Can You Break a Veterinary Associate Contract? | Associate Veterinary Employment Agreement Termination

Can someone break a veterinary associate contract? The short answer is yes, you can. However, if breaking the employment agreement or employment contract means that you are not adhering to the terms that you signed and agreed to abide by, you could be in breach of the contract. 

Consequences of a Contract Breach

And if you’re in breach, there are some serious consequences that you need to consider. First, sometimes contracts will have liquidated damage clauses stating that if you break this agreement, leave before you complete your term, you do not give proper notice without cause termination, there may be financial consequences which equate to tens of thousands of dollars. You want to make sure that you read your employment agreement and that you understand fully what you’re signing because you can’t just walk away without consequences.

Restrictive Covenants

The other thing you want to consider is any of those restrictive covenants. So, that’s your non-compete clause, your non-solicitation of employees. Those all still stand, so even if you break the agreement, you can still be held in violation of the non-compete clause or the non-solicitation clause. So, you want to make sure, again, you read your employment agreement and you understand that those restrictive covenants don’t go away. Even if you breach the agreement, they can come after you for damages, for the breach of the contract, and for a violation of the restrictive covenants.

Arbitration Clause

Now, most veterinary employment agreements will have an arbitration clause. That means that you’ll have to sit down with an arbitrator to discuss the damages of this breach. If they don’t have that, then your employer can sue you in court and bring forth any damages. And what’s that going to look like? Well, if they must recruit another veterinarian, the cost of that and onboarding that veterinarian if they’ve lost any business while you are gone, and this can get really serious for someone who’s very specialized and there’s a few of you out there that can fill that position.

Non-Compete and Non-Solicitation Clause

So, the short answer is yes, you can always break a contract. But what are the consequences of that going to be? You’re probably going to be in breach of the contract and that can either mean arbitration or litigation. You don’t get out of the restrictive covenants; those things stick around. You are going to have to abide by the non-compete and non-solicitation clauses. Sometimes there’s also confidentiality in there as well.

And then, lastly, it’s best just to look at your contract itself. Sometimes, well, most of the time, you should look for it and should not sign a contract that does not have a without cause termination. If there’s a without-cause termination, you just give the required notice, which is anywhere between 60 to 90 days, that’s typically an industry standard that you’ll be terminating the agreement. Then at the end of that 60 to 90 days, you walk away.

Veterinary Employment Notice

However, the restrictive covenants are always going to apply, but you’re not opening yourself up to arbitration or litigation costs because you did it properly. The other thing you want to remember if you’re terminating the agreement for without cause, you want to make sure that you give the proper notice so that 60 to 90 days start. There’s normally always a notice clause in your employment agreement contract. However, they’re vastly different. Sometimes you’re able to give your notice in person, via email, however, sometimes they have to be in writing and mailed to headquarters if it’s more of like a corporate setting, but they’re always different. And if you mail them, sometimes the notice starts on the first day and sometimes it starts the third day after you mail it in. Again, you want to read this very carefully, so you make sure that you’re not in breach of your contract.

Termination Letter in an Employment Contract

What needs to be in a termination letter for a veterinarian who’s employed at a veterinary practice? The short answer is it needs to be direct and really doesn’t actually need to include too much. To start off though, first, you need to know if you can terminate your contract if it has to be for-cause or without-cause, and you’re going to start with your employment agreement. 

There’s normally, or there should be, and you should always look for this before you sign an employment agreement, a without cause termination. And what that means is you can have a cause, or you can have no cause at all. And you don’t have to disclose that when you terminate your employment with the veterinary practice. Normally, there is a notice provision in there that states that you must give the employer anywhere from 60 to 90 days’ notice that you will be ending your employment agreement.

Giving a Proper Notice

There’s also going to be a clause in your employment agreement itself that normally states how to give proper notice. So, where are you going to be turning that termination letter into, is it a person? Do you have to mail it, hand-deliver it, or email it? Every contract should have a notice clause, however, they’re all vastly different. So again, read that employment agreement and it’s going to tell you how to turn in that letter.

Now, most of the time, I would say that it has to be in writing. Sometimes you can email it, sometimes you can hand deliver it. You also want to be careful if it does state that you have to mail in your termination letter. Normally, there’s an address where to send it, and even sometimes there’s more than one address. So, you want to be careful. Also, it will explain to you if your notice starts the day, you mail your letter, or if you have to count anywhere from one to three days before your notice starts.

Notifying the Veterinary Hospital or Clinic

This is important. You should read this before you write your termination letter because in the termination letter, all it should state is that you are terminating your employment, this is you giving you proper notice, and that your last day will be, and then you can fill that in. If you want to thank them for all of their support and opportunities, you can, but really only what’s required is that it’s in writing that you are notifying them that you’re going to terminate this agreement. 

It’s also helpful sometimes if you want to let them know that you will assist them with the transition to a new veterinarian, but all situations are kind of different, depending on your relationship with them.

Should You Give a Full or Short Notice?

If you’re ending in bad circumstances, maybe the most direct route is the best route. You do want to make sure though, that you are giving proper notice for the full-time. Sometimes we have clients call who need to give a shorter notice than what’s required under the employment agreement. It can be a little stressful because you could technically be in breach of your contract. So, if you ever need to give a shorter notice than you’ve agreed to give, you may want to consult an attorney or our office. We can also assist with that.

 So again, just to reiterate, the employment agreement if you’re terminating, it needs to be done how it’s written in the contract. And normally it’s in writing. You need to state that you are terminating your employment, you are giving notice, and that your last day, whenever that will be.

Draw for an Associate with Practice Agreements

What is a draw in a veterinary associate employment contract? A draw is related to compensation. Basically, it means how much money you are going to make each month in some way. Let’s kind of talk about the different compensation models and then when a draw would come into play. Usually, the vet would have a guaranteed base for at least the first year or two of their contract. It’s very unlikely that you would come into a new employment opportunity and just have straight productivity. In the veterinary arena, it’s almost always calculated through net collections.

Net Collections

Net collections are any of the money that the practice receives for the vet’s personally performed services.

Whatever they collect, that’s what would be considered net collections for that vet. And one common way of doing it is let’s just say you have a one-year guarantee, and the reason why they do that is it takes time to build up a practice. Now, I guess it’s depending upon what specialty you’re in, but for the most part, let’s just say you’re a general vet. You’re not just going to hop into practice and have an immediate client base. It takes a while to build up. So, they’ll give you a guaranteed base in year one. Then after year one, they’ll probably switch you to productivity/net collections model. And that’s when a draw would come into play. 

Pro-Sal Method

The veterinary industry utilizes the pro-Sal method commonly. And it’s kind of a methodology for a veterinary practice to pay their employees which allows them at least a small profit margin.

And in that method, they will basically take a projection of what your net collections would be. And the vet would then receive a smaller percentage of that per month. And then there would be a reconciliation or true up at the end of the year.

Calculation of Net Collections under Pro-sal Method

Let’s just go through some examples. Let’s say the vet is making 120,000 per year in their first guaranteed base year. And then they collected that amount as well. While under pro-Sal, they would maybe knock it back to 80%. You would make 10,000 in that scenario per month. And so, they would say, alright, what is going to knock it back to 80%? And then the vet is going to get a draw of $8,000 per month. And throughout the year, they’ll make 8,000 per month. And then at the end of the year, they’re going to take whatever the total net collections were for that vet versus what was paid out.

Downside of the Pro-Sal Method

In that scenario, 8,000 times 12 minus 6,000. And then if there is a difference, meaning, if they collected more, they would then get a percentage of those net collections. Now, the downside is if you are in a negative balance, meaning, if you collected less than they paid out, they generally are going to make you pay that back over time. And what they’ll normally do is they’ll take however much you’re in the deficit for. Let’s just say it’s $6,000. Over the next three pay periods, they might take 2000 out of your paycheck until you’re back to zero. Is that fair? It just depends. Obviously, no one wants to employ any employee that doesn’t cover their own salary and expenses.

Other Blogs of Interest

• Pros and Cons of Employment at a Corporate Veterinary Office: Corporate Vet Clinic Benefits and Work Problems
• Veterinary Non Compete Clause | Non Competition for Veterinarians

Breaking an Employment Contract?

Can a veterinarian break an employment contract? I think the most important matter is to kind of define what break means. Do you mean, can I terminate the contract, meaning, get out of it if I’ve already signed it and have started? Yes, that’s one way to think of breaking the contract. In my mind, breaking a contract usually means you’ve signed the agreement, but you haven’t started yet. But we’ll kind of look at both of those. 

Can you break a contract? 

Let’s talk about the first one first. Can you break a contract? In any employment agreement, there’s going to be language about how to terminate the agreement. And there are generally four ways to terminate an agreement.

Four Ways to Terminate an Agreement

1. You can do it if the term expires, then there’s no automatic renewal. 

So let’s say you have a two-year contract, get through the two years, neither party has renegotiated an extension, the contract ends, it’s terminated. 

2. By mutual agreement. 

If either party is like, you know what? This isn’t working out. Let’s move on. The contract can end.

3. For-cause termination. 

If one party is in breach of contract and doesn’t fix the breach, then they will have the option of terminating the contract immediately.

4. Without-cause termination. 

And that just means either party can terminate the agreement at any time, for any reason, with a certain amount of notice to the other party. In the veterinary industry, somewhere between 30 to 90 days is kind of a standard amount for without cause termination. 

Just because you’re utilizing one of those four ways of terminating a contract doesn’t necessarily mean you’re breaking it.

What Breaking a Contract Means

I feel like breaking a contract means you are not following the terms of the agreement. However, I also think many people think of giving without cause termination notice as breaking the contract. But if you’re just following the language in the agreement and it states, these are the ways you can terminate the contract and then you follow those ways, I don’t really think you’re breaking the contract. You’re just ending it. So yes, you can break the contract, and get out of it if you’ve signed the agreement and have already started, but you just must follow the terms of it.

Short-Term Notice

Now, what if you don’t follow the terms of the agreement? Like, let’s say you have 90 days without cause termination notice, and then you say, I don’t want to work here anymore, you walk into the clinic, you say, owner, I’m done. I’m not seeing any more clients. This is it. And you give one day’s notice.

Well, you’re in breach of contract in that scenario. And then you could be sued for damages. Maybe lost profits, the cost to find a replacement, short-term costs for a fill-in. These are things you could be liable for if you don’t give enough notice as required in the contract. 

Not Going Through With the Signed Agreement

Alright, let’s talk about the second way. And that would be, let’s say you’ve signed an agreement, but you don’t want to move forward with it. I think in my mind, this is kind of the most common association with breaking a contract. Many times, people will sign a contract in their last year of training. Or if they’re doing some more education or residency or fellowship and for whatever reason, they don’t want to go through with or start with the actual employer.

And that could be for several reasons. One, it could be a change in health, maybe there’s a health problem that is going to make it impossible for them to start with that employer, it could be a family situation, maybe now you have kids, or you must move back to be in your family.

Received a Better Offer

And then the third situation is you get a better offer, and you decide, I don’t want to take that job anymore, I don’t want to pursue this opportunity. If there’s a reasonable explanation as far as why you don’t want to move forward with the contract, I find most employers are understanding. As I said before if maybe you had kids in the interim from when you signed it, there’s some kind of health issue, some other family issue that’s just making your start or moving to that job impossible, just be honest with the employer and just say, look at the time I signed this, this is what was going on.

Things have changed and therefore I just can’t go through with the contract. I’d appreciate it if we can just kind of wash our hands of this and move on. It is very rare that an employer would try to come after you. I mean, they can’t force you to work, right? 

Even if you sign an employment agreement, there’s no procedure for them to force someone to work for them, but there could be damages that they suffer. And so, they could come after you legally, either through arbitration if there’s an arbitration clause or they could litigate and go through that system. I find giving them as much notice as possible and then explaining the personal part of it as far as why you don’t want to start or kind of alleviate any of those problems.

Can a Practice Require Services?

And most employers will find just letting you move on. Now, the shorter amount of notice you give the less likely it is that it won’t be a problem. So, if you’re supposed to start on Monday and on Friday, you say, oh, by the way, I can’t start, well, there may be a problem and they may come after you for that. It’s also possible there would be language in the contract that specifically addresses this issue. 

It may state, if you sign the agreement, maybe we’ve paid out some bonuses to you or stipend during training that if you don’t start, you’ll have to pay us back that amount. Or there could be a liquidated damages provision that just has a set amount, meaning, if you sign the contract and don’t start, you owe us $20,000, something like that. That’s another way that it can be handled.

Canceling the Previous Agreement for a Better Job Offer

The last way would be if you just find a better job offer. Now, if that’s the case, the employer certainly is not going to be understanding, and this could lead to a legal problem for you. There is just no employer that’s going to be like, oh, cool, you got a better job offer. And you’re just leaving us in the dark. No problem. So, you need to tread carefully about how you talk about that situation. 

It’s better to tie anything back to family concerns, or personal reasons. Just stating, oh, well, this job offered me $15,000 more, it’s a no-brainer that I take it, it’s very unlikely if you come to the employee that you sign the contract with and say, oh, well, this job is offering me this much more. Will you match it? Well, they’re just going to state, we’ve signed a contract, man.

Like, this is too bad. We’re not going to up our offer after you’ve already signed the agreement. If you can, I would stay away from using that as the reason to not start. Yes, I mean, you just have to go with your gut, but just stating to the employer, oh, I’m getting paid more so I’m taking that job usually isn’t going to fly. So, can a vet break a contract? Certainly, but there could be some repercussions that they have to think about.

Have a Lawyer Review Every Contract

Your eyes might get big when you see some of the benefits you can get just from signing off on your professional contract. However, before you get too excited about all that is contained within the contract, please consider having a veterinary contract lawyer look it over. Your lawyer can review each aspect of your contract to see if elements need to be revised before you sign off. They can also inform you about anything within your contract that you do not understand. 

A complete review of your contract will cost you some money, but that is money well spent! Most contracts offered to veterinarians are fair and reasonable, but there are cases when a contract should be rejected due to unreasonable expectations. To make sure you don’t end up signing up to work in a situation that you can’t stand, you should contact us and let us get to work, helping you figure out if the contract you are presented with is worth signing.