⛓️ GP Contracts Simplified, Part 2

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Restraint of Trade Clause

This clause exists in most GP contracts and I think it would be fair to say that it is one that doesn't receive as much attention as it deserves

Surgery owners tend to downplay it as "oh that's just a standard clause in all our contracts" and contractors are usually focussed on other aspects of the deal, like the percentage fee, the billing model, or the MIG (covered in my last post)

When things are going smoothly, this clause has no bearing on the day to day working and I would hazard a guess that most contractors when pressed would not be able to quote the exact nature or duration of their Restraint.

So, what is it?
In short, the clause bars or restrains a contractor from working in a specified area, usually expressed as a radius of X Kms, if they decide to leave the surgery. Often left unsaid is the duration of this restraint. For the clause to be valid, it must specify a time period as well. It cannot be for perpetuity. A typical clause might be worded like this:

the Practitioner undertakes and agrees that the Practitioner will not without the prior written consent of the Practice during the Restraint Period be directly or indirectly engaged, concerned or interested in any capacity in any business, undertaking or venture within the Territory in competition with the Practice.
- Clause from Author's own contract

There is lot of confusion whether this clause has any legal validity especially with regards to Independent Contractors, which is how most GPs contract with Surgeries. This is not mere semantics.

If you are an independent contractor, then the patients are your clients and if they choose to see you in an another building or premises, you are not competing with your previous Surgery.

The business of the Surgery is providing services to its contractors, not looking after patients. That's the business of the Individual Drs.

The ATO is scrutinising the Contractor status after a recent High Court Ruling

If you are deemed to be an employee, you should be paid Super, annual leave, Workcover and other benefits.
Suffice it say that this is non existent in Australia.

However, the general consensus is that if you signed the contract, it is valid and testing this in a Court of Law will require deep pockets - GP surgeries generally have deeper pockets than yours!

Assuming it is valid and you are bound by this Clause, how would it affect you?

There are several scenarios that can play out.
It isn't always the case that a Dr wants to leave a Surgery because of a falling out. There can be personal reasons. One may have acquired different skills, one may want to open their own Surgery. One may have outgrown the Surgery's billing model.

Imagine a Contractor GP working in a Bulk Billing Surgery who no longer wants to BB. The owner doesn't want to change the model (which by the way is another factor which would suggest to the ATO that you are in fact an employee).

So you want to move to another surgery which does indeed offer mixed or private billing. But, now your Surgery owner dusts off the contract, points to the Restraint of Trade clause and says you can't practice within a 10km radius.
In a metro, even 5kms will place you several suburbs out. In a remote or rural setting, you will be out of the town, period. You may have worked in the area for several years and have a loyal base of patients. Moving elsewhere means starting from scratch. Again!

This situation is ripe for a ruling by the ATO and if and when this happens it will shake up the setup of General Practice in Australia big time.

Till such time I strongly recommend that you pay more than a cursory look at this clause and if you are an Independent Contractor, simply point out the contradictions contained in the contract and work to remove this clause or clarify your working relationship. Signing the contract and then hoping for the best is not a good strategy. The big corporates for example will spend $$ to make an example of you to deter others.

Next time I'll look at Billings

Till then...