Locum GPs: potential entitlement to holiday pay
Community Based Care Health v Narayan [02.09.19]
In a judgment that could potentially have wide ranging and expensive implications for organisations that engage locum GPs, the Employment Appeal Tribunal (EAT) has decided that a locum GP was a “worker” under the Employment Rights Act 1996 and not a self-employed contractor.
Community Based Care Health Ltd (CBCH) provide out of hours GP services using GPs from an approved list and in accordance with the NHS standard contract for out-of-hours services.
CBCH engaged Dr Reshma Narayan to work on the service on a self-employed basis.
Between 2015 and 2017, Dr Narayan worked regular shifts for CBCH on a 12-week rota following a set shift pattern. CBCH was not obliged to offer Dr Narayan any work nor was she obliged to accept. Dr Narayan provided her own equipment and indemnity insurance.
Dr Narayan could take holiday whenever she wanted as long as she informed CBCH in advance and Dr Narayan did not need CBCH’s permission to perform work for other organisations. However, such holiday was unpaid by CBCH on the basis that she was an independent contractor and not a worker or employee, and therefore not entitled to statutory paid holiday under the Working Time Regulations, which only applies to workers and employees.
In 2015, Dr Narayan set up her own limited company. CBCH made payments directly to the company’s bank account and Dr Narayan accounted for income tax and national insurance through the company.
Under the NHS standard contract, CBCH was obliged to regularly check that its GPs were competent and appropriately qualified and to satisfy the NHS that this was the case through the provision of audits of the GPs work and of the services provided.
In November 2016 an issue arose over certain telephone advice Dr Narayan had given. As a consequence of that issue and a later allegation that she had unjustifiably swapped duties without informing CBCH and on short notice, CBCH wrote to Dr Narayan in February 2017 informing her that it would no longer be offering her further work.
Dr Narayan brought a claim in the Employment Tribunal against CBCH for a payment in respect of accrued unpaid holiday pay. In England, Wales and Scotland, there is a two year backstop period on claims for holiday pay. This means that claimants can only recover deductions for holiday pay going back two years from the date that the claim is submitted. It is worth noting that there is no such limit on claims in Northern Ireland.
Both employees and workers have the statutory right to receive holiday pay, by virtue of the Working Time Regulations 1998 (WTR) and Employment Rights Act 1996 (ERA). Therefore, in order to succeed with the claim, Dr Narayan needed to establish that she had actually been engaged as either an employee or worker.
CBCH’s case was that they had engaged Dr Narayan on a self-employed basis and therefore she had no right to paid holiday under the WTR as she was neither a worker or employee.
However, neither the Employment Tribunal or the EAT agreed, and they found that Dr Narayan was in fact a worker pursuant to the ERA, for these key reasons:
- Dr Narayan was required to work personally for CBCH and could not send a substitute in her place – the work had to be carried out by another GP from CBCH’s approved list.
- Dr Narayan worked regular shifts for CBCH over many years.
CBCH also argued that it was actually Dr Narayan’s company that was providing the service, rather than herself, and therefore she could not have been an employee or worker. The EAT did not accept this and held that Dr Narayan was seeing patients and providing the services personally herself. The obligation on CBCH to check her particular competence and qualifications as an individual doctor (in accordance with the NHS standard contract) defeated this argument.
As a result of the decision, Dr Narayan was deemed a worker entitled to statutory paid holidays under the WTR, and therefore entitled to backdated holiday pay.
Assessing the employment status of individuals can be a notoriously difficult and uncertain area. The employment status of an individual is important for a number of reasons. Certain important legal rights only apply if an individual is an employee, such as the right to claim unfair dismissal, a statutory redundancy payment, and rights under the Transfer of Undertakings (Protection of Employment) Regulations 2006. Other rights apply to both workers and employees, but not to the genuinely self-employed, including protection under the Equality Act, the right to paid holidays and statutory sick pay, and the right to be auto-enrolled into a pension scheme.
Unfortunately, there is no clear legal definition of ‘employee’, ‘worker’ or ‘self-employed individual’, nor can organisations simply rely on what is stated in the contract between the parties. The Employment Tribunal will go behind what is recorded in writing and look at the reality of the working relationship on the ground.
Given the absence of a clear legal definition, the decision as to the employment status of an individual will be a matter of fact and law in the hands of the Employment Tribunal. Such decision will be dependent on the circumstances of each case and consideration of a number of factors when assessing an individual’s employment status. Some examples include whether:
- the individual has to perform the work personally or can genuinely and realistically send a substitute
- the employer has control over the individual’s work and directs when, where and how their work is carried out and what rules they are subject to
- the individual can set their own work pattern and working hours
- the individual is embedded with and integrated into the employer’s organisation
- the individual provides their own equipment to carry out the work.
Whilst a worker has fewer employment rights than an employee, they both have the right to receive pay whilst on holiday from work (unlike a self-employed individual) and the right to receive the national minimum wage, amongst other rights. They are also both legally protected if they make a “protected disclosure” (i.e. whistleblowing).
The decision in Narayan could potentially create a significant holiday pay liability for organisations providing GP services through locums and a review of existing arrangements with locum doctors may be prudent.