Tips on terminating an associate (that you should know when hiring)
In my previous column, I addressed critical issues to consider when hiring an associate and deciding if his or her relationship with your practice should be as an employee or as an independent contractor. This relationship doesn’t just set parameters on how you and the associate will work together, it also applies directly to what must occur should it become necessary for you and the associate to part ways.
A dentist has several options when terminating an associate, all influenced by whether the associate is an employee or independent contractor.
Typically, managing the effects of a termination can be streamlined from the beginning of the employment relationship, if the associate is an independent contractor. In this situation, the original employment contract should include provisions regarding notice to be given to the associate prior to the termination of employment, guidelines establishing actions that the contractor may take that would lead to termination of the employment, and an agreement on any payments that will be made to the associate upon termination.
If the parties agree that advanced notice of a termination will not be required under the contract, no advanced notice may be required by the courts. An employer would simply need to ensure that the contract is valid and that the termination sections have been followed appropriately.
If the associate is an employee, different factors must be considered in terminating the employment. Employees are entitled to notice of termination or payment in lieu of notice if they are terminated without cause. For instance, under the Employment Standards Act, 2000, an associate with three years of employment may be entitled to three weeks notice or payment in lieu of notice.
If the employer failed to provide adequate notice or payment in lieu of notice, the terminated associate may be able to file proceedings against his or her former employer through the Relations Board, or the associate could sue the former employer in Superior Court under the common law, on the basis that he or she did not receive reasonable notice or payment in lieu thereof.
Courts use various factors to determine what constitutes reasonable notice, which may include: (1) the associate’s age; (2) employment performance; and (3) difficulty in obtaining meaningful employment after termination, in addition to other factors. Proceedings may cause unnecessary expenses to a dentist, such as costs to retain a lawyer’s services, damages paid to an associate who has been wrongfully dismissed, and the legal fees incurred by the former employee. These costs can be simply avoided by ensuring that proper notice of termination has been provided to the associate.
Termination agreements can also be used to settle disputes and release the parties from claims, including breach of the notice clause of an employment contract. The claims that may be settled by a termination agreement may arise under the employment contract, provincial legislation, or at common law.
Additionally, non-solicitation clauses may be added to the termination agreement to restrict associates from soliciting employees, patients and referring dentists after the termination of the employment relationship. The termination agreement may also provide an opportunity to amend the terms of a previous non-solicitation clause, if necessary.
Non-solicitation clauses are used to restrict associates from soliciting employees, patients and referring dentists during the term of their employment and after the termination of that relationship. These terms are an important tool to protect a dental practice from unnecessary hardship upon the termination of an associate; they should optimally be included in the initial employment contract but may be established by an independent contract at a later date.
For the clause to be generally enforceable, associates must be given a benefit in exchange for waiving their right to solicit; typically, this benefit will be money paid as part of the associate agreement or termination agreement. Additionally, the terms of the non-solicitation clause must be reasonable, clear, and complete so that they can be properly interpreted and enforced.
The terms of the clause should be specific as to limitations on the associate’s solicitation activities, the geographic scope in which the associate is restricted from solicitation, and the time period during which solicitation is restricted. The clause should also define important terms, such as “solicitation,” “employees,” “patients,” “referring dentists,” etc.
The restrictions included in non-solicitation clauses must be reasonable to be enforceable. A non-solicitation clause that is unduly restrictive in terms of time limits, geographic scope, and prohibited activities will not be enforceable against the associate. Additionally, the non-solicitation clause can not be unduly restrictive to the public interest in gaining the services of a dentist.
In order to ensure that the non-solicitation clause included in an employment contract with a new associate is not unduly restrictive, it may be wise to only seek to restrict the associate’s actions within the geographic scope from which you primarily draw patients as well as provide for a reasonable time to adequately protect your practice, and only include other restrictions that are legitimately necessary in order to protect your proprietary interests.
This article is provided for educational and informational purposes only and does not constitute legal advice. For more information and advice, you should consult with an attorney.
Stuart J. Oberman, Esq., handles a wide range of legal issues for the dental profession including practice sales, real estate transactions, lease agreements, non-compete agreements and professional corporations.