Documentation is very important in the hiring, firing and performance management process. Take the time to do things properly (offer letter, termination letter, performance reviews, etc.) and it will save you time, frustration and money in the long run!
Offer of Employment: Agreements and Responsibilities
A verbal offer of employment should be followed by a written employment agreement that clearly outlines the terms and conditions of employment. Without this written agreement in place, you can open yourself up to a lawsuit very easily. A documented employment agreement protects you as the employer, as well as protects the employee from unfair treatment. The new hire should sign the employment agreement and any other documentation required, before starting work. It is also recommended, as a best practice, that you have any new hire sign a confidentiality agreement.
Employment Agreements – Employee vs. Independent Contractor
Your Employment Agreement will look different and cover different areas depending on the nature of the employment relationship. For most Chiropractic clinics, administrative and support positions such as receptionist, CHA and office manager are hired as employees. When you hire an employee, an offer letter is typically presented. Conversely, in the case of hiring other healthcare practitioners, the employment agreement is usually that of an independent contractor. When you hire an independent contractor, an independent contractor agreement is typically presented. Both types of employment arrangements have advantages and disadvantages. Which you decide to pursue in your hiring practices is totally up to you.
The information that follows is comprised of considerations, examples and recommendations. For optimal advice on employment agreements and terms to be covered, it is recommended you speak to an employment lawyer.
Hiring an Employee
The employee/employer arrangement is the typical form of employment and extends to most positions in both large and small businesses. Generally speaking, employees hold a permanent position (full-time or part-time) and perform a specific role that contributes to business operations (receptionist, CHA, office manager, etc.). Employees receive a fixed and regular wage (hourly or salary) as well as benefits, pension and paid vacation. They work according to hours and rules set forth by the clinic owner and utilize the clinic’s tools and equipment to perform the job (computer, telephone, office supplies, etc.). In most cases, particularly in the case of full-time employment, employees do not work for anyone else. An employee is trained by the employer and assumes no financial risk in performing his or her duties.
In this kind of arrangement, the employee works for you. You ultimately control the functions and responsibilities that are performed and have the flexibility to modify a role to suit your needs. You direct the person in how you want these functions carried out and are very much the decision maker. There is a defined reporting relationship between you and your employees. As part of that relationship, you are responsible for evaluating performance and accountable for imparting discipline. You also have the right to terminate with or without cause. The only reason you would NOT hire someone as an employee is (a) to fill a short-term need (b) to provide a specific service on an irregular or flexible basis.
Hiring Independent Contractors
Generally speaking, an Independent Contractor is hired to perform a specific service and receives a fee for that service. When Chiropractors hire other therapists or healthcare practitioners that work independently outside of the business, this constitutes an independent contractor arrangement. Independent Contractors are not on payroll and do not receive benefits, pension or paid vacation. That being said, you must pay HST on the compensation that an independent contractor receives. Keep this in mind from a budgeting standpoint, as it can be a substantive amount at the end of a year. Compensation is usually a percentage of billings (60/40 or 70/30 is typical) but could also be an hourly rate or fee per client. Independent contractors typically have autonomy in how they do their job and they manage their own schedules. There is less reliance on the clinic owner for providing training, equipment and support, compared to an employee. Independent Contractors may work irregular hours and work for several clinics at the same time. In this kind of arrangement, the clinic owner has little control over the practitioner.
When drawing up an independent contractor agreement, it is critical to lay out all terms of the arrangement and clearly define who is responsible for what. For example, the contractor may be responsible for scheduling his or her own appointments, collecting payment, marketing him or herself and cleaning his or work area. Alternatively, the clinic may be responsible for scheduling and billing. Whatever the arrangement, it needs to be spelled out. This division of responsibility is very important because there is a fine line between being an independent contractor and an employee. As a clinic owner, you don’t want to find yourself knee deep in legal complications.