Internet Explorer and Edge browser users:
To download Word, Excel or PowerPoint files please right-click on the file you wish to download, and select 'Save target as...'

Dentists' associate agreements: key terms to look out for

Blog Author Claire Bennett

Blog Date 12/11/2018

 terms-conditions-650px.jpg

 

​We get a lot of calls from associates about their contracts – this is often well after their agreement has been signed and when issues or problems have arisen.

We advise that you get your associate contract checked with us, well before you sign it.

 

Our contract-checking service is free for all BDA members – just email your contract through to our team, with your BDA membership number.

 

Isn't it just a 'standard' agreement?

Many practice owners use the BDA template associate agreement (or a similar 'standard' contract), but they may add in their own specific terms and conditions, so please don't assume the BDA has 'endorsed' it.

It's important that you understand the terms set out in any document you are being asked to sign and we can help you with that.

A well-drafted agreement will provide clarity and certainty on key terms and conditions and very often, your contract is a crucial document in the event of a dispute.

Here are some of the key terms we advise you to look out for:

 

1. Financial arrangements

Financial arrangements typically include an associate agreeing to pay a practice owner a licence fee for use of their premises and facilities.

This fee is deducted from the associate's gross earnings, together with other deductions, for example, laboratory costs, bad debts and/or hygienist fees.

Top tip: Check the mathematical correctness of the payment provisions in any contract. The financial terms should be clear, certain and reasonable.

You might find it useful to apply illustrative figures to a payment schedule, which sets out things like how much you will be paid per UDA performed (gross and net), how laboratory costs will be apportioned and the value of any licence fee.

 

2. Performance targets

It would not be unusual for you to be given a contract, containing performance target  - either a UDA target, a private income target, or both.

Where this is the case, the contract often contains clawback provisions or indemnities, which seek to protect the practice owner from sustaining any losses, in the event that you fail to achieve your targets.

Top tip: Before agreeing to any performance targets, you should consider whether the target is realistic and fair, by reference to factors like the practice's patient base and local market conditions.

You should also consider whether corresponding clawback provisions or indemnities are fair and reasonable. If the compensation the practice owner will receive should you underperform places them in a better position than if you had met your target, then it may be that the clawback provisions are too high.

An indemnity that permits a practice owner to recover from you where you have failed to meet your targets, but through no fault of your own, may be drafted too widely.

 

3. Use of facilities

You will be paying the practice owner to use their facilities, including their premises and equipment. You should look for clauses that set out what will happen should those premises become unavailable or equipment breaks down.

Ideally, the contract will provide for you to be compensated in these circumstances. However, it may be that the contract makes no provision for compensation, which could mean you lose out financially.

Top tip: Where the contract does not provide for compensation, you should raise it with the practice owner. It may be that the practice owner can justify its position, but if not, you should try to negotiation the inclusion of a clause which compensates you in the event of breakdowns, etc.

 

4. Notice periods

Generally, associate contracts will provide for the industry norm of three months' notice of termination from either party.

Occasionally, a practice owner will ask for something more than this – four or six months' notice of termination from the associate – or even seek to tie the associate to the agreement for a lengthy fixed-term, perhaps as long as two-years.

Top tip: You should think carefully before agreeing to notice periods that exceed the industry standard or entering into a fixed-term contract. You might ask the practice owner to explain why they are seeking a longer notice period than usual. It may be that you are willing to agree to a longer notice period where the practice owner has a good reason for requesting one – a shortage of associates in the area, making recruitment difficult, for example.

Be cautious though, six or twelve months can feel like a long time when you have taken the decision to leave a practice and the relationship between you and the practice owner may not be what it once was.

 

5. Clauses protecting practice owners' goodwill

Most associate contracts will contain restrictive covenants; provisions that are intended to protect a practice owner's goodwill after an associate leaves the practice.

It's tempting to glance over these provisions since they will only apply on termination, but any future associate positions may be hampered if they are too restrictive.

Commonly, restrictive covenants in associate agreements prevent associates from working as a dentist within a particular radius of the practice for a particular period of time and from treating patients of the practice.

Top tip: You should consider whether such clauses are reasonable. In most cases, it will be difficult to justify a restricted period of more than 12 months. The reasonableness of the proposed radius will depend, amongst other things, on the location of the practice and local factors.

 

6. Retaining fees after you leave

Retention fee clauses allow practice owners to retain money from associates' fees for the purposes of remedial or replacement work after they leave the practice.

A practice owner is not able to retain fees for these purposes without express contractual authority to do so.

Retention fees can be a useful way of dealing with returning patients once you have left a practice.

Top tip: You must check that the amount you agree to leave behind is reasonable and proportionate, taking into account your length of time at the practice, the type of list you have and the number of returning patients you may have had during the last 12-18 months.

It's also important that the contract sets out when the retention fee can be used and how and when any balance will be returned to you.

 

Negotiating an associate contract that is right for you

Coming to an agreement often requires some negotiation.

If you are presented with a contract that seems skewed in the practice owner's favour, places you at increased risk or fails to reflect your needs, don't be afraid to speak up!

Before approaching the practice owner, understand a little about the practice and the position you are negotiating from – how quickly does the practice need a dentist in post; is there a shortage of dental provision in the local area; how much are other associates being paid locally? The answers to these questions, may mean that you are in a stronger position to negotiate the removal or amendment of particular terms.

During any negotiation, you should prioritise the clauses that are most important to you – don't become bogged down in discussions about clauses that are not 'deal breakers'.

Try to support your position with evidence and explanation rather than simply stating that you feel a term is unfair. The aim of your negotiation should be to get to a point that you are comfortable with.

However, if the practice owner is unwilling to make the changes you seek, you will have to consider whether your dream practice is the right place for you after all.

 

Claire Bennett, BDA Practice Management Consultant

 

Adapted from an article by Bennett, C. Associate agreements; key terms to watch out for. BDJ In Practice 2018; 9: 34-35.

 

BDA advisory services

Our advisory services team offers advice to BDA members on a huge range of issues, such as employment law, health and safety, the NHS, business support and regulatory inspections.

We also provide employment representation, an associate contract-checking service, mediation services, tribunal support and consultancy services.

With each new member, our voice and our influence grows.

Add your voice, join today.