We have all need to use a locum at some point or another, whether it be that our regular pharmacists are unwell or on leave, a locum pharmacist is part and parcel of running a community or hospital pharmacy.
A locum may be paid in one of three ways:
- On the pay roll of the pharmacy – this involves significant amounts of paper work for both the locum and business, especially if it is just a short term solution to a staffing shortage.
- The locum is paid through a recruitment agency such as Pharmacy SOS. This is likely to be the easiest way to handle the issue. You get one invoice, with both Placement Fee and the wages of the locum on one single invoice.
- The locum invoices the pharmacy directly, and the invoice is paid in its entirety to the locum!
Paying the locum pharmacist on an invoice provided by the locum can be a trap. there are a few issues you need to consider before paying the invoice.
- Is the invoice coming from a company, partnership or trust?
- Is the work or service agreement between your business and the individual worker?
- Is the invoice coming from an “individual” with an ABN?
- Is superannuation included on the invoice?
- Should superannuation be paid on this invoice?
How the invoice is then paid will then depend on a number of factors. Superannuation might be factored in to the hourly rate on an invoice, but it is not payable as a separate entity.
And – if it is factored in – if the locum pharmacist is an individual with an ABN number, then even if you pay that invoice you may be liable to pay superannuation again and on top of the whole invoice amount. You should see professional advice before paying such invoices.
Here are a few scenarios:
Scenario 1:
The locum invoices using a company, trust or partnership. The rate is agreed, and superannuation is factored in to that rate.
The pharmacy pays the invoice and every one is happy.
Well that is what most people think! But if the work or service agreement is between the business and the individual worker, then the formula potentially changes and the superannuation will need to be paid to the contractor as the though the contractor is an employee.
Recommendations:
Either a) Seek professional advice or b) Use a recruitment agency pay roll.
Scenario 2:
The locum invoices using an ABN but is an individual. The rate is agreed, and superannuation is factored in to that rate, OR added in as a separate line on the invoice.
The pharmacy pays the invoice and every one is happy.
But then some one gets audited! Not happy. The pharmacy may now be liable to pay the superannuation guarantee amount to the locum pharmacist, again, and on top of the total of the invoice.
What should have happened is the pharmacy with holds the superannuation amount and pays that directly in to the superannuation fund of the locum pharmacist when superannuation payments are due. More paperwork!!
Recommendations:
Either a) Seek professional advice or b) Use a recruitment agency pay roll.
Scenario 3:
In the above scenarios, the locum may have been recruited directly or through an agency. In this scenario, the locum pharmacist is recruited using a locum agency such as Pharmacy SOS.
The locum pharmacist submits a time sheet to Pharmacy SOS, and Pharmacy SOS takes care of the rest! We look after the superannuation properly, pay the locum on a regular basis and on time, and the pharmacy pays a single invoice to Pharmacy SOS.
Back to everyone being happy!
Recommendations:
Use a recruitment agency pay roll such as the Pharmacy SOS Pay Roll service to pay your locums!
Whether you are a locum or a business, consider speaking to your accountant about this issue. The information provided in this post is of a general nature and should not be taken as advice.
If you would like to speak to an accountant to seek professional advice, please contact your accountant or our preferred accountants, BNS Tax Consultants Pty Ltd.
(Last Updated on September 1, 2022)