As with most professions, the employment options within dentistry have changed considerably in recent years. Currently, around 80% of dentists work in the private sector, another 5% working in government positions and the remaining 15% employed by organisations like universities, or as locum dentists.
Although most dentists are still either an owner or an employee on a salary in a private practice, these aren’t the only options anymore. Increasingly, dentists are being engaged as casual employees or as self-employed independent contractors, while some practices are moving towards offering services and facilities agreements.
Range of employment contracts
There is a range of employment contracts normally offered to dentists:
1. Full-time or part-time salaried employee – This is the traditional employment arrangement where you receive a set income without the pressure to be wholly or mostly reliant on commissions.
As an employee you work under the control of the employer in terms of work hours, nature of the work you perform, equipment used and the staff involved.
Most salaried arrangements are full-time, but permanent part-time positions are sometimes offered, so you need to check before agreeing to take on a position.
2. Retainer and commission – Under this arrangement you are still an employee, but instead of a fixed salary you receive a retainer (such as a base hourly rate) plus commission payments based on the revenue you generate, less expenses like lab fees. Commissions are usually in the range of 30%-40% (including superannuation), and depend on your level of expertise, patient demand and potential other costs.
3. Casual employee – Casual engagements are becoming more commonplace in the dental profession and are paid a higher hourly rate than a full-time or part-time employee. This is called a casual loading and is to compensate casuals for not receiving certain employment benefits available to full-time and part-time employees, such as paid sick leave and paid annual leave.
Range of contractor agreements
Common engagements for self-employed independent contractors in the dental profession include:
1. Independent contractor agreement – As an independent contractor, you are self-employed and viewed as a separate business entity from the dental practice. Most contractors operate as either a sole trader or a company, so they face all the normal tax and accounting obligations of a small business.
As a self-employed independent contractor you can choose the hours you want to work, but you will need to provide for your own insurance, sick pay and holiday pay. Depending on the individual practice, you may be responsible for providing your own equipment and will not have access to employee entitlements such as workers’ compensation cover, administration and materials.
Self-employed independent contractors do not always receive a guaranteed level of income, so while this form of engagement gives you more freedom to select your own hours, it can be very challenging when you first enter the dental profession.
2. Services and facilities agreement (SAFA) – Under these engagements, you are essentially operating a small, independent business within another dental practice and are viewed as a separate business entity by the ATO. Although similar to a self-employed independent contractor agreement, a SAFA requires you to pay the practice an agreed percentage of the fees, or a set fee, of what you earn to compensate for use of the practice’s administrative services and professional facilities.
Employee or contractor?
It can often be difficult to tell whether a practice is offering to engage you as an employee or as a self-employed independent contractor. A key difference between the two types of engagement is an employee works in the business and is part of it, while a self-employed independent contractor runs their own business supplying a service to the practice.
To understand whether you are being engaged as an employee or self-employed independent contractor, you need to look at the terms of the work arrangement you are being offered. Unfortunately, there is no single test that determines whether you are an employee or a self-employed independent contractor.
ADA members, i f you are uncertain about what type of engagement you are being offered, or if you would like more information about the terms and conditions of a particular engagement, you can contact the ADA HR Advisory Service and they will be happy to explain contract conditions with you.
