In brief
An employee dentist works under an employment relationship, usually for a salary, while the practice carries the costs and the business risk. An associate is a contractor who practises in someone else's practice, typically for a share of billings, with more autonomy and more of their own costs. How the relationship works in fact, not its label, decides which it is, and whether an associate is a dependent or an independent contractor.
Many dentists practise, for part or all of their careers, in a practice they do not own. Two common arrangements are employment and an associateship. They can look similar day to day, but they differ legally in control, compensation, liability and tax treatment. Legal advice should be sought to ensure the structure works as intended; otherwise, costly adverse legal consequences may follow.
What does an employee dentist's relationship look like?
An employee dentist works for a dental practice or dental organization under an employment relationship. The employer runs the practice and is responsible for its day-to-day operations and carries the financial risks.
Dentists themselves are excluded from the protections other employees receive under the Employment Standards Act (ESA)[1]. An employee dentist’s minimum entitlements, including notice of termination or wages, therefore come from the employment agreement and the common law rather than the ESA. The ESA does apply to most other staff in a dental practice, such as dental hygienists, dental assistants and reception staff.
The relationship between a dentist employee and the employer is governed by:
an agreement, which can be oral or written;
applicable professional obligations set by BCCOHP; and
other legislation applicable to employment relationships, such as the Human Rights Code, the Workers Compensation Act, and the Personal Information Protection Act.
An employee dentist may be paid a fixed salary, a salary based on commission, or a combination of both. The employer is legally responsible to make statutory remittances to CRA on a set schedule, the failure of which creates a liability not just for the practice, but also for the practice’s corporate directors personally. Since the ESA does not apply to dentist employees, the practice’s corporate directors cannot be held personally liable under the ESA for their unpaid wages.
A written employment agreement should be entered into to address compensation, vacation, probationary period, duties, reporting structure, and termination – among other things.
What is an associate arrangement?
An associate practises in an established dental practice without owning it. The associate is an independent contractor and is typically paid a percentage of their billings, less lab and clinic costs, under an associate agreement.
Unlike an employee, an associate tends to have more autonomy to set their own schedule and decide how many hours to work, and is responsible for the cost of the supplies, materials and lab work they use.
An associate may be engaged as an individual or through the associate’s dental corporation.
Legal advice should be sought to ensure that an associate relationship is properly structured and maintained; otherwise, the employer’s liabilities for withholding taxes and other deductions and remitting them to CRA that are applicable to an employment relationship may unintentionally follow, regardless of how the nature of the relationship is labelled.
Is the associate a dependent or independent contractor?
With respect to payroll remittance obligations under federal law, CRA only considers a worker to be either an employee or an independent contractor. The employer’s liabilities for payroll remittance obligations apply only to workers whom CRA considers to be employees.
With respect to contractual relationships between a practice and a non-employee worker under BC law, the non-employee contractor is generally considered to be either a dependent or independent contractor.
A dependent contractor is economically dependent on the practice whereas an independent contractor is not[2]. An associate with their own “book of business” would be more likely to be considered to be an independent contractor. An associate who receives nearly all of their work from the practice is more likely to be considered a dependent contractor.
The difference is critical.
In the absence of protection from the ESA, the common law has developed certain general entitlements for dependent contractors that independent contractors do not enjoy. For example, a dependent contractor is generally entitled to notice of termination or pay in lieu of notice[3].
Does calling an associate a contractor make it so?
No. Whether a relationship is legally one of employment depends on the actual circumstances and the applicable law, not on what the parties call it in their agreement. The courts and the Canada Revenue Agency each make their own determination.
In deciding whether a dentist is an employee or a contractor, they may examine factors such as the extent of:
control over the work, including scheduling and how the work is done
ownership of tools and equipment
the chance of profit
the risk of loss
the source of work
written agreements
tax remittances
If an agreement describes a contractor relationship but the associate is in fact controlled like an employee, the relationship may be treated as employment for tax purposes and as employment, or at least a dependent-contractor relationship, for other legal purposes. An associate agreement should therefore reflect these factors, and the arrangement should operate consistently with what the agreement says.
Ultimately, the applicable authorities may take a different position and therefore the employer always carries a risk that an associate relationship may be characterized as an employment or dependent-contractor relationship. For example, if CRA decides that the relationship was employment, the employer may be obligated to make all statutory remittances it failed to make plus applicable penalties and interest, which can be quite costly.
Although labels are not a determinative factor by themselves, written agreements are an important factor that authorities will consider in deciding the type of relationship. Dentists should seek legal advice and ensure their intended arrangement is properly documented.
What should an associate or employment agreement cover?
Whether the relationship is structured as employment or as an independent contractor relationship, the agreement should address the following topics, although the terms will differ depending on the nature of the relationship.
Topic | Employee | Associate |
|---|---|---|
Compensation | Not subject to the ESA minimum wage (dentists are excluded from the ESA); may be fixed, commission-based, or a combination of them. | Typically a percentage of billings, less lab and clinic costs. |
Withholding payments | The employer must withhold income tax, CPP and EI, must also pay the employer’s matching CPP contributions and 1.4 times the employee’s EI premiums, and must remit all of them to CRA on a set schedule. Directors of a corporate practice can be held personally liable for the corporation’s failure to do so. The employer’s mandatory CPP and EI contributions effectively increase the cost of the employee. | The practice has no obligation to withhold any payment. The associate is responsible for their own tax remittances and CPP contributions (both portions); self-employed individuals generally pay EI only if they opt in. |
Duties | Employer has fuller control over how the employee performs their duties. | The associate has more control over how to perform duties but the employer may set protocols and standards. |
Professional insurance | Employer typically pays for an employee’s professional insurance. | An associate covers their own professional insurance costs. |
Continuing education | Employer typically pays for an employee’s continuing professional training. | An associate covers their own continuing professional training costs. |
Non-competition | Non-competition provisions are harder to enforce in an employment relationship, and legal advice should be sought to ensure any such limitation is considered to be reasonable. Typically, a non-competition provision during a term of full-time employment is considered reasonable. | Non-competition is more likely to be enforceable but legal advice should still be sought. |
Termination | Termination is subject to the employment agreement and common-law reasonable notice; the ESA’s termination pay rules do not apply to dentists. | Length of termination notice may be set by contract and is not subject to legislation, but courts do have the inherent jurisdiction to decide its enforceability. |
Tax savings | Deductions available to employees to reduce taxable income under the Income Tax Act are limited to specific prescribed expenses. | Associates may generally deduct reasonable expenses incurred to earn income, subject to limitations (e.g. the 50% limit on meal expenses). |
Non-solicitation | Non-solicitation provisions typically limit soliciting employees, suppliers, and patients. However, patients have the right to choose their own dentist regardless of any non-solicitation arrangement. | |
Professional negligence | Whether an employee or an independent contractor, the dentist should be required to report any professional negligence claim to the practice. | |
Whether a dentist practises as an employee or an associate affects compensation, tax and each party's obligations. In either case, a written agreement that matches how the relationship works in practice protects both the dentist and the practice.
Notes
Section 3 of the Employment Standards Act, RSBC 1996, c 113; and paragraph 31(2)(c) of the Employment Standards Regulation, BC Reg 396/95.
Cvjetkovich v Breezemax Web (Ca) Ltd., 2024 BCSC 808, at para. 36.
Cvjetkovich v Breezemax Web (Ca) Ltd., 2024 BCSC 808, at para. 44.
This article is select general information about the laws of British Columbia, including the federal laws of Canada applicable in British Columbia, as of its publish or last-reviewed date. It is not legal advice and does not create a solicitor-client relationship. Please obtain advice about your specific situation before acting. See our Disclaimer.