The Hidden Risks of Paying Locum Pharmacists Directly via Invoice

Every pharmacy, whether community-based or hospital-based, relies on locum pharmacists at some point. Whether it’s to cover staff illness, leave, or unexpected absences, locums are an essential part of maintaining seamless pharmacy operations.  However, paying Locum pharmacists correctly is just as important, yet can be more complicated than it seems. Many pharmacies fall into the trap of paying locums directly via invoice, which can lead to significant legal and financial risks. In this blog, we’ll explore the pitfalls of paying locums on invoice and why using a recruitment agency like Pharmacy SOS is the smarter, safer choice.

How Are Locum Pharmacists Typically Paid?

There are three common ways to pay a locum pharmacist:

1. On the Pharmacy’s Payroll:
   While this method ensures compliance with tax and superannuation obligations, it involves significant paperwork—especially for short-term staffing needs.
2. Through a Recruitment Agency (e.g., Pharmacy SOS):
   This is the simplest and most efficient option. The agency handles all payroll, superannuation, and compliance matters, and the pharmacy receives a single invoice covering both the locum’s wages and the agency’s placement fee.
3. Direct Payment via Invoice from the Locum:
   This method is where many pharmacies run into trouble. Paying a locum directly via invoice can expose your business to legal and financial risks, particularly around superannuation and tax compliance.

The Risks of Paying Locum Pharmacists via Invoice

Paying a locum pharmacist directly via invoice can be a trap. Here are the key issues to consider:

• Is the invoice from a company, trust, or partnership?
• Is the work agreement between your pharmacy and the individual locum?
• Is the invoice from an individual with an ABN?
• Is superannuation included on the invoice? Should it be?

If the locum is invoicing as an individual with an ABN, your pharmacy may still be liable for superannuation payments—even if superannuation is factored into the hourly rate. This can lead to double payments and unexpected liabilities during audits.

Common Scenarios and Recommendations

Scenario 1: Locum Invoices via a Company, Trust, or Partnership

• The locum invoices through a business entity, and superannuation is factored into the agreed rate.
• The pharmacy pays the invoice, assuming all obligations are met.

The Risk: If the work agreement is between the pharmacy and the individual locum (not the business entity), the pharmacy may still be liable for superannuation payments.

Recommendation: Seek professional advice or use a recruitment agency payroll service like Pharmacy SOS.

Scenario 2: Locum Invoices as an Individual with an ABN

• The locum invoices as an individual, with superannuation either factored into the rate or listed as a separate line item.
• The pharmacy pays the invoice, believing all obligations are covered.

The Risk: During an audit, the pharmacy may be required to pay the superannuation guarantee amount again, on top of the invoice total.

Recommendation: Withhold the superannuation amount and pay it directly into the locum’s superannuation fund. Alternatively, use a recruitment agency payroll service to avoid the hassle.

Scenario 3: Using a Recruitment Agency (e.g., Pharmacy SOS)

• The locum submits timesheets to the agency, which handles payroll, superannuation, and compliance.
• The pharmacy receives a single invoice from the agency, covering all costs.

The Benefit: No paperwork, no compliance risks, and no surprises during audits. Everyone is happy!

Recommendation: Use a recruitment agency payroll service like Pharmacy SOS to pay your locums.

Why Pharmacy SOS is the Best Solution

At Pharmacy SOS, we take the stress out of paying locum pharmacists. Our payroll service ensures:

• Compliance: We handle superannuation, tax, and other legal obligations.
• Simplicity: You receive one invoice covering all costs.
• Reliability: Locums are paid on time, every time.

Final Thoughts

Paying locum pharmacists correctly is critical to avoiding legal and financial risks. While paying via invoice may seem straightforward, it can lead to significant complications. Using a recruitment agency like Pharmacy SOS ensures compliance, simplifies payroll, and protects your pharmacy from unexpected liabilities.

Whether you’re a locum or a pharmacy owner, we recommend consulting your accountant or reaching out to BNS Tax Consultants Pty Ltd for professional advice.

We have a wealth of information on our blog posts page, please visit that for some more information on the above issue and also be sure to read the Guides above.