John Grant Director from Goodman Grant Solicitors discusses the importance of bespoke written associate agreements.
If you were to study the legal test into whether someone is an employee or self-employed, you might quickly conclude that most dental associates are employees. The dental profession has quite frankly always enjoyed what can only be called a special dispensation from the Inland Revenue. In other words, the Revenue have not, as yet, challenged dental associates’ self-employed status. Although there is little sign of this changing at present, that is not to say it never will and it is certainly better to do what one can to protect oneself – not only against the Revenue, but also against claims of unfair dismissal by former associates
If there is no written associate agreement and a practice principle decided to terminate an associate’s contract, that associate could seek legal advice and if it was deemed that they were an employee, they could pursue a claim for unfair dismissal. This could then culminate into a sizeable compensation sum.
In addition, not only are there the risks of compensation claims, there are also tax implications. If the Inland Revenue were to pursue the case, it would be entitled to ask the principle to pay all tax that the associate should have paid as an employee over their entire period of employment. This is regardless of any tax the associate may have already paid.
Consider the criteria of the legal multiple test that is used to determine if someone is an employee or self-employed:
Personal service – does the servant have to perform the service personally or can someone else carry it out
In most associate’s agreements, the right to appoint a locum is provided – however in the vast majority of cases, it is limited and may only apply if the associate were away ill and even then, the appointment of a locum is usually subject to the practice owner’s approval.
Mutuality of Obligation- An obligation to do the work and an obligation to be paid for it.
The overall reality of a dental practice is that the principle or owner does introduce patients. Whilst many associate agreements state there is no obligation, the reality is that such an obligation does exist – otherwise principals would quickly find associates giving notice to leave the practice. When the work is complete, there is the obligation to pay the associate.
Control – how much control does the employer exercise over how the servant carries out their job?
Not only are there controls imposed by CQC, the NHS and the GDC, but in addition many written agreements stipulate that associates must comply with the practice policies and procedures – even to the extent of requiring associates to participate in practice appraisals.
Similarly, most large dental corporates go into great detail within associate contracts to explain exactly how the individual should perform the work, which I would submit is entirely contrary to the notion of associates being self employed. If they are required to attend team meetings and have to attend out of hours emergencies, this too suggests a degree of control that is most commonly found in an employee/employer relationship.
John Grant of Goodman Grant Lawyers for Dentists - a Past Chairman of ASPD