Contracts – the basics every doctor should know

Contracts and legal jargon can be quite confusing. The good news is that most contracts are not as overwhelming as they seem at first glance.
 
For those practitioners entering written agreements as independent contractors with the practice providing support services to them, there are some key aspects to consider.
 
Setting the scene
Parties to the contract should be clearly identified including the Pty Ltd that owns the business and has an ABN. Similarly, your own service entity under which you work, the name and ABN should be noted.
 
Is the term, the commencement and end date clearly identified, or is there no set end date? Many contracts are intended to be ongoing, with reasonable options for either party to terminate the contract according to the terms agreed.
 
The parties’ obligations
Most contracts document what’s expected of the practitioner – and most of these expectations mirror aspects of the Medical Board’s Code of Conduct – but keep an eye out for any unreasonable expectations that may require negotiation.
 
The contract should clearly list the range of services the practice will provide. It’s important that you’re able to request regular billing summaries, to allow you to review what has been billed under your provider number.
 
Payment arrangements
Where the income from your billings is paid – the practice account, your own account or a trust account – should be clearly set out in the written agreement. The transaction cycle should also be clearly stated, ie every seven days, 14 days, etc.
 
Hours and leave
If you’re independent and not an employee, you should have the freedom to decide what hours you work and when you take leave. However, it’s a reasonable request that there be an agreement upfront regarding the working hours and planned leave.
 
Medical records
The contract should specify who owns the medical records.
 
Confidentiality
Most contracts include reference to current privacy laws, but often go further to protect any operational or trade secrets.
 
Taxation elements
An independent contractor is responsible for their own tax as a starting point. As with many things, the taxation aspects of a contract have become more complicated as the years have gone by. We recommend you discuss the taxation clauses with your accountant.
 
Insurances
Contracts often refer to the insurances that each of the parties are required to hold. If you sign a contract agreeing to do so, you should ensure you meet this obligation.
 
Restraints
Restraints of trade are becoming less common due to their effect on certain taxation elements.
 
However, if your contract includes a restriction, either during or after termination of the contract, then you need to read it carefully and understand the potential consequences. If the clause is reasonable, it may be enforceable.
 
Termination
Unless the contract is for a fixed term without an early termination option, it should clearly set out the rights of the parties to terminate. In the first instance, there should be a mutual right to terminate without cause by way of a minimum timeframe in which written notice must be provided.
 
This article was commissioned by MDA National and independently reviewed by newsGP.
 
The above information will hopefully take some of the confusion out of the contract process, but if you have any concerns, we recommend you seek advice from a lawyer and/or a tax accountant.
 
This article is provided by MDA National. They recommend that you contact your indemnity provider if you need specific advice in relation to your insurance policy or medico-legal matters. Members can contact MDA National for specific advice on freecall 1800 011 255 or use the “contact us” form at mdanational.com.au.
 
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