Are you seeking guidance on drafting a dental associate agreement? Whether you’re a dental practice owner welcoming a new associate or a dental professional aspiring to join a new team, a properly drafted agreement can protect your best interests, as well as prevent misunderstandings.
In this blog, we’ll discuss what dental associate agreements are, along with what to consider when writing one.
What Is a Dental Associate Agreement?
A dental associate agreement refers to a legally binding contract between a dental practice owner and a self-employed dental associate, setting out the rights, responsibilities, and expectations of both parties.
While a dental associate agreement is sometimes overlooked, we believe it is a critical document, as it clarifies roles and expectations to avoid disputes and legal complications later down the line.
Considerations when Writing a Dental Associate Agreement
When writing a dental associate agreement, there are some essential elements that you need to include. A dental specialist lawyer can guide you through this process, but we’ve listed the main elements below for your reference.
1. Remuneration
The majority of dental associates are paid a percentage of their gross fees; however, it is essential to ensure that the agreement clearly specifies the exact percentage, the frequency of payments, and any applicable deductions.
Why remuneration matters:
- Pay structures can vary between dental practices, so the exact pay needs to be clarified
- A lack of clarity can result in disagreements about fees, deductions, or when income is actually earned
Clarify:
- The agreed percentage of gross fees
- How lab fees and other costs are shared
- When will the payments be made
- The specific deductions for failed treatments and other factors
In our experience, the terms concerning remuneration in dental associate agreements tend to be over the top in terms of complexity, and there is no need for them to be. This over complexity tends to lead to disagreements between the associate and the dental practice owner due to a lack of understanding of the terms. If any terms do not make sense, seek clarity or that they are rewritten in a more user-friendly manner.
2. HMRC implications
Dental associates are generally self-employed. However, this status can be challenged by HMRC if the associate agreement fails to reflect genuine self-employment. With this in mind, the associate needs to ensure they have control over their working hours and patient treatments and have an unfettered right to appoint a locum.
Why HMRC implications matter:
- HMRC may reclassify the associate as an employee if the working arrangement resembles employment
- This could even result in backdated tax and penalties for the practice owner
Ensure you clarify that:
- The dental associate is self-employed and responsible for their own tax
- There is no mutual obligation to provide or accept work
- There is no entitlement to employee benefits, such as sick pay and holiday pay
3. Time off (planned and unplanned)
The agreement should address what will happen if an associate is absent for whatever reason. It should specify what notice is required if planned, how long an associate can be absent before alternative arrangements are necessary, and the engagement of a locum.
4. Defective treatment
What happens when you leave, and defective treatment is identified on patients you have treated? Normally, a sum of money (commonly known as a ‘retention’) is held back by the practice owner when you leave and it is then paid to you after a certain period, so long as there has not been any defective treatment identified. You also need to consider:
- Is there a mechanism for agreeing with the practice owner whether the treatment was ‘defective’, and how is that defined or determined?
- What is the amount of the retention and when do you get it back?
Why failed treatment matters:
- Failed treatment can result in patient dissatisfaction, as well as financial losses
- Practices commonly deduct the cost of remedial work from the retention unless otherwise agreed
Ensure you clarify:
- A defined warranty period for treatments
- Whether dental associates are financially responsible
- Whether deductions will be made from payments
- The correct procedure for dispute resolution
5. Termination of contract
The dental associate agreement should clearly outline the circumstances under which either party can terminate the agreement. It should include notice period requirements, obligations during this notice period, and any grounds for immediate termination, such as misconduct.
Why termination of contract matters:
- Ending the business relationship without notice can disrupt business operations, harming staff morale and patients
- Restrictive covenants can legally bind associates after leaving the dental practice
Clarify:
- The required notice period, which is typically three months
- Grounds for immediate termination
- Obligations of the dental associate during the notice period
6. Restrictive covenants
Restrictive covenants intend to protect the practice’s goodwill, stopping patients from moving with the dental associate when they decide to leave. Dental associate agreements sometimes contain post-termination restrictions, preventing the dental associate from working within a specified radius for a set timeframe or soliciting former patients or staff.
To be reasonably considered, these must be perceived in the context of the practice demography and location. Moreover, a smaller radius and shorter time limit are more likely to be perceived as reasonable. All in all, you can only test how enforceable an agreement is in court, which could be both costly and time-consuming for the parties involved.
Why restrictive covenants matter:
- They protect the goodwill of the dental practice
- Vague clauses may not be enforceable in court
Ensure you clarify:
- A reasonable geographical restriction and time limit
- A non-solicitation clause to prevent the poaching of patients and staff
Seek Help from a Dental Specialist Lawyer
If you need help drafting a dental associate agreement or reviewing an existing one, specialist dental legal advice is essential. At Newtons Solicitors, our dental specialist lawyers have extensive experience in advising dental professionals across the UK.
Along with assisting in writing dental associate contracts, we can also offer guidance in buying and selling dental practices, NHS dental contracts, and CQC dental practice inspections.
Please reach out to our specialist team today to ensure your dental associate agreement is enforceable, reasonable, and legally sound.