do you make good, failed treatment and patient relationships outside your normal hours of engagement?
  • Do you have full clinical freedom?
  • Can you organise your appointment book as you would like?

As a principal, would you like your self-employed team members to:

  • Be part of a high functioning team?
  • Wear a practice uniform?
  • Attend and participate in team meetings?
  • Discuss treatments and engage in in-house peer review?
  • Discuss their career development with regular achievement and planning reviews or appraisals?
  • Work hours that fit in with the practice?

Do you exert control over your contractors when considering the bigger picture of the practice. Or do you do this in true collaboration?

What are the risks of getting it wrong?

When the status of self-employed contractors is challenged, it most often occurs when:

  • HMRC do a random spot check
  • Your relationship with your contractor turns sour and they challenge their status retrospectively.

If a contractor is found to be employed rather than self-employed, the HMRC will want to collect the back tax and NI payments, possibly going back seven years.

They may also have holiday pay, sick pay, maternity pay, pension contributions due depending on the individual case.

It is most likely the principal and practice will bear this financial burden. Could you afford to pay this and the practice stay solvent?

If you are a clinician or a principal, I don’t know what the correct remuneration package for you is. It will vary from practice to practice and clinician to clinician.

I do know that you do need to think about it.

Action points

  • Think and be conscious about the decisions you make. Evaluate the benefits, risks, and potential consequences
  • Be open to change
  • Have honest discussions with your contractors and your principals about the validity of self-employed status and other options
  • Discuss how you can strengthen your self employment claim, if that is your preferred option
  • Evaluate if an employee relationship is a better option for you
  • Ensure your manager fully understands how their actions may impact on contractor’s status
  • Consider an agreement as you would a treatment plan. Make sure you understand every clause and only sign it when you are happy that you have ‘informed consent’
  • Speak to employment experts. Get them to check your contracts before signing. Pay for their expertise
  • If you are self-employed get adequate locum protection insurance.

Self-employed, employed worker – decide this before you consider the appropriate remuneration package. Such as fixed percentage, sliding scale, basic salary, and commission.

It goes without saying, these are discussions and decisions that you can make in the light of full analysis of the monthly practice management accounts.


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