In addition to providing some useful tips for healthcare professionals, the Employment Appeal Tribunal also provided some useful clarification as to what will constitute a valid right of substitution in the case of Community Dental Centres Limited v Sultan-Darmon (2010).
Dr Sultan-Darmon worked as a dentist for Community Dental Centres Limited (“CDC”) on an independent consultancy basis between 2002 and 2009.
CDC had contracts with primary care trusts for dental services, some of which were ultimately provided by Dr Sultan-Darmon and other contractors holding a similar position to Dr Sultan-Darmon.
Factors pointing towards being treated as a disguised employee:
CDC provided Dr Sultan-Darmon with the following:
- Premises from which to work;
- Basic equipment;
- Support staff (such as receptionists and dental nurses);
- Introductions to patients requiring dental work; and
- Monthly targets of patients to be treated.
Dr Sultan-Darmon was required to work hours fixed by CDC, participate in an emergency on-call roster and was limited as to the amount of time he could take off.
Factors pointing towards being treated as an independent contractor
Whilst the above items can be detrimental to a claim of self-employment, there were a number of other factors that traditionally point towards being an independent consultant that outweighed them, namely:
a) A contract that accurately mirrored Dr Sultan-Darmon’s working practices;
b) Dr Sultan-Darmon was paid per patient / per unit of dental activity undertaken;
c) Dr Sultan-Darmon provided his own work-wear;
d) Liability for bad debts were split equally between Dr Sultan-Darmon and CDC;
e) Dr Sultan-Darmon could undertake private work at the premises as he liked (fees shared equally with CDC);
f) Dr Sultan-Darmon has to meet some of costs of the laboratory work generated from treating patients;
g) Dr Sultan-Darmon was required to indemnify CDC for costs incurred as a result of his negligence;
h) A substitution clause in the contract which had been exercised by other dentists (but not Dr Sultan-Darmon)
i) Dr Sultan-Darmon has his own insurances
Some useful factors for healthcare professionals
This case highlights the need to distinguish yourself from employees engaged by your client. Not receiving holiday pay or sickness benefits is not going to be enough to draw a distinction.
Some items that can be detrimental to employment status such as being on-call, having targets set by the client and working fixed hours can all be counter-balanced with factors that demonstrate your independence from your client as demonstrated by Dr Sultan-Darmon above.
Best advice to all healthcare professionals is to be paid per patient. Employees will usually be paid an hourly or daily rate or an annual salary. Being paid per patient will enable you to demonstrate that you bear some financial risk (the more patients you see, the more your company will earn and vice versa) and that there is also no mutuality of obligations between you and your client as you can pick and choose which patients you see and when.
Finally, having a contract that accurately mirrors your working practices is essential. Dr Sultan-Darmon’s contract stated that his status was “a self employed independent contractor dentist with full clinical freedom and accepting full clinical responsibility”. This sentence alone demonstrates 3 key IR35 factors:
i. It is intended for Dr Sultan-Darmon to be engaged as a self-employed contractor;
ii. Dr Sultan-Darmon is in control of his work and he is not subject to the control of the client (control is a key factor when deciding employment status);
iii. Dr Sultan-Darmon bears the financial risk for his mistakes. He is not covered by CDC or CDC’s insurances for clinical errors.
Clarifying the issue of substitution
There has been a string of cases in which the courts wrestled with the concept of substitution. This case has continued with this theme.
The Employment Appeal Tribunal in this case stated that a substitution clause is likely to be detrimental to a claim that someone is being treated as a disguised employee where:
- The clause is not limited to circumstances where you are unable or unwilling to perform the services (see the clause below which states “ill health, maternity leave or other causes”;
- You can demonstrate that it can be validly exercised. In this case, Dr Sultan-Darmon had never provided a substitute, but other contractors working alongside him had exercised the right which helped to demonstrate that it was a valid right of substitution;
- You retain some responsibility for the substitute rather than simply letting the client replace you (see the clause below which states “and shall be paid by you”).
In this case, the substitution clause read as follows:
“In the event of your failure (though ill-health, maternity leave or other causes excluding up to 30 days’ annual holiday allowance) to utilise the facilities for a continuous period of 5 days you shall make arrangements for the use of the facilities of a locum tenens acceptable to [CDC] and in the event of your failure to make such arrangements [CDC] shall have the authority to appoint a locum tenens if possible to act on your behalf who should be your servant or agent and shall be paid by you”.