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Tax Treatments for Locums

I run a GP surgery which has recently become much busier and so I’m thinking of engaging a locum to help out with the extra work. Can you advise me as to the correct tax treatment for payments I make to this locum?

In situations like yours, the determining factor as to the tax treatment of payments to your locum will be whether the engagement fits the definition of employment or self-employment. When making this decision, you should be guided by the “Code of Practice for Determining Employment or Self-Employment Status of Individuals”. In most cases it will be clear whether an individual is self-employed or an employee, but the Code aims to bring clarity to those instances where some doubt exists. It can be viewed in full on several websites, including .

The Code doesn’t promote a “one size fits all” approach, but instead maintains that each situation should be reviewed individually, taking into account all conditions and factors of the working relationship. Under the Code, the essential test as to employment or self-employment is whether the individual performing the work does so “as a person or business in their own account”.

To help determine this, the Code details a number of issues that should be considered. These include whether the individual is under the control of someone who specifies how, when and where work must be carried out. Are they exposed to any personal financial risk when carrying out the job? Are they entitled to overtime, sick leave or to receive expense payments for travel or subsistence? Do they have a say in agreeing a price for the job? These factors, together with several others outlined in the Code, will give a good indication of an individual’s employment status.

In the case of a locum, a key consideration will be whether they are engaged under a contract of service (i.e. an employee) or a contract for service (i.e. self-employed). It’s important to note that a contract including statements such as “Dr. X is a self-employed doctor and not an employee of this practice” isn’t sufficient from a Revenue point of view to determine the employment status of a locum. Revenue will consider the entire working situation, not just the terms of any contract.

If, after examining the facts, the locum is determined to be an employee, all payments made to them under the engagement should be subject to deductions at source under the PAYE system. If however, they are deemed to be self-employed, then they must pay tax under the Self-Assessment pay and file system.

Your locum may inform you that they don’t wish to work under the PAYE system and will only take on the engagement as a self-employed contractor. However, if after reviewing  the situation, Revenue decide that they meet the criteria for employment, the locum can’t choose to simply opt out of paying tax under the PAYE system, nor can you as their employer ignore your PAYE and PRSI obligations.

 If after referring to the Code, you’re still unsure as to whether your locum will be considered self-employed or an employee, you can apply to your local Revenue Office or the Scope section of the Department of Social and Family Affairs for further assistance. Contact details can be found within the Code of Practice or a qualified Tax Advisor.