Agreeing with Associates

John Grant Director from Goodman Grant Solicitors discusses the need for practice owners to have bespoke written associate agreements in place.

From a lawyers perspective, when you consider the legal test 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.

Take this scenario for example: 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 they could pursue a claim for unfair dismissal on the basis that they were employees all along. This could then culminate into a sizeable compensation sum in excess of £75,000. Even if not successful, those proceedings would be stressful, expensive in terms of legal fees and time consuming. It is the case where there is no written associates agreement in place that tribunals have been minded to find that the associate was in fact an employee.

In addition, not only are there the risks of compensation claims, there are also tax implications. If the Inland Revenue were to pursue a claim, 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. A few years ago there was a case where a well-known weight loss company found itself in this position and it cost the company millions in tax that had to be paid to the Revenue.

Consider the criteria applied by courts and tribunals to determine if someone is an employee or self-employed:

1. 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. The courts have held that where there is any limitation on an ability to appoint a substitute this is evidence of a contract of employment.

2. 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.

3. 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 out of hours emergencies, this too suggests a degree of control that is most commonly found in an employee/employer relationship.

4. Other Factors – when a court or tribunal is considering whether someone is employed or self employed, they will look at the reality of the entire situation.

Example 1: If an associate has an unfettered discretion to work for other organisations/practices it would go some way to indicating it is not an employee/employer relationship. But if there are restrictions on where they can work, whilst they are at the practice, it is indicative of the associate being an employee.

Example 2: If there were no end date on the contract, this would indicate employment. However if the agreement is time limited this would more obviously be a case of self-employment.

Example 3: In the case of dental practices, associates perform duties, which are absolutely essential to the nature of the business and are therefore more likely to be indicative of the employee/employer status. Generally an independent self-employed contractor may perform an ancillary role.

Example 4: If an associate provides their own equipment it would indicate self-employed status, but if they are only able to use the equipment provided in the practice it would suggest an employer/employee status.

Another area to consider is that if an associate agrees to correct failed treatment in their own time as well as at their own expense, this would be evidence that they are self-employed. Most associate agreements stipulate the latter but not the former.

In each case courts and tribunals look at the reality and the individual circumstances. It is not possible to say across the dental industry, associates are employed or self-employed. However it is certain that if there is no written agreement and a claim arises, there is a very real risk that associates will be found to be employees. What’s more, if you have an associate contract that has not been approved by Inland Revenue or have no contract at all, you are again running a very significant risk.

John Grant of Goodman Grant Lawyers for Dentists – a Past Chairman of ASPD

For more information call John Grant on 0113 834 3705 or email [email protected]



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