When purchasing a dental practice, understanding and reviewing employment law compliance is crucial. The dental practice you are acquiring likely has a team of employees, and ensuring that all employment practices are compliant with relevant laws will help you avoid potential disputes, penalties, or reputational damage. Here's a guide to what you need to check when reviewing employment contracts, award compliance, and staff entitlements during the acquisition process.
1. Review Employment Contracts
Why it’s Important
Employment contracts outline the terms and conditions under which employees work, including their rights, responsibilities, and entitlements. Understanding these contracts helps ensure there are no hidden liabilities and that staff are treated fairly and legally.
Key Areas to Review
Position and Duties: Ensure that job roles and duties align with the practice’s needs post-acquisition. Any changes should be communicated to (and agreed by) employees.
Remuneration and Benefits: Verify that salaries, bonuses, commissions, and other benefits are clearly outlined and in line with market standards.
Termination Clauses: Review termination procedures, including notice periods, redundancy clauses, and severance packages, to ensure compliance with the Fair Work Act.
Non-compete and Restraint Clauses: Ensure any non-compete clauses are reasonable and enforceable.
Dispute Resolution: Look for clear procedures regarding grievances, disputes, and conflict resolution between employers and employees.
Considerations for Buyers
Transfer of Contracts: Check if employee contracts need to be transferred to you, or if there are no contracts, whether new contracts must be created after the sale.
Employee Rights: Employees cannot be treated less favorably following a change in ownership under the Fair Work Act 2009 (Cth). Understand how the transfer of ownership affects employee rights.
2. Award and Enterprise Agreement Compliance
Why it’s Important
In Australia, many dental employees are covered by either modern awards or enterprise agreements that set minimum pay rates, working conditions, and other entitlements. Non-compliance with these legal standards could lead to penalties and employee disputes.
Key Areas to Review
Modern Awards: Confirm which modern award applies to the dental employees at the practice (e.g. Health Professionals and Support Services Award 2020). This award outlines minimum pay rates, overtime, penalty rates, and other conditions.
Enterprise Agreements: If the practice is covered by an enterprise agreement, ensure it’s still valid and compliant with Fair Work requirements. Enterprise agreements often provide terms more beneficial than modern awards.
Classification of Employees: Ensure employees are classified correctly under the relevant award or agreement based on their duties and responsibilities. Incorrect classifications can result in underpayment claims.
Hours of Work and Overtime: Review staff schedules and overtime arrangements to ensure compliance with the award’s provisions on work hours, overtime pay, and rest breaks.
Considerations for Buyers
Pay Audits: Perform a pay audit to ensure that the practice has been paying employees correctly according to the relevant award or agreement.
Record Keeping: Check that the practice has maintained accurate records of employee hours worked, wages paid, length of service and entitlements.
3. Employee Entitlements
Why it’s Important
Employees in Australia are entitled to a range of benefits under the Fair Work Act and other legislation, such as annual leave, sick leave, and long service leave. Understanding these entitlements before purchasing the practice ensures you can manage and budget for these costs appropriately.
Key Areas to Review
Leave Entitlements:
Annual Leave: Confirm that all employees have accrued the correct amount of annual leave and that it is properly recorded.
Sick Leave: Review sick leave entitlements to ensure they are in line with the National Employment Standards.
Long Service Leave: In most Australian states, long service leave is an entitlement after a certain number of years of service. Review employees' leave records and ensure that you are aware of any upcoming liabilities.
Superannuation Contributions: Ensure that the practice has been meeting its superannuation obligations by reviewing payment records and verifying contributions. Non-compliance with superannuation obligations could result in hefty fines.
Public Holidays and Penalties: Review the practice’s policies around public holidays and penalty rates to ensure staff are compensated correctly for working on those days.
Workers' Compensation: Ensure that all employees are covered by appropriate workers’ compensation insurance, particularly if there have been any past claims.
Considerations for Buyers
Accruals and Liabilities: Be aware of any accrued leave or other entitlements that may need to be paid out upon an employee’s termination post-acquisition. These costs can significantly impact the financials of the acquisition.
Contractual Entitlements Post-Acquisition: When acquiring the practice, you will inherit responsibility for ensuring that employee entitlements are honoured. Make sure you are prepared to manage these obligations.
4. Workplace Health and Safety Compliance
Why it’s Important
Dental practices must comply with strict workplace health and safety (WHS) regulations, ensuring the well-being of staff and patients. Non-compliance can lead to fines, penalties, and workplace injuries.
Key Areas to Review
Workplace Safety Policies: Ensure the practice has a comprehensive workplace health and safety policy, including risk assessments and safe work procedures for dental procedures.
Injury Claims: Investigate any past workplace injuries or compensation claims, and ensure that the practice complies with Work Health and Safety Act 2011 (Cth) requirements.
Training and Certification: Ensure staff have received the necessary training in infection control, radiology safety, and emergency procedures.
Considerations for Buyers
WHS Records: Request copies of past injury and safety reports to assess the risk and history of workplace safety issues.
Audit and Review: Conduct a WHS audit to ensure compliance with all federal and state regulations, as well as to identify any potential risks or areas for improvement.
Conclusion
Ensuring employment law compliance is a crucial aspect of acquiring a dental practice in Australia. By thoroughly reviewing employment contracts, an employee handbook (policies and procedures), award compliance, staff entitlements, and workplace safety, you can avoid costly disputes and legal issues post-acquisition. With proper due diligence, you’ll be well-positioned to run a compliant and successful dental practice.