The importance of written agreements

When the word ‘written agreement’ is mentioned in the context of a dental practice, this can cover a multitude of sins. It is important that all legal agreements are recorded in writing but of those, having a written associate agreement is of absolute importance.

Why?

If you are engaging an associate dentist, there is a common misconception that they are self-employed – because that is how HMRC has historically viewed them for tax purposes – and that whatever their associate agreement says or doesn’t say is of little significance.

If recent reports come to fruition, then it may be that dentists are next on the list for HMRC tax investigations in relation to self-employed status, but equally, this has been talked about before without any action.

However, if the only indicator of self-employed status of a dentist is how their income tax and national insurance contributions are dealt with, this is not necessarily going to convince an Employment Tribunal if an associate dentist challenges their employment status.

It is the case that what the written agreement says is only part of the puzzle, but it is also the starting point for a court or tribunal, should employment status ever be challenged – either alone or as part of a wider claim.

Equally, following recent case law, it is extremely important that the terms of an associate agreement reflect the reality of the relationship between the practice owner and the associate as a self-employed contractor. It is also essential that the agreement does not suggest the situation is of an employer/employee relationship. It is not enough to have a document which indicates a self-employed contractor, but actually, has all the hallmarks of an employee.

Similarly, the lack of a written agreement means a court or tribunal will have to look straight to the course of dealings and the reality of the relationship between the parties. This comes with more risk of an adverse finding against the practice owner. The courts will only look at the terms of an associate agreement as part of their review in making a decision. It is no use relying on the assumption that a decision will be made based on a written agreement that doesn’t reflect the reality. Consequently, you must take special care to have an agreement in place that reflects what happens on a day-to-day basis.  

If you have not got written associate agreements in place, this may leave you open to an employment status claim from an associate who, if successful, may then gain employment or worker rights. This includes the right to sue for unfair dismissal.

Other Considerations

If you do not have a written associate agreement in place, you also do not have the benefit of post-termination restrictions (restrictive covenants). This, in itself, poses a serious risk to the goodwill of your business.

In the absence of post-termination restrictions, an associate can walk out tomorrow and setup in competition with you next door the following Monday.

In any event, for a positive relationship during the engagement of an associate, a written agreement provides both parties with a clear set of terms to work under, as well as protecting the practice owner’s business interests when the engagement comes to an end.

Who else should have a written agreement in place?

If you engage consultants, bookkeepers or cleaners, it is equally important that each individual has a written agreement – whether as a service agreement (self-employed), a contract of employment (permanent or temporary), or a zero hours contract worker for the same reasons explored above.

Given the current climate of employment law and – in particular – employment status, it is of paramount importance that contracts and agreements are appropriate. A one size solution no longer fits all.

An investment in issuing written agreements to your staff and contractors can minimise future risks, as well as ensure you follow best practice from a HR and legal perspective.

Practitioners may be concerned that drafting fair and thorough written agreements is somewhat of a complex and lengthy task, so it may be worth seeking out a reliable dento-legal solicitors who can aid in this process. The expert team at Goodman Grant have the extensive knowledge and experience required to help you put together balanced and comprehensive written agreements, so you are able to avoid the risk of disputes arising in the future.

Ray Goodman
Managing Director
Liverpool
John Grant
Director
Leeds
0113 831 4472
Paul Harris
Director
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Ifath Khan
Director
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Paul Edels
Director
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Hewi Ma
Director
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Kate Beech
Director
Heather Meakin
Director of Business Services
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Solicitor
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