There have been some high-profile cases concerning the status of self-employed individuals, with companies such as Uber and Deliveroo hitting the headlines in recent years.

The issue of the self-employed status of associate dentists is also very much a hot topic at the moment – in particular, with a review HMRC has been conducting in recent times and the Employment Tribunal case of Mr A Lynn v. Damira Dental Studios Ltd. In this case, the associate asserted that he had been employed as a dentist for a considerable number of years and alleged that he had been unfairly dismissed from his employment as a dentist despite having entered a “self-employed licence agreement” with the practice owner. The Employment Tribunal looked at the facts and applied basic legal principles to find that the claimant was not an employee.

In its decision, the Employment Tribunal considered the following significant factors as evidence of self-employment:

1. Lack of mutuality of obligation
   Employment contracts contain an obligation on the employer to provide the work and a matching obligation on the employee to perform that work. However, it is important that these obligations do not exist between a practice owner and an associate, i.e. there should not be an obligation on the practice owner to offer the associate dental work on a regular basis and there should not be an obligation on the associate to perform the work. Despite this, associate agreements commonly include clauses that provide that the practice owner will introduce patients to the associate and the associate will perform a certain number of Units of Dental Activity (UDA).
2. Locum cover
   Employees are required to personally perform the work that they are employed to do but associates have a right to a appoint a substitute locum to perform the work on their behalf. Even where the associate chooses not to exercise this right of substitution and engage a locum, the fact that the right exists is enough to show that the associate agreement is inconsistent with a contract of employment and it is therefore evidence of self-employment. The right to appoint a substitute locum should be unqualified. Problems may arise where any right to appoint a substitute is subject to the practice owner’s approval or where locums may be used only in certain pre-determined circumstances e.g. when the associate is unwell or unable to work, rather than just unwilling or unavailable to work.
3. Clinical freedom
   Employees are under the direct control and management of the practice owner, who decides what the employee does and how and when they do it. Whereas for an associate, there should be no line management. An associate should have complete clinical freedom to treat patients as they see fit. Periodic auditing of the associate to ensure compliance with relevant legislations and standards will not amount to a degree of control but compliance with practice policies, such as behaviour and dress code may be an indicator of employment. Other factors that were considered evidence of self-employment include, the associate:

• being responsible for income tax and national insurance contributions;
• paying for professional indemnity insurance cover;
• not being paid holiday pay;
• sharing responsibility for laboratory costs;
• sharing responsibility for bad debts; and
• indemnifying the practice owner in respect of damage done by him to the practice owner’s equipment.

Do your associate agreements reflect the above principles? Have you had them checked in recent times? Whilst model associate agreements are readily available and come with easy to follow guidance notes, they may need to be adapted to suit individual circumstances. It is important that legal advice is sought before adapting model agreements that are available. To avoid issues regarding self-employment status, a well drafted associate agreement should include:

• Limited control – the associate should be given clinical freedom, and whilst the agreement can indicate UDA targets, it should avoid placing obligations on the associate to carry out specific work and dictating how that work is performed. Complete integration, line management and compliance with practice polices (e.g. relating to behaviour and dress code) can be an indicator of employee status.
• Use of facilities – the practice owner will need to determine when the associate can access the dental practice and what facilities the associate is entitled to use. Providing the associate with equipment required to carry out the work could be an indicator of employee status but to get around this, the practice owner should charge the associate a licence fee for use of the equipment.
• The financial arrangements – the associate should not be paid a fixed amount each month and should not receive benefits from the practice, such as pensions (not including superannuation) or bonuses, or they may be at risk of being considered an employee. The associate’s pay should be linked to the actual work carried out by the associate and should take into account laboratory bills.
• Taxation – to demonstrate self-employed status, the associate should be responsible for payment of their own income tax and national insurance contributions on their gross earnings.
• Financial risk – given that the associate will have clinical freedom, they too should be responsible when things go wrong and remedy defective treatment in their own time, at their own expense and should share responsibility for bad debts. The associate should also indemnify the practice owner for any damage caused under their watch to the facilities, including the equipment. This is in contrast to employees, who do not assume any such financial risks.
• Working hours – the agreement should give the associate flexibility in the days and hours worked. Obviously, a practice owner may wish to stipulate a minimum number of hours per week. However, a rigid approach in this area runs the risk of the associate being deemed an employee.
• Substitution – if the associate is unwilling or unavailable to work, they should have the right to appoint a locum to provide cover. The practice owner should exercise as little control over this exercise as possible. In other words, the associate should organise the locum cover, retain the locum’s revenue and pay the locum out of that revenue.
• Restrictive covenants – when the associate leaves, the agreement should include restrictions on the associate’s future activities to prevent the associate from competing with the interests of the practice. Restrictive covenants can be an indicator of employee
  status. However, it is a plausible argument that restrictive covenants are necessary to protect the goodwill of the practice.

The associate agreement itself is not enough to determine self-employed status. Once you have gone to the effort of ensuring that the associate agreement is consistent with self-employment, it is important that you ensure that the terms are followed in every day practice to avoid the courts looking beyond the associate agreement to determine whether an associate should actually be considered an employee.