Associate contracts: What you need to know

Starting work as an associate is an exciting time. But the first time you negotiate your contract (or even every time you do) can be a daunting prospect.

Your contract is the foundation for the practice life you want, setting clear expectations between you and the practice owner. So, it’s important to know the ins and outs, what you’re looking for and what you want.

While diving into the fine print of associate contracts might not be thrilling, it’s crucial to have a written record of what’s expected from both sides. Plus, your contract can have a significant impact on your personal finances.

What you should consider before signing a contract

Before you negotiate and sign your contract, there are several key factors to consider. As this is a written agreement between you and the practice owner, you should pay special attention to clauses about retention of fees and responsibility for bad debts.

No two contracts are the same, but many include substitution clauses, which outline what happens if you can’t 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 detail the agreement between you and the practice about who is responsible for finding, approving and paying for a locum.

What happens if you can’t work?

If your contract states that you’re responsible for finding, hiring and paying a locum if you’re unable to work, it’s worth thinking about what you would do in this situation. The cost of locums has skyrocketed in recent years, ranging from £500 to £900 per day, depending on the location.

So, you need to ask yourself, how would I pay for cover? Can I afford to? Do I need to build an emergency fund to keep me financially secure if I were to fall ill? Answering these questions will help you get a plan in place for if you need to take time off.

You may want to consider taking out specific locum insurance to cover these costs. Good locum insurance can cover the cost of hiring a locum for up to 52 weeks, whether it’s a short-term arrangement or a longer period of absence.

Either way, it’s smart to explore your options and have a plan in place.

Receiving sick pay

As an associate dentist, you’re effectively self-employed, meaning you can’t claim Statutory Sick Pay (SSP) from the government. However, your bills won’t stop when you’re ill.

Again, ask yourself if you will be able to cover your essential bills without short-term (or even long-term) income. It could be worth looking into income protection to understand if this is for you.

Negotiating your UDA rate

Your contract will specify the amount you’ll receive for each Unit of Dental Activity (UDA) you’ll perform. It’s likely the principal dentists will have a figure in mind, but you can negotiate.

Fellow associate, Diana Omar, says: "Set yourself a reasonable target, say 1000 UDAs for every day you work within the year. In other words, if you’re working five days a week, your target for the year should be 5000 UDAs. As you become more experienced, you can increase your UDA targets.

"In terms of UDA rate, don’t be afraid to politely ask for more than the rate you’ve been offered.

"In my experience, when I’ve asked employers for a higher rate, they do tend to increase it – even if it’s just by 50p. Although this sounds like very little, if you’re working five days a week, this adds up to an extra £2,500 a year.

"If you work in an area with a lower demand for dentists, you’re likely to be offered a lower rate per UDA. However, if you work in an area where there is a higher demand for dentists, the UDA rate tends to be higher. So, do some research before you agree on a rate."

HM Revenue & Customs (HMRC) implications for associates

Be clear about the practice arrangements set out in your contract. If challenged by HMRC, you’ll need to explain the arrangements for when you’re off sick and who pays if locum cover is required.

Since April 6, 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 carefully consider your associate contract and identify potential risks early on. Make sure you have a financial plan for the things you need to cover and you’re happy with the working relationship you’re setting out with the practice owner or management team.

Once in place, you can focus on being part of the practice team and enjoying your work – knowing you’re happy with the terms you’ve agreed and have a plan to fall back on, should you need to take any time off work.