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With the introduction of new rules regarding IR35 effective from 6 April 2021,[1] many medical professionals who previously provided their services to the NHS, Local Area Health Authority or private hospitals via their own limited companies, are now turning to umbrella companies, or a recruitment agency on a contract of service.

The new rules suggest that some nurses could currently be in ‘disguised employment’, rather than self-employed, and would therefore not be covered under the Royal College of Nursing (RCN) indemnity scheme. HMRC is trying to eradicate disguised employment to generate a bigger tax revenue and level the playing field with those nurses and healthcare professionals who are on a contract of service and paying full PAYE and National Insurance on their income.

This move, however, creates a further issue that according to the RCN’s rules on medical malpractice liability insurance, the organisation ‘employing’ the healthcare worker should purchase the liability cover. So, unwittingly umbrella companies that ‘employ’ the workers need to purchase the cover.

The FAQ responses on state that:-

“If you are employed, you should not need to arrange your own indemnity cover. Your employer will have vicarious liability (in other words is responsible) for your actions and omissions at work and, should provide the appropriate indemnity cover for you.”


“If the nurse is using an agency, then the employment status is the key issue, when assessing eligibility under the RCN scheme. If a contract of employment exists between the nurse and any other party (ie the agency, the umbrella company, or end user) the RCN scheme will not apply.”[2]

What action should you take? 

As an umbrella company, it is important to review the contracts in place to determine the employment status. Only genuinely self-employed workers will be covered by the RCN scheme. It is advisable to seek legal opinion on the employment status of your workers.

The cover provided by the RCN scheme is for claims up to £3 million for any one claim, and this cover is included within the RCN membership. However, if a medical professional is employed, then this is the responsibility of the organisation employing the worker and they may be required to mirror the cover provided by the RCN scheme.

Please check out their website should you require further clarity.



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