Introduction

A good associate contract will hopefully remain filed away after being signed and will never be looked at again. A comprehensive contract that clearly sets out the obligations of both practice owner and associate, so they know exactly where they stand from the outset, will make disputes less likely – but if a dispute does occur, the contract will also make it easier to resolve.

The worst situation is a dispute with no valid contract, when both parties may have completely different recollections of what was and was not agreed. In this situation, resolving the dispute may prove very difficult, time consuming, costly and painful for both, if not actually impossible.

Our recently launched associate contract checking service, available to both practice owner and associate members, has proved to be a very popular addition to the existing benefits of DDU membership. However, the new service has shown there is a huge variation in the associate contracts currently in use, many of which are in our view seriously flawed, sometimes as a result of poorly thought out modification of an otherwise reasonable model contract.

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An associate agreement should ideally strike a careful balance between protecting the interests of both the practice owner and the associate. It should be in the interest of both parties to have a balanced agreement in place, as this should not only reduce the risk of disputes but also contribute to a healthy working relationship.

The DDU has produced a template contract in conjunction with specialist solicitors. We believe this contract covers the commonly occurring mixed NHS and private practising arrangements in England (further versions for the other UK countries are in the pipeline) and reasonably protects the interests of both practice owner and associate. It is freely available to members on request and we would urge members to consider using it to reduce the risks of dispute.

General advice…

…for practice owners

In our experience, it's in the best interest of practice owners to have a balanced agreement with associates, which not only adequately protects the owner's business interests and goodwill, but also treats the associate fairly. That way the associate should feel their interests and those of the owner are aligned, and be a happy, productive, professionally fulfilled member of the team who can contribute fully to the success of the practice.

…for associates

We advise associates that once they sign the contract it is a legally binding document, so they would be wise to assume all clauses are enforceable unless they have strong legal advice to the contrary. Accordingly, it is important they carefully read each of the clauses, and if any clause or paragraph of a schedule causes them discomfort, they would be well advised to raise it with the practice owner and seek to negotiate a mutually acceptable variation that overcomes their concerns.

If, after suitable negotiation, they cannot agree on a contract they are content with, and it still contains provisions which for them are 'red lines' that they couldn't accept, or could not properly comply, then they may have to decide to seek another position. We explain to associates that if they were to later breach any of the clauses and the practice owner were to suffer financial losses as a result, the owner could bring a legal claim against them for those losses resulting from the breach of contract.

Furthermore, the GDC might disapprove of any registrant breaking a legally binding agreement that they had freely entered into, particularly if patients were considered to have been disadvantaged as a result.

Common areas of concern

Restrictive covenants

These are also known as 'binding out clauses', and are aimed at protecting the goodwill of the practice owner. Associates would be wise to assume restrictive covenants are enforceable, as they'll usually contain a restricted area, expressed as a radius in miles from the practice, and a restricted period, within and during which the associate must not practise after terminating the agreement and leaving the practice.

These should be viewed in the context of the practice location and demography. A certain exclusion radius in a rural area might be considered reasonable, whereas the same radius in an urban area might be considered as excessive and therefore unenforceable. However, ultimately the enforceability of any contract or agreement can only be tested in court, which both parties will wish to avoid.

The intention of some restrictive covenants is to prevent patients moving with the associate when they leave, or the associate encouraging them to do so, in order to preserve the practice goodwill. This is usual, but it is open to the associate to try and negotiate a reduction in the radius and/or the time restriction if they think either is excessive.

The radius and time limit should be carefully considered by the associate with regard to their future plans, and whether they might want to practise nearby in the future. For owners, in general the smaller the radius and the shorter the time limit, the more likely it is that the restrictive covenant will be seen as reasonable by the associate, and also be legally enforceable.

Failed treatment

Some contracts aim to make the associate totally responsible for the cost of remedying treatments that fail (for whatever reason). These reasons can be varied - for example, if the patient fails to comply with the instructions, advice and warnings given by the dentist.

There is a risk of ultimate failure with all restorations, and some restorative experts will say that the one certainty of all restorations is that they will ultimately fail. Provided the patient has been warned of the options and the risks of each, including the risk of failure, the practitioner should not be justifiably criticised. We would therefore generally recommend that the words 'defective treatment' are to be preferred to 'failed treatment'.

Termination

A contract may need to be terminated by either the practice owner or the associate for a whole variety of reasons, all completely unconnected with any breach of the agreement. Because of this, it is entirely normal for there to be a termination clause allowing either party to give the other written notice of termination, commonly three to four months.

Some contracts seek to impose a longer period of notice on the associate than on the owner, whilst others require the associate to serve a minimum term before they can give notice. Contracts will usually also contain clauses allowing for immediate termination in exceptional circumstances. In our view all such clauses should be balanced, and should in general apply equally to associate and owner.

It should be in the interest of both parties to have a balanced agreement in place, as this should not only reduce the risk of disputes but also contribute to a healthy working relationship.

Retainers

Most associate agreements will contain one or more clauses making provision for the practice owner to retain a sum of money for a specified period, to be used to fund the cost of remedying defective treatment provided by the associate.

Money should only be retained by a practice owner when an associate leaves the practice if the retention has been agreed in advance, usually in writing as part of the associate contract. In general such a retention sum, if properly agreed and administered, can be to the advantage of both associate and owner. Where treatment has been defective and needs to be replaced, it allows the patient to be provided with the necessary remedial treatment swiftly and free of charge, making a complaint or claim less likely.

A good, balanced contract will stipulate how the money should be used and how it should be administered, as well as the detail and frequency of the information the practice owner should provide to the associate to justify each and every deduction, including sight of the relevant records and radiographs. Some agreements will specify that any proposed withholding exceeding a certain specified figure has to be agreed with the associate in advance.

Remuneration

Disputes over the financial aspects of associate arrangements are common, but can be largely prevented by clearly setting out the precise financial arrangements in the contract.

In our experience, the financial arrangements are often overly complex and opaque. If the associate does not properly understand the arrangements they should seek clarification from the owner, and if necessary suitable amendments should be made to the contract so the arrangements are crystal clear, and different interpretations are impossible.

Also, bearing in mind the current interest of HMRC in the status of self-employed persons and limited companies used for consultancy work, all the wording in the contract should reflect the fact that the associate has a licensing arrangement with the owner and pays the owner for the licence, which provides the use of the facilities and staff, and that they are not employed or paid by the owner. The same applies to contracted hours and days, time away from the practice and clinical freedom; these should avoid any suggestion that the owner controls or manages the associate.

Summary

Since introducing our contract checking and advice service, we have seen that associate contracts can vary hugely in their quality and content. To reduce the likelihood of disputes, both associates and practice owners should fully understand and be content with all parts of a contract. Any doubts or concerns should be raised and addressed early.

However, we would also remind members that while having a well-drafted and balanced contract is clearly very important, it is not the only factor that will influence whether an associate position is a success. The associate getting on well with the staff and the patients, and generally fitting-in to the culture of a practice, will have a big impact on whether both parties want the arrangement to continue.

Ultimately, after the necessary negotiations have been completed and any changes in the contract agreed, there is a degree to which both parties need to be willing to enter into the arrangement in good faith – so there is confidence that each will be fair and reasonable during the term of the agreement and afterwards.


David Lauder

Dento-legal adviser

David qualified from Newcastle Dental School in 2002. His post-graduate training included qualifications from the Eastman Dental Hospital and the Royal College of Surgeons, after which he worked in a number of dental settings in the UK and abroad. He has always pursued an interest in the legal aspects of dentistry and has a Master of Laws degree in the Legal Aspects of Medical Practice.

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Rupert Hoppenbrouwers

Senior dento-legal adviser

Rupert Hoppenbrouwers (BDS LDSRCS) was head of the DDU until his retirement at the end of 2015. He is a former general dental practitioner and was director of the School of Dental Hygiene at University College Hospital, London, from 1980 to 1986. He has lectured and written widely on risk management and dento-legal matters, has previously chaired the UK Dental Law and Ethics Forum, and has a particular interest in complex ethical and legal issues affecting dental members.

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