The current pressures on veterinary practices, including the skills shortage, have seen an ever-increasing use of locum arrangements. While locum arrangements are a long-established and commonplace solution to provide cover for staff holidays and sickness absences, a growing number of practices are engaging locums more regularly to cover vacant posts.
Despite providing a quick and flexible solution, practices should always take care when embarking on a locum arrangement to ensure clear, unambiguous terms and contractual safeguards for both parties and to guard against an unplanned employment status determination. Prevention is always better than cure, so it is important to consider these matters ahead of any locum engagement to ensure that it correctly portrays the nature of the proposed engagement (ie a contractor or hiring the services of a self-employed locum).
Despite providing a quick and flexible solution, practices should always take care when embarking on a locum arrangement to ensure clear, unambiguous terms and contractual safeguards for both parties
The locum practice agreement consists of two parts:
- A work schedule, which clearly sets out dates, times, locations and services to be provided as well as the various fees and how they will be paid. This will be the main area of negotiation, so both parties should ensure they are comfortable with the work schedule before signing it and before signing the terms and conditions
- The terms and conditions. These are valid in conjunction with a completed work schedule, which together will form a legal contract. Regular review and update of the terms and conditions where necessary is always advised
Key provisions
The key provisions recommended for any locum agreement to contain, at a minimum, are as follows.
1) Duration
Duration is the start and end date of the engagement, to be confirmed where possible. This is an important element of a “locum” engagement as it helps mitigate the risk that indefinite-term agreements can pose. While employment contracts are generally ongoing unless explicitly stated to be fixed term, contractor agreements, in comparison, expire upon completion of the job or assignment and should make their end date clear.
2) Status
A status clause that expressly sets out the working status of the locum as a self-employed consultant and not an employee should be included within the agreement to reflect the intended legal relationship between the parties. While this does not defeat any later challenge, it does evidence the intention of the parties at the time of entering the contractual relationship.
A status clause that expressly sets out the working status of the locum as a self-employed consultant and not an employee should be included within the agreement
3) Termination
It is key to expressly state in the agreement how it can be terminated. This could be for cause and served by either party, by virtue of a breach of terms or non-performance, or alternatively for convenience, which can be by mutual agreement of both parties. The amount of notice required, the obligation(s) of both parties on termination (eg return of equipment by the locum) and how disputes will be resolved on or after termination should be stated. Death or incapacitation of the locum may also be covered, allowing the contracting party to be able to terminate the agreement with immediate effect, without any further payments other than liability for amounts accrued before the termination date. This would prevent the contract from becoming frustrated and void.
4) Substitution clause
A substitution clause permits the locum to provide, at their own expense, a substitute to carry out services in their place. This is a key provision as caselaw suggests that a wider power to appoint a substitute of the locum’s own choosing, subject to suitability requirements, is a useful indicator for helping to determine self-employed status, especially where the right is not subject to limits. It is, therefore, helpful to allow for the appointment of substitutes at any time, not simply when the locum is unable to perform. Actual usage of a substitute demonstrates that the arrangement is genuine and not simply paying lip service to bolster any employment status challenge defence.
Caselaw suggests that a wider power to appoint a substitute of the locum’s own choosing, subject to suitability requirements, is a useful indicator for helping to determine self-employed status
5) National insurance and tax payment
When it comes to national insurance (NI) and tax payment, the agreement should clearly and expressly state that the locum is undertaking the work in a self-employed capacity and undertakes to meet their own NI contributions, income tax and other taxes arising from the income.
6) Non-solicitation
The non-solicitation clause is a type of restrictive covenant that seeks to stop the locum from influencing, attempting to persuade or encouraging the clients that they have been introduced to during their course of engagement away from the business. It also seeks to stop the locum from leaving with these clients and taking their business elsewhere.
However, you must take care when using these types of clauses as they are deemed to be one of the most onerous restrictive covenants, particularly if seeking to enforce on a self-employed person. The scope of such restrictions should be considered carefully, for example to ensure they do not seek to enforce for an excessive length of time, are not overly restrictive in that specific industry or do not seek to enforce this across too large a geographical area. Overly restrictive non-solicitation clauses may be deemed unreasonable and, therefore, unenforceable unless the client practice can genuinely demonstrate that it is to protect a legitimate business interest.
7) Payment terms
Payment terms should be explicitly specified and outlined in the locum agreement. Invoicing and payment, the method of payment, the frequency of payment, how travel or mileage and miscellaneous expenses will be dealt with (ie can the locum expense these or are they personally responsible for these costs) and exactly how the payment will be structured would all need to be covered within the agreement.
8) Obligations
The agreement should clearly set out the contractor and locum’s respective obligations under the agreement. This section should be fairly comprehensive. Regarding the locum, factors like the scope of work covered, the nature of services to be delivered and whether any licences need to be obtained could all be considered. From the practice’s perspective, the basic facilities they will provide for the locum could all be clarified under the agreement, such as information on computer usage, induction information, supplying appropriate equipment, prompt notification of complaints and notice period for cancellation of services.
From the practice’s perspective, the basic facilities they will provide for the locum could all be clarified under the agreement
Conclusion
To avoid disputes and challenges later in the working relationship, full consideration of locum terms should always be at the forefront of mind for those engaging locums. Clearly drafted and reviewed terms are essential to solidify the intentions of both parties.
