HR update: Independent contractors in your practice

Within the dental industry, the engagement of independent contractors plays a pivotal role in ensuring smooth operations within the practice and delivering quality patient care. Here is how to best take on and embed these important supplementary workers.

Engaging and managing an independent contractor is different to the way in which dental practices would ordinarily deal with employees. This article aims to outline key considerations for dental practices when engaging independent contractors, and for independent contractors more broadly.  

Key considerations for practices  

Practices should draft and issue clear and comprehensive independent contractor agreements outlining the terms of engagement. Agreements will often include specification of services to be provided, payment structures, duration of engagement, and any relevant delegation of work particulars. Clarity in agreements mitigates misunderstandings and minimises legal disputes. Dental practices most often use independent contractor agreements or service and facilities agreements. Both templates are available via the ADA HR Hub, or by contacting the ADA HR Advisory Service.

Practices should ensure compliance with Australian taxation and superannuation requirements concerning independent contractors. This includes consideration of whether superannuation contributions are required to be made on the contractor’s behalf, or whether the contractor will make contributions themself. Where the practice is facing any uncertainty surrounding taxation or superannuation, it is recommended that you speak with a tax advisor, accountant or, more generally, the Australian Taxation Office.

Practices have a duty to provide a safe and healthy working environment for independent contractors. This encompasses implementing adequate workplace health and safety protocols and addressing any hazards or risks within the dental practice premises. Consideration for health and safety also extends to ensuring psychosocial safety in the workplace. Factors such as bullying, harassment, manageable stressors should all be considered in order to ensure that the practice is safe and healthy for all workers to attend.

When engaging contractors, practices should remain mindful of sham contracting risk. Sham contracting is where a business attempts to disguise an employment relationship as a contractor relationship. This may be done knowingly or unknowingly and may be done to avoid paying entitlements ordinarily owed to employees. While there are many complexities associated with considering whether a sham contracting arrangement might be in place, practices should broadly consider the degree of autonomy that contractors have (as compared with employees of the practice).

Unlike with employees, the relationship between a practice and an independent contractor is commercial in nature. This reflects on various aspects of the working relationship, however is of particular relevance when considering the terms and conditions agreed to within the independent contractor agreement or service and facilities agreement. Where the practice, or contractor, has any issue with the agreement, terms should be discussed, negotiated and agreed between the two parties. While standardised agreement templates can be used as a best practice guide, contractor agreements are truly commercial in nature and therefore, can be altered to best suit the working arrangement at hand.  

Considerations for independent contractors  

Before signing any agreements, contractors should clarify payment terms, including rates, frequency of payment, and invoicing procedures. It is essential to establish clear expectations regarding payment to avoid disputes or delays.

Contractors should carefully review agreement terms, paying close attention to clauses related to scope of work, termination conditions, confidentiality agreements, and liability provisions. Seeking legal advice may be prudent to ensure the contract aligns with their interests and protects their rights. Contractors should consider and understand any insurances required as part of their engagement.

Overall, successful engagement of independent contractors in the dental industry necessitates a clear understanding of respective responsibilities and obligations. Practices must prioritise clear agreements, compliance with taxation and superannuation laws and workplace safety. Contractors should familiarise themselves with their agreement before signing and agreeing to any terms, clarify any unclear terms and consider any insurance requirements. By considering these principles, both parties can cultivate productive and mutually beneficial relationships in the dynamic landscape of the Australian dental sector.

For HR assistance, contact the HR Advisory Service online or by calling 1300 232 462

This article was first published in the ADA's News Bulletin, June 2024