Getting employment status right is one of the biggest compliance challenges facing dental practices today. Many individuals working in dental settings – locums, hygienists, therapists, receptionists, and associate dentists are often described as self‑employed. However, HMRC or an employment tribunal may take a very different view once they examine the reality of the working relationship.
Misclassifying someone’s status can expose your practice to significant tax liabilities and unexpected employment law obligations. It can also affect the rights and financial security of the individuals working in your practice.
This guide outlines the key risks, the factors HMRC and tribunals consider, and the practical steps you can take to minimise exposure.
Why Employment Status Matters
There are two separate frameworks to consider, and they don’t always align:
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Tax Status (HMRC)
Determines whether someone should be paid through PAYE like an employee, or gross as a genuinely self‑employed contractor.
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Employment Law Status
Determines whether an individual is legally an employee, worker, or self‑employed contractor. Each status carries different rights and obligations. Someone can be self‑employed for tax purposes but classed as a worker or employee for employment law purposes, creating a risk.
Key Factors HMRC and Tribunals Consider
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Control
Indicators of employment include set working hours, fixed appointment lengths, treatment protocols, required materials/equipment, or practice‑controlled pricing/patient allocation.
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Mutuality of Obligation
If the practice is expected to offer work and the individual is expected to accept it, this points toward employment.
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Integration Into the Practice
Examples: appearing on staff rotas, wearing uniforms, attending team meetings, and being overseen by practice leadership.
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Use of Practice Facilities
If the practice provides surgery space, dental nurses, materials, equipment, or software, it becomes difficult to justify self‑employment.
What Happens If Someone Is Misclassified?
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HMRC Review
If HMRC determines the person should have been an employee, the practice may face up to seven years of PAYE, employer NICs, interest, and penalties.
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Employment Tribunal Claim
Workers may be entitled to paid annual leave, National Minimum Wage arrears, pension contributions, rest breaks, and more. Employees may gain additional rights such as sick pay, maternity/paternity pay, unfair dismissal protection, and redundancy pay.
How Dental Practices Can Reduce Risk
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Review Contracts
Ensure contracts reflect actual working practices.
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Ensure Genuine Autonomy
Self‑employed clinicians should be free to decline work, swap shifts, and choose how they deliver services.
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Avoid Treating Locums Like Employees
Minimise integration where possible.
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Carry Out Regular Status Assessments
HMRC’s CEST tool is a helpful starting point.
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Maintain Clear Documentation
Good records protect the practice during HMRC enquiries or disputes.
Next Steps: Speak to Us
If you’re unsure how these rules apply to your practice, or would like a review of your arrangements, we can help.
Contact our Employment Taxes Partner, Kyle Newton, at kyle.newton@bhp.co.uk, or reach out via your usual BHP contact.
This material is for informational purposes only and should not be relied upon as professional advice.
