An Ounce of Prevention: The Benefits of Dental Employment Contracts (Part 2)
By Paul Martin
In the last post, we provided an overview of some of the benefits a properly drafted dental employment contract can provide to an employer. In this post, we will discuss the methods by which an employer can impose a new dental employment contract on existing employees.
Implementing the Agreements
If possible, we recommend that employers put employment contracts in place prior to the employee commencing employment, by having prospective employees sign written offers of employment before commencing employment. This ensures that the terms of employment are clear from the beginning of the relationship. However, the reality is that many dental offices have employees working without written agreements in place. In cases where a dentist has employees working without written dental employment contracts, steps should be taken to ensure they are implemented sooner rather than later.
Imposing new contracts on existing employees requires a very precise approach. In these circumstances, a question we often receive once an employer has decided to implement new agreements is: “Can’t I just provide my existing employees with the new contracts? If I offer and they accept, then that’s all that matters, right?”
The simple answer is “no”. The law is clear that an employer cannot unilaterally impose new contractual terms during the course of employment. The reason for this is that for a contract to be binding, three elements must exist: 1) offer; 2) acceptance; and 3) consideration. The term consideration refers to something of value that must be exchanged between the parties to a valid contract. In the employment context, the consideration flowing from the employer is the job and payment for services, and the consideration flowing from the employee to the employer is those same services.
So, while you may offer the new contract to an existing employee, and the employee may accept, if there is no form of consideration flowing from you to the employee, then the contract will not be binding. The issue is that by imposing a new dental employment contract on an existing employee, there will be no consideration. The employee already has the job (and associated payment for that job), and the employer already has the benefit of the employee’s services. When a new agreement is imposed, only the employer is obtaining something new of value. The consideration only flows one way.
This can cause issues if the employment contract is ever challenged by the employee. A Court will find it to be unenforceable. So, after taking the time to put the proper terms into place, and believing that you have the security of a proper agreement, the contract may be held unenforceable, leaving you exposed to a claim for notice in accordance with common law principles.
How can you impose new agreements on your existing employees?
As mentioned above, you will need to provide the existing employees with some form of consideration in exchange for their signature on a new dental employment contract. We typically recommend that an employer offer an employee a bonus or raise that they would not otherwise be entitled to in exchange for their signature on the new contract. The bonus or raise acts as the consideration. We usually recommend a payment of at least $500.00. In this way, the three elements of a binding contract are in place. So long as the employee accepts the $500.00 payment in exchange for signing the new agreement, there should be no question that the agreement is valid.
What if the employee refuses the offer of a raise or bonus?
There is another method by which an employer can impose an enforceable dental employment contract upon an employee, during employment. If the employee refuses to accept the signing bonus or raise, and refuses to sign the new employment contract, then the employer can provide written notice to the employee that at a date in the future, their employment will be at an end. As mentioned above, as a rough rule of thumb, Courts provide that an employee should receive one month’s notice for each year of employment. For instance, with an employee who has been working for 6 years, you would need to provide them with notice that in 6 months their employment will terminate. Once the employer has provided the employee with proper notice and the notice period expires, the employment will be at an end. The employer can then offer the employee re-employment on the amended contractual terms. In this way, the employer is not imposing a new employment contract during employment, but rather a new employment relationship is being created.
Just like every aspect of running your practice, proper attention to employee relations is integral. As we often tell employers, “an ounce of prevention is worth a pound of cure”. Spending the time to implement proper dental employment contracts can end up saving you valuable time and money in the future. Our dental employment contracts are designed to crystallize the employment relationship. There are certain terms that are implemented to significantly limit the employers’ liability. There are a number of other benefits that our agreements provide in addition to those outlined above.
We would be happy to discuss these benefits with you and help organize your workplace in an attempt to minimize your exposure to potential future loss. If you would like to discuss the benefits of dental employment contracts for your business, please contact Matthew Wilton at email@example.com, or Paul Martin at firstname.lastname@example.org, or by phone at 416.860.9889.
*The foregoing is not intended to be legal advice and is provided for educational purposes only. You should retain a lawyer to seek advice prior to taking any legal steps.