Associate Agreement Lawyers Adelaide: Health Practices, Service Fees, Payroll Tax and Restraints
Associate agreements for health practices in South Australia
Health practices often engage practitioners as associates rather than employees. The associate agreement decides who collects the patient fees, what the practice charges for its rooms and support, whether payroll tax reaches the arrangement and what the associate can do after leaving. Talon Legal drafts and reviews associate agreements for Adelaide chiropractic, physiotherapy, podiatry, medical, dental and other health practices, and for practitioners asked to sign them. Book a same-day free 30-minute consultation or call (08) 7094 2021.
Associate agreement key facts
| Issue | Position in South Australia |
|---|---|
| What it is | A contract under which a practitioner treats patients at a practice, usually as an independent contractor, for a service fee. |
| Service fee model | The practice collects patient fees, keeps its service fee (commonly a percentage, plus GST) and pays the balance to the associate. |
| Employee or contractor | For Fair Work Act purposes, decided by the real substance, practical reality and true nature of the relationship (section 15AA, from 26 August 2024). |
| Sham contracting | An employer must not represent an employment contract as a contract for services, unless it reasonably believed it was one (section 357). |
| Payroll tax | An associate agreement can be a relevant contract, with amounts paid for the work taken to be wages (Payroll Tax Act 2009 (SA) sections 32(1) and 35(1)). |
| Exclusions | Include services ordinarily required for less than 180 days in a financial year, and services provided for no more than 90 days in aggregate, subject to conditions (section 32(2)(b)). None applies if the Commissioner determines the contract was entered into with an intention of avoiding or evading tax (section 32(2d)). |
| GP bulk billing | A percentage of wages paid or payable to GPs engaged by a practice that bulk bills is exempt, from the financial year starting 1 July 2024 (Schedule 2 clause 17B; regulation 4). |
| Allied health | The regulations as read contain no equivalent exemption for allied health practices. |
| Restraints | As Callinan J described the presumption, restraints are unenforceable unless the party with their benefit shows otherwise (Peters (WA) v Petersville at [51]). |
| Patient records | A business covered by the Privacy Act must take reasonable steps to protect personal information (APP 11.1). |
| First step | Same-day free 30-minute consultation. Call (08) 7094 2021. |
Need an associate agreement lawyer in Adelaide?
Our associate agreement lawyers in Adelaide act for chiropractic, physiotherapy, podiatry, medical, dental and other health practices that engage associates, and for practitioners reviewing an agreement before they sign. The Fair Work Act 2009 (Cth) decides whether the relationship is really employment, and the Payroll Tax Act 2009 (SA) decides whether payments under it are treated as wages. This page states the law current to 6 November 2026.
This guide is part of our professional services practice. Related guides cover service agreements and terms of business, consulting agreements, confidentiality agreements and data protection and privacy.
For patient testimonials and photos in a practice’s advertising, see our guide to testimonial and image consents.
Free Consultation. Send us the associate agreement before it is signed. Book a same-day free 30-minute consultation or call (08) 7094 2021.
On this page
- What is an associate agreement?
- How does the service fee model work?
- What should registration and insurance terms say?
- Who controls the patient records?
- Is an associate an employee or a contractor?
- Does payroll tax apply to associate agreements?
- What payroll tax exemptions apply to health practices?
- Can a practice restrain an associate after they leave?
- How should the arrangement end?
- How similar matters tend to play out
- How we act on associate agreements
- Case law
- Frequently asked questions
What is an associate agreement?
A contract under which a practitioner treats patients at someone else’s practice, also called a service agreement or service fee agreement. In the usual model the associate is an independent contractor. The practice provides the rooms, equipment, reception, bookings and marketing. The associate provides the clinical services, keeps clinical autonomy and pays a service fee out of patient fees.
The agreement usually makes the associate responsible for their own ABN and GST registration, tax, superannuation, registration to practise, indemnity insurance and continuing education.
Employment is the other model, with a salary, leave, probation, notice and post-employment restraints. For Fair Work Act purposes, the label in the document is only part of the picture (section 15AA). An associate agreement lawyer will read the document for what it says about control, sessions, fees and exclusivity. Those terms bear on employment status and on payroll tax.
How does the service fee model work?
The practice collects the patient fees, keeps its service fee and pays the rest to the associate.
Patient fees come first. The agreement should say who sets them, usually the practice’s fee schedule, with the associate free to set the fee for a particular consultation within it. It should say who collects the fees and in what capacity the practice holds them; many agreements record that the practice receives them as the associate’s agent. Unpaid accounts, refunds, write-offs and rejected fund claims need a rule too.
The service fee is commonly a percentage of the patient fees collected for the associate’s services. Some agreements tier it, so a lower percentage applies above a weekly threshold. Others charge a fixed amount. The agreement should set out the calculation, and when the associate receives a statement and the balance. Agreements commonly express the fee as plus GST and require tax invoices. The GST position on patient fees should be confirmed with the practice’s accountant.
The schedule of practice services should be specific: rooms and reception, equipment, practice software and the shared record system, booking staff, cleaning, consumables, the website and marketing. The agreement should also set the sessions the associate works and the notice needed for leave. Who decides those things matters for employment status.
Fee reviews need their own clause. The agreement should say when and on what notice the service fee can change, and what the associate can do if they do not accept the change.
What should registration and insurance terms say?
They should make continuing registration and insurance conditions of the engagement. These are contract terms; the registration rules themselves are not covered here.
The agreement should require the associate to:
- hold and keep current their registration to practise, and disclose any conditions on it;
- tell the practice straight away of any complaint, investigation, condition, suspension or cancellation;
- hold professional indemnity insurance on terms reasonably acceptable to the practice, with evidence on signing and at each renewal;
- do nothing that could make the practice’s insurance void or voidable.
Indemnities should match the risk. The associate’s indemnity for loss caused by their breach or negligence is commonly reduced to the extent the practice caused or contributed to the loss. The practice should be able to end the agreement immediately if registration is suspended or cancelled or cover lapses.
Who controls the patient records?
Whoever the agreement says, so it should say. Practice-drafted agreements usually keep paper and electronic records with the practice as part of its confidential information. An associate who expects patients to follow them should raise that before signing, along with access to records after leaving and patient requests to transfer care.
The confidentiality clause is backed by equity. In Optus Networks Pty Ltd v Telstra Corporation Ltd [2010] FCAFC 21, the Full Court set out the elements of a breach of confidence. The information must be identified with specificity, have the necessary quality of confidence and have been received in circumstances importing an obligation of confidence, and there must be actual or threatened misuse without consent ([39]).
A business covered by the Privacy Act 1988 (Cth) must take steps reasonable in the circumstances to protect personal information it holds from misuse, interference and loss, and from unauthorised access, modification or disclosure (APP 11.1). Those steps include technical and organisational measures (APP 11.3). In a practice with associates, individual logins and access limited to need are the obvious starting points. The data protection and privacy guide explains which businesses the Act covers.
Is an associate an employee or a contractor?
It depends on the real relationship. For Fair Work Act purposes, whether an individual is an employee in the ordinary meaning of that expression is determined by ascertaining the real substance, practical reality and true nature of the relationship (section 15AA(1)). The totality of the relationship must be considered, including how the contract is performed in practice and not only its terms (section 15AA(2)). Section 15AA commenced on 26 August 2024.
The section changed the approach for Fair Work Act purposes. In CFMMEU v Personnel Contracting Pty Ltd [2022] HCA 1, the plurality held that where a relationship is fully set out in a written contract that is not a sham and has not been varied, the contract’s rights and obligations decide its character ([43] to [44]). Section 15AA was enacted as a response to that decision and a companion case (section 15AA note).
In a health practice the facts often point both ways. An associate who chooses their sessions, builds their own patient base, carries their own insurance and could take their practice elsewhere looks like a contractor. One who works rostered hours, wears the practice’s uniform, sees whichever patients reception allocates and is barred from working anywhere else looks more like an employee, whatever the agreement says.
Sham contracting is prohibited. An employer must not represent to an individual it employs, or proposes to employ, that the contract of employment is a contract for services (section 357(1)). The exception is where it proves it reasonably believed the contract was one (section 357(2)). Nor may it dismiss, or threaten to dismiss, an employee in order to engage them as an independent contractor to do the same or substantially the same work (section 358).
The Fair Work answer does not settle payroll tax. The Payroll Tax Act has its own relevant contract provisions, and a genuine contractor arrangement can still fall within them.
Does payroll tax apply to associate agreements?
It can. Under the Payroll Tax Act 2009 (SA), a relevant contract, for a financial year, is a contract under which a person (the designated person), in the course of a business it carries on, does one of three things (section 32(1)). It supplies to another person services for or in relation to the performance of work. It is supplied with the services of another person for or in relation to the performance of work. Or it gives out goods for work and re-supply.
Amounts paid or payable by an employer during a financial year for or in relation to the performance of work relating to a relevant contract are taken to be wages paid or payable in that year (section 35(1)).
Service fee models raise two questions. The first is whether the associate agreement is a relevant contract, for example because the practice is supplied with the associate’s services for or in relation to the performance of work (section 32(1)(b)). The second is which amounts are paid or payable for that work (section 35(1)), including patient fees the practice collects and pays on. Both turn on the terms of the agreement and how the arrangement actually runs.
Some contracts are excluded. A contract of service is not a relevant contract (section 32(2)). Other exclusions cover services ancillary to the supply of goods and some goods conveyance, insurance procurement and door to door sales services (section 32(2)(a) and (d)). Those that matter most to health practices are these.
- Services of a kind the designated person does not ordinarily require, performed by someone who ordinarily performs services of that kind to the public generally (section 32(2)(b)(i)).
- Services of a kind ordinarily required for less than 180 days in a financial year (section 32(2)(b)(ii)).
- Services provided for no more than 90 days in aggregate in the financial year, subject to conditions (section 32(2)(b)(iii)).
- Services the Commissioner is satisfied are performed by a person who ordinarily performs them for the public generally in that year (section 32(2)(b)(iv)).
- Work done by two or more persons employed by, or providing services for, the contractor, with variations for partnerships and individuals (section 32(2)(c)).
A practice that needs an associate most weeks of the year is unlikely to fit the 180-day or 90-day exclusions, and subparagraph (iv) depends on the Commissioner being satisfied.
None of the exclusions applies if the Commissioner determines that the contract was entered into with an intention, directly or indirectly, of avoiding or evading tax (section 32(2d)). Redrafting an agreement only to fit an exclusion invites that determination.
What payroll tax exemptions apply to health practices?
The regulations exempt some wages paid to general practitioners and, for past years, to other medical practitioners and dentists.
Schedule 2 clause 17B of the Act allows the regulations to declare a percentage of wages paid or payable to general practitioners engaged by a designated medical practice, for bulk billed services, to be exempt wages. It can operate from the financial year starting 1 July 2024. A designated medical practice is a medical practice where some or all GP services are bulk billed.
The Payroll Tax Regulations 2025 (SA) set the percentage (regulation 4). For each financial year from 1 July 2024, the practice’s bulk billed services are divided by its total medical services, leaving out a category the regulation specifies, and multiplied by 100. DVA services and Return to Work Act services count as bulk billed (regulation 4(3)).
Clause 17C allows exemptions for previous financial years. Regulation 5 covers GPs engaged under a relevant contract by a practice that successfully applied for the payroll tax amnesty approved by the Treasurer on 22 June 2023. Wages paid or deemed paid to them, on which payroll tax was not paid, are exempt for the financial years starting 1 July 2018 to 1 July 2023.
Regulation 6 covers other medical practitioners engaged by prescribed medical practices, and dentists engaged by dental practices registered as employers before 1 July 2024. Wages paid or deemed paid to them under relevant contracts, on which payroll tax was not paid, are exempt for the financial years starting 1 July 2019 to 1 July 2023.
The regulations as read contain no equivalent exemption for allied health practices. A chiropractic, physiotherapy or other allied health practice that engages associates should have its arrangements assessed under the relevant contract provisions.
Can a practice restrain an associate after they leave?
Only with a restraint that can be justified. As Callinan J described the presumption in Peters (WA) Ltd v Petersville Ltd [2001] HCA 45, restraints of trade are contrary to private and public interests and unenforceable unless the party with the benefit of the restraint shows otherwise ([51]).
The joint judgment said most reported decisions on the doctrine turn on the reasonableness of the restraint, particularly in relation to the legitimate interests of the parties ([14]). Threshold questions can come first, including whether there is a restraint at all, judged by its practical working rather than merely its legal form. “Trade” is not read narrowly and extends to employment generally ([14]), so restraints in employment contracts can engage the doctrine too.
Associate agreements commonly bar the associate from practising within an area around the practice for a period after leaving. Most also bar soliciting or accepting the practice’s patients and enticing its staff. Many use a ladder of alternative areas and periods, each combination a separate obligation, so that a narrower one stands if a wider one fails. Whether it does depends on the court’s view of reasonableness.
The restraint should match what the practice needs to protect, such as patient relationships, referral sources, confidential information and staff. A restraint that keeps an associate out of their profession across a wide area for a long time will be harder to justify than one that stops them soliciting the patients they treated. This page suggests no area or period; that depends on the facts.
How should the arrangement end?
On notice, with a clean handover. The agreement should say whether it runs for a fixed term or until ended on notice, and how much notice either side gives. Either side should be able to end it for a material breach that is not fixed after written notice. The practice should be able to end it immediately for insolvency, serious misconduct, or loss of registration or insurance.
On exit, the agreement should deal with the final reconciliation of patient fees and the service fee, patients mid-treatment, future bookings and how patients are told. Keys, equipment, records and confidential information should come back, and the clauses meant to outlast the agreement, such as confidentiality and the restraint, should say so.
How similar matters tend to play out
Three illustrations of how the law on this page combines on ordinary facts. They are not predictions. Outcome depends on the documents, the evidence and the decision maker.
Lower range. A general practice that bulk bills most consultations engages its GPs under service agreements. If those agreements are relevant contracts, a percentage of the wages taken to be paid to the GPs is still exempt for the financial year starting 1 July 2025, worked out from its bulk billed services as a share of its total medical services (Schedule 2 clause 17B, regulation 4).
Middle range. A physiotherapy practice engages four associates on service fee agreements. Each works rostered sessions five days a week, all year, under the practice’s name. The agreements may be relevant contracts (section 32(1)(b)), year-round work is unlikely to fit the 180-day or 90-day exclusions, and amounts paid for the work may be taken to be wages (section 35(1)). The regulations as read contain no equivalent exemption for allied health practices.
Upper range. A chiropractor leaves a clinic, opens a practice nearby and contacts patients from the clinic’s list. As Callinan J described the presumption, the clinic’s restraint is unenforceable unless the clinic shows otherwise (Peters at [51]), and the case is likely to turn on reasonableness (at [14]). A confidentiality claim can also run in equity if the list meets the elements in Optus at [39].
How we act on associate agreements
Our associate agreement lawyers act for health practices engaging associates and for practitioners reviewing the terms they are offered. For a practice, the aim is an arrangement that matches how it actually runs and a restraint that can be defended. For a practitioner, it is fair fees and a restraint they can live with.
| Stage | What happens | What we do |
|---|---|---|
| Structure | The practice decides between associates and employees. | Assess the model against section 15AA, the sham contracting rules and the payroll tax relevant contract provisions. |
| Drafting | The associate agreement or employment contract is prepared or reviewed. | Draft the fee mechanics, practice services, registration and insurance terms, records, confidentiality and restraints. |
| Payroll tax review | The practice checks its exposure on existing agreements. | Review the agreements and how they operate against sections 32 and 35 and any exemption, alongside the practice's accountant. |
| Operation | Sessions, fees and roles change over time. | Keep the documents in line with how the arrangement actually runs. |
| Exit or dispute | An associate leaves, or fees, records or a restraint are disputed. | Advise on the agreement, the restraint and the records, and negotiate or enforce. |
We cannot promise an outcome, and no lawyer can. We can make sure the agreement records what was actually agreed, in terms that hold up.
Every hour matters. Book a same-day free 30-minute consultation, or call (08) 7094 2021 now.
Associate agreement case law
None of the decisions below concerned a health practice or a service fee arrangement; each decided a point that applies to one.
| Case | Court | Principle | Pinpoint |
|---|---|---|---|
| Peters (WA) Ltd v Petersville Ltd [2001] HCA 45 | High Court | Restraint cases mostly turn on reasonableness; the presumption as Callinan J described it | [14], [51] |
| CFMMEU v Personnel Contracting Pty Ltd [2022] HCA 1 | High Court | Written contract decisive of employment status; for Fair Work Act purposes section 15AA now governs | [43], [44] |
| Optus Networks Pty Ltd v Telstra Corporation Ltd [2010] FCAFC 21 | Full Federal Court | Elements of breach of confidence; contract definition did not exclude equity | [29], [39] |
Case notes
Peters (WA) Ltd v Petersville Ltd [2001] HCA 45
The joint judgment said most reported decisions on the restraint of trade doctrine turn on reasonableness, particularly in relation to the parties’ legitimate interests, though threshold questions may come first ([14]). Callinan J described the presumption that restraints are unenforceable unless the party with their benefit shows otherwise ([51]). The appeal was dismissed with costs ([50]).
CFMMEU v Personnel Contracting Pty Ltd [2022] HCA 1
The plurality held that where a relationship is fully set out in a written contract that is not a sham and has not been varied, the contract’s rights and obligations decide its character ([43] to [44]). For Fair Work Act purposes, section 15AA, enacted in response, now requires the whole relationship to be considered.
Optus Networks Pty Ltd v Telstra Corporation Ltd [2010] FCAFC 21
The Full Court held that an exhaustive definition of confidential information in the parties’ agreement did not show an intention to exclude equitable obligations of confidence ([29]), and set out the four elements of a breach of confidence in equity ([39]).
Frequently asked questions
What is a health practice associate agreement?
A contract under which a practitioner treats patients at a practice, usually as an independent contractor, for a service fee.
Is an associate an employee or a contractor?
It depends on the real relationship. For Fair Work Act purposes, the real substance, practical reality and true nature of the relationship decide it, including how the contract works in practice (section 15AA).
How is a service fee usually calculated?
Commonly as a percentage of the patient fees collected for the associate’s services, sometimes tiered, with GST added. Some practices charge a fixed amount instead.
Does payroll tax apply to payments to associates?
It can. An agreement under which a practice is supplied with services for or in relation to the performance of work can be a relevant contract, with amounts paid for the work taken to be wages (Payroll Tax Act 2009 (SA) sections 32(1) and 35(1)).
Is there a payroll tax exemption for bulk billing GPs?
Yes, for a percentage of wages paid or payable to GPs engaged by a practice that bulk bills, from the financial year starting 1 July 2024 (Schedule 2 clause 17B and regulation 4).
Are allied health practices exempt from payroll tax on associates?
The regulations as read contain no equivalent exemption for allied health practices. Their arrangements should be assessed under the relevant contract provisions.
Can a practice restructure its agreements to avoid payroll tax?
Not safely. The exclusions do not apply if the Commissioner determines the contract was entered into with an intention, directly or indirectly, of avoiding or evading tax (section 32(2d)).
Can a practice stop an associate practising nearby after they leave?
Only with a restraint that can be justified. As Callinan J described the presumption, restraints are unenforceable unless the party with their benefit shows otherwise (Peters (WA) v Petersville at [51]).
Who keeps the patient records when an associate leaves?
Whoever the agreement says, which is why it should deal with records expressly. A business covered by the Privacy Act must take reasonable steps to protect personal information it holds (APP 11.1).
Do I need an associate agreement lawyer?
For any practice engaging associates, or any practitioner asked to sign a restraint, yes. An associate agreement lawyer can align the agreement with how the practice runs before payroll tax or a departure tests it. A free 30-minute consultation will tell you where you stand.