The importance of associate contracts

by Fitcoachion | Last Updated: August 13, 2020



David Lauder discusses some of the most frequently asked associate contract questions.

It is clear that COVID-19 will have a significant impact on dentistry for some time to come. There is currently a great deal of uncertainty regarding how associate positions may also change as a result.

While the DDU is unable to assist with the resolution of contractual disputes, it is our experience that the best way of avoiding a dispute is for both parties to discuss and ensure they have the same understanding of an associate agreement before signing it.

For example, due to the current uncertainty surrounding COVID-19, associates and practice owners could discuss the achievability or otherwise of any agreed targets. And agree how to make any changes to the contract if the targets become unachievable. 

After signing, an associate agreement is a legally binding document. A claim for breach of contract initiates if either party were to breach the terms of it. To reduce the likelihood of this happening, write the contract in a clear and unambiguous way. Keep it balanced and fair to both parties.

Practice owners will, of course, want to protect their business interests. But having an associate who feels like the practice treats them fairly and therefore wants to stay long term should also contribute to the success of a practice.

The DDU’s associate contract checking service, which is available to both practice owner and associate members, has 383 files since its launch in June 2019. Below are some of the most common themes and queries that we receive from our members.

Remuneration

The calculation used to work out an associate’s payments can vary between contracts. While there is no one way of doing things, some calculations are either overly complicated, or poorly written. Both of which leaves room for interpretation. We have therefore advised some members to clarify this aspect of their contract. This will avoid the owner and the associate from having different interpretations. 

Since the start of the pandemic, we have had a number of queries relating to NHS pay and the associated financial aspects of associate contracts. We advise any arrangements concerning NHS contracts are in line with current guidance from the various chief dental officers.

Retained fees

Associate contracts often contain clauses that allow the practice owner to retain an amount of money for a specified period after the contract ends. The contract should clearly set out how much the practice will withhold, for how long and also how the practice will use the money and why.

When properly agreed and administered, retained fees can be to the advantage of both the associate and practice owner. It can allow a patient to be provided with necessary remedial treatment swiftly and free of charge. Therefore making a complaint or claim less likely.

Termination

Associate agreements usually contain clauses allowing for immediate termination in specific, exceptional circumstances. Ideally keep these clauses balanced, and apply equally to the associate and practice owner.

Either party can also terminate a contract without giving a reason. Provided they give the adequate notice, which is commonly three to four months. Usually the notice period is the same for both parties. But some contracts impose a longer notice period on the associate than the practice owner. While others require the associate to serve a minimum term before they can give notice.

Restrictive covenants

At the DDU, members sometimes ask about the enforceability of restrictive covenants. They are also referred to as ‘binding out’ clauses. These seek to protect the practice goodwill. They set out how the associate is unable to work within a specific radius from the practice, for a set period of time after the contract ends.

In order to be enforceable, such clauses need to be considered reasonable if scrutinised in a formal dispute. Many factors need considering, including the location of a practice. A reasonable exclusion distance in a rural area isn’t necessarily reasonable in an urban area.

Case study

Here, an associate discusses practising dentistry in the UK as opposed to the EU and the benefits of the DDU’s associate contract checking service.

‘When applying for my first job post in the UK after practising dentistry in the EU, I joined the DDU following recommendations. And looked into the contract checking service available to its members.

‘Excited by the prospect of starting a new job in a completely different system, I knew that I wanted to be crystal clear over expectations of me as a dental associate to build the foundations of a strong working relationship for many years to come.

‘I attached the contract to the email with several points I wished to clarify. It was not too long before I received a very detailed response and feedback regarding the contract. Honestly, I was not expecting such a carefully crafted response with meticulously organised points to refer to. The DDU exceeded my expectations in every sense.

‘As well as providing points pertaining to the contract itself, the adviser drew my attention to several other aspects of practising dentistry in the UK and the implications it would have on my day-to-day practice. Coming to a new country I was bound to have blind spots. So the additional context from by the DDU’s dentolegal adviser was really valuable. The DDU contract checking service gave me more information and confidence going into further contract talks and starting work.

‘I truly would like to thank the DDU for this amazing service. I cannot express how the adviser and his incredible kindness impressed me. And his patience in combination with his professional expertise. Without any hesitation, I am quick to recommend the DDU.’


Published first in Dentistry magazine. To view the latest issue visit dentistrymagazine.dentistry.co.uk.

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