If you run an allied health practice and engage people as contractors or consultants, having a solid contractor agreement is crucial because everything seems fine… until it’s not. One of the biggest risks with allied health clients is having contractors working within their practice without any formal contracts in place. Often, all that’s needed is an independent contractor agreement to protect your business – simple but vital.
Contractors differ from employees as they are independent, running their own business with their own ABN. In the allied health industry, you may engage contractors or consultants to enable you to bring in specialists like physiotherapists, dietitians, or occupational therapists to meet client demand. Whether it’s ongoing work or a short-term arrangement, a contractor agreement ensures everyone understands their responsibilities.
In the health sector, relying on informal agreements or handshakes is far too risky. While it may seem like a friendly way to operate, without a written agreement, you’re exposing your practice to potential liabilities and missing out on transferring risk to your contractors.
Here are 5 reasons why you should have an independent contractor agreement in place:
1) Document the Details
A contractor agreement should clearly outline the relationship between the parties and defines their responsibilities, holding them accountable. For instance, the contractor should be responsible for paying their own taxes and fees. This ensures your practice, as the principal, isn’t liable for any financial obligations owed by the contractor.
2) Address Workplace Health and Safety
In the health industry, workplace health and safety is paramount. Your contractor agreement should reallocate health and safety obligations to the contractor, where legally permitted. By signing the contractor agreement, they agree to use safe practices and equipment, as well as ensure adequate training. The agreement should also include a notification obligation—requiring the contractor to halt services and notify you if they identify a health and safety risk. This protects your practice and ensures that responsibility for safe work practices lies with the contractor.
3) Clarify Insurance Obligations
Allied health professionals need appropriate insurance to cover the services they provide. A well-drafted contractor agreement ensures the contractor provides their own insurance for themselves and their team. If they fail to hold the required insurance, they assume responsibility—not your practice. This protects your business from potential liability and allows you to hold the contractor accountable if something goes wrong with a client. In cases of client complaints or poor service, you want the contractor to be liable for any required remedies, covered under their professional indemnity insurance.
4) Define Equipment and Tools Responsibilities
A contractor agreement should specify that the contractor is responsible for providing any tools, equipment, or assets required to perform their work. In allied health, this could include specialist equipment, therapy tools, or even administrative software. A written agreement makes it clear who is responsible for these items, avoiding confusion or disputes if problems arise later.
5) Outline Dispute Resolution Procedures
Though no one wants to think about disputes when entering into a business relationship, it’s essential to plan for the worst. A contractor agreement can include dispute resolution procedures like mandatory mediation or arbitration, which can save your practice from costly and time-consuming litigation. Having these mechanisms in place ensures a smoother resolution process if disagreements arise, protecting both your finances and your practice’s reputation.
In the allied health sector, it’s always better to be proactive rather than reactive. Having a contractor agreement in place protects your practice and ensures you’re prepared for any potential risks. Surround yourself with advisors who can identify risks in your business and help you implement the right strategies to protect yourself and your clients.
Remember, while this information provides a general overview, legal advice tailored to your specific circumstances is invaluable. Don’t hesitate to contact Rise Legal for personalised guidance or book in a free Discovery Call.
Disclaimer: This blog post is intended for informational purposes only and should not be considered legal advice. Consult with a qualified commercial lawyer for personalised advice related to your specific circumstances.
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