GAP Australasian Dentist Sept Oct 2020

Category Australasian Dentist 125 How should my associate dentists be engaged? It is a prudent time to ensure your health house is in check … W e are commonly queried on engagement structures for health practitioners. The risks/benefits of engaging health practitioners do need to be discussed with your lawyer. We commonly see employment, independent contractor and service provider engagements - engaged under an employment, contractor or service facility agreement (SFA). Notwithstanding the stage of your practice career, whether you are selling, starting up, buying or taking on a new associate, it is highly recommended that your associate dentists have written agreements – handshake agreements are not commercial and can leave you quite exposed. There are certain statutes that deem professionals to be employees in certain circumstances. If you are unsure as to the precise engagement structure, or if your current practice structure engages associate dentists under a contractor agreement or SFA, then you should consider the quality matrix below as a guide to ascertain the true relationship between you and your engaged dentist under common law. How are my associate dentists engaged then …? Do your associate dentists have contracts or are they merely handshake agreements? Are they an employee or a contractor or a dentist conducting a practice by way of engaging a service provider (you – the owner) to provide support services? What happens if your associate dentists consider themselves an employee when you consider them as otherwise? A common example… Consider the ramifications of your 15 year associate dentist (long server) without a signed agreement. A handshake agreement may well have been all that was in place in 2005. The percentage 40% payments were agreed and everything was rosy. You now decide to sell your practice for $1mil – congratulations! You also have two casual nurses/receptionists who have been with you for three years. The common problem… As part of the practice sale due diligence your lawyer will query your associate dentist’s engagement status – it’s a handshake agreement, no written agreement. Your lawyer asks you for a list of employee entitlements for your casual staff and a brief on your associate dentist’s tenure. There is a minimal long service leave contingency to your casuals (yes casuals accrue long service leave – this is remarkably unknown by practice owners). Your long server’s remuneration is 40% including super less laboratory fees. You then comment to your lawyer (often these minor comments turn into surprise sale issues) that your long server believes they have been engaged as an employee, has found out about the sale and expects back pay for long service leave. Your lawyer then flags if long service leave is expected, then annual leave and sick leave entitlements may also be a consideration, in addition to possible tax/payroll implications to you. A complicating issue … Further inquiry then reveals that you have been paying superannuation to your long server’s fund, rather than directly to the long server – an indicator that the engagement is one of employment. So, if your long server is in fact deemed an employee, 15 years worth of leave entitlements will be adjusted (down) against the purchase price – this could be $50,000 and rising … How then do you protect yourself? Written agreements are key It is not uncommon for practices to engage associate dentists hastily without recording the terms of their engagement, and subsequently have a later dispute about the engagement which can lead to Fair Work complaints and litigation. For those reading this article who are feeling a sense of unease about their existing professional practitioner engagements, it’s not too late to create an agreement with an acknowledgment of its effective commencement date. If you are about to engage an associate dentist, run through the above quality matrix, ascertain whether you are leaning towards an employee or contractor/SFA, speak to your accountant, agree to the terms of the engagement in principle with your associate dentist and contact us to ensure an appropriate written agreement is in place. u Julian Whitehead is a partner at Whitehead Legal and he exclusively advises health care professionals in their commercial matters throughout Australia. Julian can be contacted on 0411 406 151 or via email julian@whiteheadlegal.com.au or visit www.whiteheadlegal.com.au By Julian Whitehead LL.B B.A. Quality Matrix Employee Contractor/SFA Control of practise - Low - High/total control of dentistry - Practitioners under your control - Practitioner essentially running their and dictation own practice within your practice. Equipment and Provided/paid by you Uses their own and brings their own Consumables to your practice or engages you to provide them support services Exclusivity Exclusive to you Works at multiple practices Delegation ability Low High Risk and - Risk level low – insured by you - Risk level high and is responsible wages/profits - Paid by you on a regular basis – and liable for patient claims – remunerated for hours worked carries their own insurance - Profit from each patient (completion of tasks) and invoices for work completed Superannuation Paid by you directly to their Paid by you directly to the practitioner and tax nominated fund who then pays their own super Paid leave Entitled to annual leave, long Not entitled to annual leave, long service leave, personal leave etc service leave, personal leave etc Julian Whitehead LEGAL