CHAPTER 7

Staffing Your Practice

Staffing decisions are pivotal for any allied health practice and can significantly impact your legal, financial, and managerial obligations. Whether hiring employees, engaging contractors, or entering into practitioner service agreements, each option brings its benefits and complexities.

The good news is, that there’s flexibility in staffing your practice, allowing you to tailor the arrangements to suit both the needs of your business and the people working in it. Here’s a breakdown of the most common options:

1. Employment

Obligation

  • Pay-As-You-Go Withholding (PAYGW): You must withhold tax from employees’ wages and report it to the ATO regularly.
  • Superannuation: Employers must pay the Super Guarantee (SG) contributions into an employee’s nominated superannuation fund.
  • Workers’ Compensation Insurance: Coverage is mandatory to protect employees in case of work-related injury or illness.
  • Payroll Tax: Applicable if your practice’s wages exceed the threshold (which varies by state). Payroll tax can significantly impact your business costs in high-growth practices.

Pros for the Practice

  • Control over staff: As an employer, you have greater control over your employees’ work schedules, their methods, and their general conduct. This can ensure consistent quality of care and alignment with your practice’s values and procedures.
  • Continuity: Employing staff offers business stability, helping build long-term patient relationships. Staff turnover tends to be lower when employees feel secure in their roles.

Pros for the Worker

  • Job security: Employment offers a stable income and entitlements like annual leave, sick leave, and long service leave, which can be a significant draw for many allied health professionals.
  • Career development: Many allied health professionals prefer employment for the structured career path, mentorship, and growth opportunities that practices can provide.
When is Employment Best?
  • Long-term, high-volume roles: Employment works best when you need practitioners or admin staff for consistent, ongoing work with a stable client base. It suits practices prioritising continuity of care and wishing to develop long-term relationships with their staff and clients.

2. Contractors

Obligations

  • Classification: It’s crucial to classify a contractor to avoid issues correctly. Misclassifying an employee as a contractor can result in significant penalties from the ATO and Fair Work.
  • Superannuation: In some instances, even contractors are entitled to superannuation contributions, mainly if they are engaged for their labour and have no substantial control over the work.
  • Business activity monitoring: Contractors often submit invoices for their services, so you’ll need to manage payments and track these expenses separately from employee wages.

Pros for the Practice

  • Flexibility: Contractors offer flexibility, especially when your practice may need a consistent patient load. You can scale up or down based on demand without the ongoing costs of employing full-time staff.
  • Reduced overheads: Contractors typically handle their insurance, taxes, and other business-related costs, which can reduce your practice’s administrative burdens and costs if engaged correctly.

Pros for the Worker

  • Autonomy: Contractors have greater control over their work, often choosing their hours, methods, and even the clients they see.
  • Potential for higher earnings: Many contractors can charge higher rates than employees, depending on their skill set and workload.

When are Contractors Best?

  • Short-term or project-based work: Engaging contractors is ideal when you have fluctuating patient loads or require specific expertise for short-term projects. For example, you may hire a contractor to fill in during a peak season or when a regular staff member is on leave.
  • Variable hours or part-time specialties: If your practice offers a range of services, such as chiropractic care, physiotherapy, or massage therapy, contractors can provide flexibility for services that may not require full-time staffing.

3. Practitioner Service Agreements (PSA)

Obligations

  • Correct agreement structuring: Service agreements must be carefully structured to ensure the arrangement is not seen as an employment relationship. Misclassification here can lead to significant financial consequences.
  • Complexity: These agreements can increase accounting and legal complexities, as they involve a split income between the practitioner and the practice, usually with some form of fee-for-service or rent for clinic use.
Pros for the Practice
  • Flexibility for the practice: With a Practitioner Service Agreement, practitioners operate as independent entities within your practice, meaning they manage their clients, billing, and schedules. The practice benefits from the services provided without the direct employment overheads.
  • Revenue sharing: Practices often charge a fee-for-service or rent arrangement, allowing for more predictable cash flow without the burden of paying a salary.

Pros for the Worker

  • Flexibility and autonomy: Practitioners can manage their schedule, set their hours, and run their operations within their practice. This setup suits highly experienced practitioners who prefer independence but benefit from the infrastructure and reputation of an established clinic.
  • Higher-income potential: Unlike employees, practitioners under a PSA often take home a more significant portion of what they earn, as their income is not subject to salary caps, but rather a percentage of their billings.

When are Practitioner Service Agreements Best?

  • Established practitioners: PSA arrangements are ideal for experienced practitioners with a steady patient base and prefer more autonomy in their work.
  • Multi-disciplinary clinics: If your practice offers a wide range of services—such as physiotherapy, psychology, dietetics, and other allied health services—PSAs can allow individual practitioners to work independently while sharing clinic resources.

Choosing the Right Mix

In many allied health practices, a mix of staffing options can work best. For instance, you may employ administrative staff for continuity and control, engage contractors for part-time specialties, and offer PSAs to senior or highly specialised practitioners. The right combination depends on the structure of your practice, the patient load, and the long-term goals of your clinic.

By understanding the obligations and benefits of each staffing arrangement, you can create a model that works best for your practice and ensures compliance with the legal and financial requirements.