Faisal Dhalla, partner at Hempsons, discusses why a written associate agreement is essential for associates.
Professional life for an associate, with all the complexities of regulations, evolving standards and ever-changing government guidelines, can seem anything but simple. In a perfect world, practice owners and their associates would work alongside each other in perfect unison, and many do.
However, there are a rising number of cases where a relationship based on mutual respect or friendship has turned sour and that a contract-replacing handshake is simply not enough. Therefore, it is incredibly important to formalise the working relationship with a written associate agreement; not only to eliminate confusion in the practice, but also to provide everyone involved with a legal point of reference, in case of any disputes.
In 'the good old days', an associate agreement was formed with little more than a handshake. These days, however, this is simply not enough. Hempsons see cases every day where a disgruntled associate has come to us for advice on a dispute over clinical standards, payment mechanisms, notice periods and even annual leave entitlement. The problem we invariably face is that no associate agreement has been put into place.
Imagine this: you're a new associate at a practice, and the practice owner tells you it's not necessary to have a written associate agreement. By month three, you have not been paid the sums you believe you are due. There is doubt over the percentage licence fee you are to pay to the practice owner and you have fallen out over your UDA target.
The practice owner is also being difficult about you taking holiday because you haven't given the amount of notice he expects. Further, he is expecting you to pay for a locum to cover you whilst you are away but you thought that would be his responsibility. What happens then?
A well drafted associate agreement would have addressed these sorts of issues and clarified them. Without a written agreement, you could end up having a dispute with the practice owner which seriously jeopardises your working relationship and your future at the practice. These are the sorts of scenarios you really need to avoid.
Prevention is better than cure
The dental mantra is that 'prevention is better than cure', and legal business matters should be treated in exactly the same way. The difficulty is that principals and associates often feel that a written agreement is not necessarily needed.
However, given the things that can go wrong without a suitable agreement, it is essential that you have one and that you are confident it clearly sets out the terms under which you are to work at the practice.
It is incredibly important to formalise the working relationship with a written associate agreement.
The agreement should cover the following topics.
- Your working hours.
- Remuneration details. Are you being paid for the number of UDAs actually delivered by you or a fixed monthly sum based on the expectation that you will deliver a certain number of UDAs each month? What if you don't deliver? How will clawbacks work?
- Holidays. If you want to go on holiday, how much notice should you give and who will be responsible for finding and paying a locum - you or the practice owner?
- Restrictions when you leave. Are you restricted from working at other practices nearby when you leave the practice? If so, in what geographical radius and how long do the restrictions last for? Are the restrictions clear? Do you think they are reasonable?
- Are you tied in for a minimum period? Sometimes, practice owners (particularly, the corporates) seek to tie you in for a minimum period, meaning that you cannot leave during that period. However, what if the practice owner doesn't stick to their side of the bargain and breaches the agreement - for example, they don't pay you or make facilities and staff available to you? Can you leave during the minimum period in those circumstances - does the agreement specifically address this?
- Defective treatment. What happens when you leave and defective treatment is identified by the practice owner 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 of time, so long as there has not been any defective treatment identified. Is there a mechanism for agreeing with the practice owner whether the treatment was actually 'defective', and how is that defined or determined? What is the amount of the retention and when do you get it back?
In addition to the above points, understand that as an associate, you will not be an employee of the practice - you will be self-employed. Do you know what this means in practical terms? Certain employment rights will apply to you (despite you being self-employed) but others will not. Do you know what rights do apply to you and are they suitably documented in your agreement?
Getting guidance and advice
Model associate agreements are readily available from sources such as the BDA, which also has excellent easy to follow guidance notes about the model agreements. However, model agreements may well need adaptation to suit individual circumstances, and you would be well advised to seek legal advice from those familiar with the dental profession before committing to your associate agreement.
If you are going to work for a dental corporate, you should be aware that most of the large corporates use very different associate agreements to the BDA model agreements. Read the terms very carefully and seek professional advice before agreeing to them.
As I am sure you will now agree, the problems that can arise from not having an appropriate associate agreement in place are many and varied, which is why having one is so essential. It is unacceptable for a practice owner to say you don't need one (and this is an excuse we hear all the time). Stand firm and say that you want one so that there is no room for confusion or dispute in the future. Make the practice owner recognise that a written agreement would be beneficial for both of you.
Remember, preventing legal issues now could save you from a lengthy battle in the future!
Faisal leads Hempsons' national corporate commercial dental team. He has a wealth of experience in acting for individuals and dental corporates in the sale and purchase of practices. Faisal advises on all corporate aspects of the sale and purchase process, including sale and purchase agreements, due diligence, CQC compliance, temporary partnership arrangements, associate agreements and bank lending and security. Faisal has strong links with dental agents, specialist dental accountants and the dental teams at the UK's major banks.
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