Contracts – What You Need To Know

Contracts are now commonplace, and becoming more complex and difficult to navigate. We tackle some of the issues doctors encounter when joining or leaving a practice.

Do you really need to read the fine print?

You’ve been offered a great job. Well, if you’ve got some fine print to read that’s a good start. We occasionally come across doctors who have accepted positions without a written contract. Although contracts can be formed through verbal agreements, this results in a lack of written evidence as to the contractual terms. We strongly recommend that you do not enter into an employment contract or an independent contracting arrangement solely on the basis of a verbal agreement.

A clearly worded contract benefits both parties

A well written contract is a benefit to both parties, as written evidence of terms and conditions significantly reduces the risk of later disputes. Provided that the contract terms are lawful, as a general rule, once it is signed both you and the other contracting party will be obliged to abide by the contractual terms – so make sure you understand what you are signing.

Is this an employment contract?

Not all contractual arrangements are employment relationships.

• Does your contract provide that you are an employee or an independent contractor?
• If you are an independent contractor, what provision is there for you to take time off for holidays or if you are sick?
• Who owns the medical records if you are an independent contractor working from a serviced practice?
• Regardless of whether you are a contractor or an employee, is the contract for a finite length of time?

If the contract is of limited duration, be aware that when that time comes to an end there may be no obligation to renew the contract – and unless it is expressed in the contract, there may be no obligation to notify you that the contract is not being renewed.

How are you remunerated?

• Are you paid by the hour or by the session?
• Are you paid a salary or based on a percentage of your billings? If you are paid a percentage of your billings, does the practice have the patient numbers that will give you a reasonable remuneration?
• If you are building up patient numbers, is there an agreed safety net below which your income will not fall?
• If you are paid a bonus, is it discretionary or is it based on clear key performance indicators?

The larger employers are likely to have industrial agreements in place that set out terms and conditions of employment, and in particular the scale of pay rates. These terms and conditions operate in addition to the basic terms in the employment contract. It is wise to get a copy of the industrial agreement before commencing employment.

When will you be working and what are the benefits?

• What hours are you expected to work in this role, and is there any flexibility?
• Are you expected to cover for other doctors in the practice or the health facility, and to what degree?
• What are the on-call demands and remuneration for on-call work?
• What leave is provided? If you are an employee, you should be provided with a minimum of four weeks annual leave.
• Is professional development leave provided, and what about study leave or conference leave?

What happens at the end?

Consider what happens at the end of employment and afterwards. Why is this important? Well, the three most common disputes we come across are the:

• meaning and effect of the termination provisions
• termination notice and termination periods
• restraints of trade post-employment.

Review the termination provisions

Can you be terminated for any reason with the giving of notice, or is it termination “for cause”? What are those “causes” you must be aware of that can be used by the employer to bring an end to your employment?

Review the notice periods

A notice period is an important term which provides time for the parties to organise their affairs before the end of the contract. For an employer, this gives them some time to find a replacement for the departing employee. For the employee, this gives forewarning of the end of employment and time to find a new position.

A longer notice period may make it more difficult to move to another job. For example, if you had a notice period of three months, another employer may not want to wait three months for you to finalise your existing job before starting with them.

Review the restraints of trade

Restraints of trade could apply during your employment and after the employment ends. Consider whether you are restricted from doing any other work during your engagement. The contract may prohibit you from working for a competitor during employment or may require you to seek the permission of the employer before obtaining a second job. If your contract is part-time this could be problematic.

Consider whether you will be able to live with the contractual restraints after the end of the contract, as these terms are often the subject of legal disputes. The contract may include a restraint clause which prevents you from working in or setting up a medical practice in the same locality for a period of time.

Any room to negotiate?

Consider the contract terms and whether you wish to attempt to negotiate changes.

Consider what you want, what is typical in the market, and think about added benefits such as time off during school holidays. Approach the negotiations carefully and professionally, as an employer can withdraw an offer of employment if you appear difficult or unrealistic.

Bear in mind that employers with industrial agreements in place may be less inclined to negotiate more favourable terms, as these were negotiated when the industrial agreement was entered into. Ultimately, if you are unable to negotiate changes, you will need to consider whether you are prepared to decline the offer of employment or live with what is offered.

Finally, before you sign on the dotted line, consider the contract terms carefully. If you don’t understand the meaning and effect of the terms, seek advice from an employment lawyer.

See also the article Contemplating Change for a case study highlighting some of the common challenges when moving from a medical practice.

Jenny Edinger
Senior Associate
Employment & Workplace Relations Team
Panetta McGrath Lawyers

Website: pmlawyers.com.au

Jenny Edinger completed a Juris Doctor in Law in 2011. Prior to studying law, Jenny worked as an Employee Relations Manager and Occupational Health and Safety Coordinator for large Australian companies. Jenny brings her practical experience of employee and industrial relations matters to the Panetta McGrath workplace relations and employment law team.