Overview
Restrictive covenants are standard clauses in dental associate agreements that help protect the practice’s business interests and patient relationships while the agreement is in place and after an associate leaves. You should understand what they are, why they matter, and how they are applied in practice.
What are they?
Restrictive covenants are contractual clauses that limit certain activities during your associateship and after your associateship ends, such as working within a defined area or contacting former patients. They are designed to protect the practice’s goodwill, patient relationships, and team stability. These clauses are a standard feature in commercial agreements and reflect the mutual understanding that both parties have invested in the success of the practice during your time there.
Why are they needed?
Dental practices invest significant time, money, and effort into building patient trust and developing a strong team. When an associate works at a practice, the practice’s patients will come to know and trust that associate. Practices are entitled and able to protect that feeling of goodwill that patients have towards the associate. Practices use restrictive covenants to help protect that investment in patient goodwill when an associate moves on, by restricting the associate's ability to continue to see those patients after they leave the practice.
The practice’s goodwill, which may have been purchased or built over many years, is a valuable asset, and it is reasonable for the practice to take steps to preserve it. Similarly, staff are an essential part of the business, and considerable time and resources go into training and supporting them. Restrictive covenants help safeguard the practice’s investment by reducing the risk that patient or staff continuity might be unintentionally disrupted following your departure.
How are they decided?
The law allows dental practices to impose restrictions on associates from taking the goodwill of the practice. But the courts will only enforce those restrictions if they are not more than what is necessary to protect their legitimate business interests.
The scope of what makes a restrictive covenant reasonable, including the length of the restricted period and the geographical area, varies depending on the practice’s location and business model. A city-centre practice may have a smaller restricted radius due to higher population density, while a rural practice may require a wider radius to reflect the broader catchment area.
Other factors, such as the number of nearby dental practices and whether the practice operates under NHS or private arrangements, can also influence the covenant’s scope. Additionally, if you are providing specialist services, such as for a referral service, this can impact what is deemed reasonable. These clauses are tailored to reflect the specific risks of each practice setting.
The length of time should generally be no more than necessary for a new associate to see most of the old associate’s patients.