A strong Dental Associate Agreement in Ontario must clearly define the associate as an independent contractor to avoid CRA penalties. It should specify a standard remuneration split (often 40/60), confirm the clinic owns all patient records, and include strict non-solicitation clauses protecting the practice.
Opening and expanding a dental clinic in Ontario is a significant investment. When patient demand outpaces what a single dentist can handle, clinic owners in bustling cities like Toronto, Ottawa, and Kitchener often bring on an associate dentist. However, hiring an associate without a meticulously drafted legal contract is a massive risk. If the relationship sours, disputes over who “owns” the patients, how laboratory fees are split, and whether the associate is technically an employee can severely damage the practice.
A handshake agreement simply will not hold up in court or during an audit by the Canada Revenue Agency (CRA). The cornerstone of a successful clinic-associate relationship is the Dental Associate Agreement. This document protects the clinic owner’s goodwill while providing the associate with clear expectations. Because the Royal College of Dental Surgeons of Ontario (RCDSO) and the CRA have strict rules governing these relationships, clinic owners typically rely on a specialized dental lawyer to draft this critical contract.
Step-by-Step Process for Drafting a Dental Associate Agreement
Drafting an effective agreement is not about copying a generic template; it is about tailoring the clauses to reflect the real, day-to-day operations of your specific clinic in Ontario.
Step 1: Establishing Independent Contractor Status
💼 The most critical element of the agreement is establishing that the associate is an independent contractor, not an employee. The CRA evaluates this based on control, ownership of tools, chance of profit, and risk of loss. The agreement must clearly state that the associate maintains control over their clinical decisions, sets their own hours (within reason), and is responsible for their own taxes, WSIB premiums, and professional liability insurance. If the CRA deems them an employee, the clinic owner could be liable for years of unpaid CPP, EI, and vacation pay.
Step 2: Defining Remuneration and Fee Splits
The contract must transparently outline how the associate gets paid. In Ontario, the industry standard is typically a percentage split of the collected billings (for example, 40% to the associate and 60% to the clinic). Crucially, the agreement must specify whether this percentage is based on billings or collections (collections are much safer for the owner). It must also clearly state who is responsible for paying laboratory fees and the wages of the dental assistants or hygienists working with the associate.
Step 3: Securing Patient Records and Restrictive Covenants
When an associate eventually leaves your clinic to start their own practice, you want to ensure they do not take your patients with them. The agreement must explicitly state that all patient records, charts, and radiographs are the exclusive property of the clinic owner. Furthermore, you must include a legally enforceable Non-Solicitation Clause, preventing the departing associate from actively contacting clinic staff or patients for a specified period (e.g., 24 months) after their departure.
How Much Does it Cost in Ontario?
Investing in a professionally drafted contract is an insurance policy against future litigation and tax audits.
- Law Firm Drafting Fees: Having an experienced Ontario dental or corporate lawyer draft a customized Associate Agreement typically costs between $1,500 and $3,500 CAD.
- Reviewing Fees: If an associate brings an agreement to a lawyer for independent review, the associate will generally pay $500 to $1,500 CAD for a consultation and proposed revisions.
- The Cost of Misclassification: If you use a cheap template and the CRA later determines the associate was actually an employee, the clinic owner could face tens of thousands of dollars in retroactive payroll taxes and penalties.
How Long Does the Process Take?
⏱ A proper legal drafting and negotiation phase should not be rushed, as it sets the tone for the entire professional relationship.
- Initial Drafting: Once you provide your law firm with the commercial terms (splits, schedules, lab fees), drafting the initial agreement takes about 1 to 2 weeks.
- Associate Review: The associate should be given 1 to 2 weeks to review the document with their own independent legal counsel.
- Negotiation and Signing: Back-and-forth negotiations on minor clauses (such as the radius of a non-compete clause) usually take an additional 1 week before final execution.
Key Clauses: What to Include vs. What to Avoid
| Clause Category | Strongly Recommended | High Risk / Avoid |
|---|---|---|
| Remuneration | Paying a percentage of actual collections (money received). | Paying based on billings (you pay them even if the patient never pays you). |
| Restrictive Covenants | A strict Non-Solicitation clause (cannot actively call your patients). | Overly broad Non-Compete clauses (e.g., “cannot work anywhere in Toronto”), which courts often strike down. |
| Termination | A 30 to 90-day mutual notice period for termination without cause. | No written termination process, leading to immediate wrongful dismissal claims. |
Frequently Asked Questions (FAQ)
Can an associate legally take patients when they leave the clinic?
Generally, no, provided you have a valid and well-drafted non-solicitation clause in the agreement. While patients always have the freedom to choose their dentist, the associate cannot actively download your patient list, call them, or send them letters encouraging them to move to their new practice.
Who is responsible for fixing defective dental work?
Your contract should include a “Remakes” clause. Typically, if an associate’s work fails within a certain timeframe (e.g., 6 to 12 months) and requires a remake, the agreement will dictate that the associate must perform the corrective work at no additional charge, or bear the financial cost if another dentist has to fix it.
Should the associate have their own professional corporation?
Yes, it is highly recommended. Having the clinic’s corporation sign the agreement with the associate’s Dentistry Professional Corporation (DPC) rather than the associate personally adds a strong layer of evidence that this is a business-to-business relationship, which helps satisfy the CRA’s independent contractor tests.
Are non-compete clauses still legal in Ontario?
Ontario recently banned non-compete clauses for general employees under the Employment Standards Act. However, there are nuances and exceptions for certain business contexts, and the law regarding independent contractors can be complex. Because non-competes are notoriously hard to enforce in dentistry anyway, lawyers heavily prefer robust non-solicitation clauses instead.
Leave a Reply