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Insurability Case 5

Question At Issue:

the appropriate rate of Pay- Related Social Insurance (PRSI) contribution due in respect of the employment of a person in the appellant’s medical practice in the period September 2007 to November 2008.

Background:

A doctor, N, worked at a Health Care Centre for the period September 2007 to November 2008. The appellant, another doctor and a sole trader, indicated that he was approached by N, an EU citizen, as she wished to gain practice and experience working as a GP in the Irish health care system. His practice had provided such opportunities for other doctors in the past, and he agreed.

After a time, N appointed a solicitor to investigate the arrangements which applied to her work at the practice and a decision on her insurability status was sought from the Department of Social Protection. Social Welfare Inspectors interviewed both parties to obtain details of the employment. Their reports were made available to a Deciding Officer, who determined as follows:

______The employment of N by C during the period specified was insurable under the Social Welfare Acts at PRSI Class A provided reckonable earnings are €38 or more per week.

The appellant appealed the decision on grounds that N was a self-employed operator.

Oral Hearing:

The appellant attended, accompanied by the practice secretary. The Social Welfare Inspector and the Deciding Officer attended, at the request of the Appeals Officer. The PRSI status of N was at issue and she had been summoned as a witness but failed to attend. It was agreed to proceed without her. The Appeals Officer advised, however, that should it transpire that a revised decision in favour of the appellant was contemplated, he would write to N to afford her an opportunity to comment beforehand. The appellant wished it noted that N had similarly failed to attend a Labour Relations hearing and that he had taken time off from his practice to attend.

The Deciding Officer was invited to set out the decision and to outline the grounds on which he had relied. He spoke of the general conditions which apply in determining whether a contract of service or a contract for services applies, referring to contract law and precedent cases. He highlighted the following as indicative of a contract of service in this case:

• N was under control and direction as to when and how to do her work. A person with specialist knowledge could be employed under a contact of service and there were many cases where this occurred. Such a person could work with quite an amount of freedom as to how to do the work but could still be under control and direction from the employer.

• She had no responsibility for the management of the practice.

• She was paid a fixed wage and she could not suffer a loss or make a gain depending on the success of the practice. She was not exposed to financial risk by her involvement.

• She had to attend in person and was not free to send a substitute.
The Deciding Officer made reference to a recent finding of the Revenue Appeals Commissioners where a doctor employed in an out-of-hours service has been found to be insurable as an employee.

In response, the appellant asserted that the circumstances of an out-of-hours co-operative were not comparable to his situation as they were limited companies. He alluded to N’s position at the start of the arrangement: her qualifications were recognised in Ireland by virtue of EU Regulations but she had no experience of general practice in Ireland. The arrangement was solely to afford her the opportunity to gain this experience. He rejected the assertion that she was an employee, indicating that the arrangement was verbal with no written contract. He said that N was well acquainted with similar arrangements as she had worked in a self-employed capacity in the US. He stated that both parties clearly understood that she was to be a self-employed operator at the start of the arrangement.

It was clarified that N attended the practice where she saw both medical card and private patients; she was expected to attend during normal practice opening hours. It was agreed at the commencement of the arrangement that she would be paid a set amount, which rose to €75,000 per annum over time; the amount was not dependent on the number of patients seen. The appellant asserted that N was a poor financial manager and that it was agreed to pay her a set amount to give stability and to bring a certainty to her finances.

The appellant made reference to additional earnings outside of the arrangement with the practice. As N developed a profile, she began to include her own private patients and she was free to see these patients in the practice after normal opening times; she was paid privately by these patients. In addition, the practice was on call for out-of-hours cover from time to time. N provided cover at such times and was free to keep any fees earned; it was clarified that this arrangement applied to all doctors in the practice. The appellant referred also to an arrangement with the Gardaí to attend for drink driving cases. When the practice was contacted and N attended, she was free to keep half of the fee charged with the other half going to the practice. The appellant stated, however, that if the Gardaí contacted N independently, she was free to retain the full fee.

The appellant stated that N, as is the case with all practicing doctors, carried her own professional indemnity insurance, she was registered with the Medical Council and was personally responsible to deal with any allegation of medical malpractice. She was not required to have public liability insurance, however, as all patients attending the practice, including her private patients attending after practice opening times, were covered under the practice insurance.

The appellant asserted that the arrangement with N was always viewed as temporary; she had indicated that it was her intention to move on. He said that the question of sending another person to cover her attendance at the practice had never arisen. While she often changed her schedule, the practice secretary was informed and it was her responsibility to arrange cover. He said, however, that other doctors were free to send their own substitutes if unable to attend and that, had it arisen, N was free to do so also.

The appellant stated that the arrangement with N was subject to regular review; as she became more experienced, she became more valuable to the practice and her earnings increased but her hours of attendance reduced. He advised that any instance of complaint would have been a matter for the Medical Council. The arrangement could have been terminated had it been found that there was evidence of illegal or unprofessional conduct.

The appellant concluded by saying that, in 15 years of practice, he had always understood that doctors engaged in a similar fashion to N were treated as self-employed and liable to manage there own tax affairs, and that this arrangement had always been accepted by the Revenue Commissioners. He went on to outline the consequences of the decision under appeal, saying that if it were to be upheld, a significant financial liability would arise. It was explained that any liability arising was a matter for the Department Of Social Protection and the Revenue Commissioners.

In summary, the Deciding Officer alluded again to a recent case where the Revenue Appeal Commissioner found a doctor employed in an out-of-hours co-operative to be insurable as an employee. The appellant reiterated his view that the case was not comparable as co-operatives operated very fixed arrangements and did not offer training or opportunities to improve experience or earn additional income. It was agreed, however, that the Deciding Officer would make the text of that decision available to the Appeals Officer and to the appellant for any comment he might to make.

Further discussion:

An exchange of emails followed the hearing. Details of the case referred to by the Deciding Officer were clarified but he indicated that he was not in a position to supply the text of the decision made by the Revenue Appeals Commission. As the text of that decision was not available, the Appeals Officer advised that he could not take account of the case in reaching his decision. He noted also that the question of the insurability of employment under the Social Welfare Acts is a matter to be decided by the appropriate officer of the Department of Social Protection and that the findings of the Revenue Appeals Commissioners were not, therefore, relevant to the question and should not be used as a precedent.

Consideration of the Appeals Officer:

The Appeals Officer indicated that as N had failed to attend the hearing and he did not have the benefit of her oral evidence, he had relied on the appellant’s account in relation to any points in dispute. He noted that the appellant had confirmed that N had been engaged by him, a sole trader, to attend the practice at set hours, to see patients of the practice and was paid a set amount for her time and work. She was not in any way involved in the management of the practice, was not involved in any decisions relating to the management of staff, equipment or facilities.

The Appeals Officer noted also that N was engaged for her skill as a doctor and as such was not under control and direction as to how she dealt with patients. While the evidence indicated that she was engaged to gain experience, he considered it reasonable to conclude that a certain amount of monitoring of her performance would have taken place particularly at the start of the arrangement. He referred to the Deciding Officer’s contention that persons with particular skills, who would not be controlled and directed in carrying out their specific duties could, nevertheless, be subject to overall control and direction as to their terms of employment. He took the view that the evidence pointed to this being the case here: N was required to attend surgery hours; patients were allocated to her on a random basis; she could not select her own, and she was under the control of the practice procedure as to when and where she did her work.

The Appeals Officer considered that the issue as to sending a substitute was unclear and he noted that it had been stated that such an instance had never arisen. However, it had been agreed that when N was unavailable for her scheduled hours of attendance, the practice secretary made arrangements to cover her absence; the appellant did not arrange the necessary cover.

The Appeals Officer observed that all doctors in practice carry their own professional indemnity insurance; however, this does not of itself suggest that they are in business on their own account. A doctor may be exposed to other risks in relation to public liability and the safety of patients attending the place of business or in relation to the keeping of individual records and data. A doctor in business on his/her own account would be expected to take out the necessary insurance against such risks; N did not carry such insurance nor was she required to do so.

The question of misconduct or unprofessional behaviour was discussed at the hearing, with the appellant indicating that such a case would have been a matter for the Medical Council. The Appeals Officer noted, however, that when pressed in relation to the possibility of continued unacceptable behaviour, the appellant had indicated that he would have taken steps to ensure professional standards at the practice. While he was not specific in relation to the steps envisaged, the Appeals Officer considered it reasonable to assume that N would have been asked to leave. He observed that it was not credible that a doctor joining the practice to gain experience could not have been dismissed if their behaviour had proved unacceptable.

In summary, the Appeals Officer concluded that the essential elements of a contract of service existed in this case: N was paid a fixed wage and was subject to control and direction; she was required to render personal service and could not gain or suffer a loss from the performance of the business. He considered that N, while engaged by the appellant under a contract of service, was also operating as a self-employed person outside of the hours she was required to attend the appellant’s practice.

Outcome

Appeal disallowed.

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