What is an associate contract?
As an associate dentist, your contract is the first step in ensuring you have the practice life you want. It’s key to setting clear expectations between you and the practice owner.
Very few enjoy the process of combing through the fine print found in associate contracts, but it’s important to have a written record of what’s expected on both sides. The contract could have a huge impact on your personal finances, too.
What should you consider before signing an associate contract?
There are several things to consider before entering a contract. As a written agreement between you and the practice owner, you should pay special attention to clauses around retention of fees and responsibility for bad debts.
No two contracts are the same, but one of the more common features of associate contracts is around substitution. This deals with what should happen if you are unable to work.
Ask yourself:
- If you couldn’t work, what would happen?
- Would you still be paid if absent?
- Would you need to hire a locum?
- Who pays for the locum?
- If it falls on you, how do you pay?
Substitution clauses will always outline the agreement between you and the practice, about who is responsible to find, approve and pay for a locum.
What happens if you can’t work?
If you’re an associate dentist and your contract states that you are responsible for finding, hiring and paying a locum, it may be worth considering locum insurance.
The shortage of dentists over the last few years has seen the cost of locums spiral. Depending on the location, the price can be anything between £500 to £900 per day.
Locum insurance can help to cover the cost of hiring a locum, usually for up to 52 weeks. So, whether it’s a short-term arrangement or a longer period of absence, you’re covered.
Receiving sick pay
As an associate dentist, you will effectively be self-employed, meaning that you cannot claim Statutory Sick Pay (SSP) from the Government. Your bills, however, won’t stop when you’re ill, which is where income protection can help.
During periods of poor health, income protection can step in to ensure your finances don’t suffer. Bear in mind that many income protection policies step in only when SSP ends. Tailored policies for dentists and doctors can offer increased cover based on your needs.
HM Revenue & Customs (HMRC) implications for associates
As an associate dentist, you should be clear about the practice arrangements set out in your contract. If challenged by HMRC, you will be expected to explain the arrangements for when you are off sick and who pays if locum cover is required.
There is a possibility that you may be considered employed if there are inconsistences in the understanding of practice arrangements.
There are two implications from this:
- You could potentially lose what is often considered a favourable tax position as well as some of the freedom and flexibility of being self-employed.
- The practice owner may become liable to pay a standard basket of employee benefits. This includes National Insurance contributions. The impact on practice profitability can be significant and, in some cases, unsupportable.
Since 6 April 2023, the dental profession has been guided to use the HMRC Check Employment Status for Tax (CEST) tool, to determine associate tax status.
Putting a financial plan in place
It’s important to think carefully about your associate contract and to identify any potential risks early on. This includes locum insurance and liability for your work. Put simply, who is expected to pay when things go wrong?
Our Specialist Financial Advisers from Wesleyan Financial Services are experts at identifying the big financial risks to you, both as a businessperson and in your personal finances.
Once the big risks have been identified, we’ll work to make sure you understand the financial plan you need to put in place to mitigate contractual risks.
Our team will take some of the burden, from research to securing the right solution for your circumstances and keeping track of any changes to your contract. This will ensure you’re always able to make an informed choice.