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Is a locum doctor an employee or independent contractor?

12 May 2015   (0 Comments)
Posted by: Author: SAIT Technical
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Author: SAIT Technical

Q: Our client is a medical practitioner that sometimes makes use of a locum. For example a locum worked 1 day and received a salary of R 15 000.00. 

1.            Should it be viewed as a salary earner or an independent contractor? 

2.            Should the doctor deduct tax and issue and IRP5 at the end of the year? If so, what tax rate should be used if the locum does not have a directive?

3.            If the locum works for more than one day should UIF be deducted? SDL paid on behalf of the locum as the Doctor is registered for SDL purposes at SARS?

A: A locum is typically not an employee and normally carries on a trade independently. 

A person making payment to an individual (in respect of services rendered) would have an obligation to deduct employees’ tax from that payment unless the individual (recipient) rendered the services in the course of a trade carried on independently (as required by proviso (ii) to the definition of remuneration in paragraph 1 of the Fourth Schedule to the Income Tax Act).  If an amount does not constitute remuneration there is no obligation to deduct employee's tax.  Please note that SARS issued a guide on the employers’ tax responsibilities with regard to independent contractors. 

The recipient has a duty to declare the income in a return of income (IT12) and that is not influenced by whether or not the payment was correctly treated by the person making the payment.

If the locum didn’t carry on a trade independently, the payments were remuneration and the client had to withhold employees’ tax.  Paragraph 5(2) of the Fourth Schedule provides that where SARS is satisfied that the failure to deduct the employees’ tax was not due to an intent to postpone payment of the tax or to evade the employer’s obligations under this Schedule, SARS may, if he is satisfied that there is a reasonable prospect of ultimately recovering the tax from the employee, absolve the employer from his liability to make payment in respect of the past periods. 

The Unemployment Insurance Contributions Act, 2002 excludes from employee an independent contractor and then applies to all employers and employees, other than an employee and his or her employer, where such employee is employed by that employer for less than 24 hours a month. 

In terms of the Skills Development Levies Act, 1999 an "employee" includes an employee as defined in the Fourth Schedule to the Income Tax Act.  We accept that none of the exemptions (in section 4 of that Act) applies.  Similarly, the client would have had to pay the Skills levy if the locum was not an independent. 

Disclaimer: Nothing in this query and answer should be construed as constituting tax advice or a tax opinion. An expert should be consulted for advice based on the facts and circumstances of each transaction/case. Even though great care has been taken to ensure the accuracy of the answer, SAIT do not accept any responsibility for consequences of decisions taken based on this query and answer. It remains your own responsibility to consult the relevant primary resources when taking a decision.



Section 240A of the Tax Administration Act, 2011 (as amended) requires that all tax practitioners register with a recognized controlling body before 1 July 2013. It is a criminal offense to not register with both a recognized controlling body and SARS.


The Act requires that a minimum academic and practical requirments be set to register with a controlling body. Click here for the minimum requirements of SAIT.

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