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Dental associate agreements

As a self-employed person, a dentist's associate agreement is their bible. Yet, it's amazing how often we come across instances where dentists have either signed an associate agreement without first reviewing its terms, or don't even have one in place.

There is no 'one-size-fits-all' approach to agreeing an associate agreement, but there are common, key themes that can be found in each of them and which any associate should carefully consider before signing their agreement. These include:-

  1. SELF-EMPLOYED STATUS

Typically, dentists are self-employed, meaning they are their own boss. However, with the freedom of self-employment comes a level of uncertainty.

Under an associate agreement, a dentist will be given a limited permission to work from the practice owner's surgery, use its equipment and its employees and in return he/she will split any revenue earned with the practice owner. However, he/she will not accrue any employment rights meaning, for example, an associate would not have the same rights as an employee to holiday pay, sick pay and maternity/paternity leave.

The associate will also responsible for his/her own taxation, including NI and PAYE, and typically will be responsible if the practice owner incurs any costs arising from a failure to pay such tax.

It's important a dentist understands this concept of self-employment before he/she enters into his/her associate agreement.

  1. FEE SPLIT

Probably the most important section of the document for any dentist is the fees he/she will be taking home at the end of the day. It's important that this is clearly set out in the agreement and covers all aspects of the fees and liabilities that a dentist may earn or be liable for.

It should be clear in the agreement:

  • what percentage of the fees the dentist will be paying to the practice owner; and
  • what percentage of deductible costs the dentist may be liable for (this would typically include lab fees, the cost of materials and the cost of chasing unpaid fees from patients).

In the case of a general NHS practice, the agreement should make it clear how much the associate will receive for each unit of dental activity (UDA) performed, what his/her UDA target is for the year and, if this target is exceeded, whether the dentist is able to carry these forward into the next year.

  1. LIABILITIES

As a self-employed contractor, a dentist will be liable to the practice owner if he/she breaches the terms of their associate agreement. Depending on the nature of the clause that has been breached, the dentist could be liable to the practice owner for all losses suffered by the practice owner on a £ for £ basis, so it's important the associate understands the nature of the obligations before agreeing to them.

It’s not uncommon for dentists to be liable to remedy any defective or failed treatment provide by them, even after their contract has terminated. Likewise, an agreement may contain provisions dealing with a failure of an associate to meet her UDA target.

  1. FEE RETENTION

Arising out of defective or failed treatment, an associate agreement will typically contain a retention provision where the practice owner will withhold a percentage of monies payable to the associate, normally during the associate's notice period of termination. The amount of monies to be retained will be a key negotiating point, as will the length of time it is retained for and its purpose.

  1. RESTRICTIVE COVENANTS

Another key negotiating point is the extent to which an associate will be restricted from practising while he/she is engaged by the practice owner and once his/her associate agreement has terminated. The key areas these restrictions look to cover are:

  1. competing with the practice the associate is working for or leaving (usually by preventing the associate from working for another dental practice in the immediate area – the specific radius is point to be considered in particular);
  2. poaching any staff from the practice owner; and
  3. treating any patients the associate, or any other dentists at the practice, have treated while the associate worked for the practice owner.

The extent of these restrictions should be carefully considered and negotiated, should be reasonable and should only serve to protect the practice owner's legitimate business interest. To the extent an associate will also be providing services to other dental practices at the same time as the practice owner, he/she should ensure this is specifically permitted under the associate agreement, for the avoidance of doubt.

Acuity Legal are dental experts and have advised many clients on associate agreements. If you are in the process of negotiating, or renegotiating, your associate agreement and have any questions, please contact Jon Lawley.

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