So we’re still on the topic of associate agreements. In the first blog, I talked about how they play a role in virtually every dental practice – regardless of how it is legally structured. In my second blog, I talked about some of the differences between having the associate as an “employee” vs. an “independent contractor”. In the third blog, I discussed restrictive covenants in associate agreements (e.g. non-competes and non-solicitation clauses). In the fourth blog, I talked about how to lay out the associate’s responsibilities in the associate agreement. In this blog, I’ll be discussing the often misunderstood topic of terminating dental associates.
If your Dentist Associate is an EMPLOYEE
Notice or Payment in Lieu Thereof
Now, if you’ve hired your associate as an employee, the rules are different concerning how you can terminate them. For starters, you can terminate them by simply giving them notice that they are being let go. The minimum notice period will depend on a number of factors. First, under the Ontario Employment Standards Act, 2000, the length of notice that you must provide correlates to the amount of time that they’ve been working for you. Second, under common law (or judge-made law), the amount of reasonable notice that they ought to receive will depend on the length of time they’ve been working there as well as other factors (e.g. age, seniority, etc.). If you don’t want them to be physically at the dental clinic, then you can PAY them what they are owed instead of keeping them on. This is called payment in lieu of notice and amounts to what they would have otherwise received if they just kept coming in and getting paid during the notice period.
Termination for Cause
Now, if you feel you are justified in terminating them because of something wrong, which they have done, then you can terminate them immediately and do not need to give them notice or payment in lieu of notice. This is called termination for “cause” or “just cause”. Typical things that constitute just cause include stealing, lying, regularly providing bad service (despite being warned), being incompetent, failing to follow the client’s instructions, not being loyal, breaking the law, being insubordinate towards the employer, breaching the employment agreement (e.g. by failing to show up for work), etc. You can go above and beyond what constitutes “just cause” under the common law by specifying in the actual employment agreement what will constitute “just cause” termination.
Another way in which the employee can be effectively terminated – sometimes without the employer even knowing – is through the doctrine of constructive dismissal. The idea here is that the employer has unilaterally changed a fundamental aspect of the employment relationship without providing additional benefit or compensation to the employee associate; this effectively gives the associate the opportunity to claim that they were constructively dismissed (as they did not agree to the new terms of the relationship) and seek damages for notice or payment in lieu of notice or reasonable notice under the common law.
Worth mentioning is that you want to terminate the employee in a manner that doesn’t add any unnecessary strain to the already difficult situation. Mocking, yelling at, or embarrassing the employee associate while they are being terminated is not a good idea. It could lead to a lawsuit for punitive damages. Also, you’ll want to be mindful of the fact that the Ontario Human Rights Code prohibits you from discriminating against an employee because of their sex, ethnicity, physical disability, religion, etc. Just keep this in mind! If you’re going to terminate on the basis of one of these prohibited grounds, you may end up before the Ontario Human Rights Commission and may need to pay more than you bargained for (as damages)!
Another thing worth mentioning is that, as your employee is on their way out, you may want them to sign off on certain restrictive covenants – such as non-compete and non-solicitation clauses/agreements. You may have already had them enter into these agreements at the beginning of your relationship, but it’s also a good idea to have them (if the relationship is amicable enough) sign off on a fresh agreement. The idea here is that if the original employment agreement containing these restrictive covenants is too old, then many things may have changed the realities since that time; giving fresh consideration (i.e. benefit, such as payment) to the employee in order for them to agree to give up their right to compete or solicit will help make those clauses more enforceable.
Finally, if you want to protect yourself from future claims, you’ll definitely want to enter into an employee termination agreement that strives to settle all claims and release you from liability. You can also include restrictive covenants in these agreements. The idea is that the employee acknowledges that they are receiving payment in exchange for releasing you from liability concerning their employment and termination thereof. You’ll want to make sure that you are released from all statutory claims (e.g. notice or payment in lieu thereof under the Employment Standards Act, 2000 and the Ontario Human Rights Code) and common law claims (e.g. reasonable notice, defamation, punitive damages).
If your Dentist Associate is an Independent Contractor
Now, if your dentist is an independent contractor, then many of the things written above will not apply. For example, they won’t get the benefit of statutory notice or payment in lieu thereof. Their termination will essentially be dictated by the independent contractor agreement which they entered into. This may include a notice period or payment in lieu thereof that is negotiated at the beginning of the relationship between the two parties. This may also include termination for just cause and what constitutes “just cause”. This may also include scenarios like: if the dental associate goes bankrupt, then the client can terminate immediately, etc.
Once again, it’s a good idea to have the independent contractor associate sign a termination agreement that details the termination, settles claims, releases the client from liability, and offers fresh consideration (i.e. benefit) in order for the independent contractor to agree not to compete or solicit the clients or employees of the dental practice (recall the discussion about restrictive covenants).