By Charlotte Anderson, MScPT, Alpha Health Services
So now the time has finally come to expand your services. It’s time to hire another physiotherapist for your clinic.
Well…now what?
It’s really important to determine whether you’re hiring an independent contractor or an employee. (To make it easy, we’ve also included a free independent contractor template for you to use. Please note that we still encourage you to review this contract with your lawyer to ensure it is adequate for your particular business)
The negotiation process is different depending on their employment status. Today I’d like to talk to you about how you should negotiate a contract with an independent contractor or associate.
We’ve collaborated with owners across Canada to get you prepared for your upcoming renewal with your physiotherapist contractor.
Before you sign on the dotted line here are 10 effective tactics you need to know when negotiating a contract with a physiotherapist as an independent contractor.
1. Working Hours
Be very clear on what the expectations are regarding the number of hours a week your physiotherapist will work. Outline this in the contract and allow time for discussion if required.
2. Payment Terms
Discuss and determine if the new hire will pay rent, if the setup will be fee for service, or both. If it’s fee for service, be sure to negotiate the percentage the physiotherapist will receive. If they are paying rent, be clear on if they’re paying hourly or daily and exactly when their rent is due. It is a good idea to ask for post dated cheques.
Keep in mind that the fee percentage alone does not meet the CRA 4-fold test criteria because it does not separate the overhead from the revenue; as such this creates a risk that CRA may rule the contractor is as an employee.
Both the clinic and associate need to decide if they are willing to take this risk, or move to a different arrangement. It’s the owner that bears a greater risk in this percentage split situation since it’s the owner is who ends up paying the fines and back deductions.
To avoid any undesirable outcomes, it is recommended to add a monthly rent to fee-for-service to satisfy the CRA guidelines. Please note, there is an element of risk included for the associate as well. This is an area that we strongly encourage you to speak to your accountant to learn more about the associated risks of fee-for-service.
3. Pay Schedule
Make sure to set out the pay schedule from day one. Explain to the physiotherapist how and when they will be paid. If you decide to pay the new hire via direct deposit, be sure to collect their banking information. Be sure to make the physiotherapist aware of when they can expect to be paid so both parties are on the same page.
Keep in mind that the physiotherapist will also need to submit their own invoices to pass the CRA guidelines.
4. Continuing Education / Extracurricular Courses
Many new physiotherapist employees may expect an academic course fund or increase in pay with successful completion of courses. In the case of independent contractors, you cannot pay for their education courses, as it does not pass the CRA test. By paying for their educational courses, you are treating them as an employee, hence removing their position as a “contractor”.
Want a contractor template for your physiotherapist?
5. Non-Competition Clause
Be very clear on the terms of the contract when signing on a contractor. Clinic owners often want a non-competition clause stating that contractors can not work at other clinics within a certain radius (ie. 5 km) for ‘x’ years (i.e., 2 years) during or after termination. It is always good to ensure that both parties understand this clause in order to make an educated decision.
6. Termination Notice
Discuss the terms of termination and the proper method and timeline for termination of the contractor for both the new hire and the owner.
7. Independent Responsibilities
As an independent contractor, the physiotherapist is responsible for marketing their practice, making sure their insurance is up to date and that they are in good standing with their respective college. Be clear to state this upfront so there are no misinterpretations or issues. Be very clear about the coverage they require and ask for confirmation of insurance coverage. Also make sure they are aware that as an independent contractor, you (the employer) are not responsible for contributing to a pension plan or covering health care benefits.
The Contractor must be responsible for submitting payments for Employment Insurance, Canada Pension Plan, Provincial and Federal taxes, Goods and Services Tax, and any other payments as required by law to the appropriate offices.
8. Patient Charts and Records
Patient records are the property of the Company and not the contractors. Make sure this is also very clear in your contract negotiation. We recommend you clearly differentiate between the Health Information Custodian (HIC) and the Health Information Agent in the contract.
9. Vacation
Outline the protocol for requesting vacation. It is the responsibility of the independent contractors to find vacation coverage when they are away. Make sure they are aware of this from the beginning of the work placement.
10. Expectations with clients (treatment times, follow ups, etc.)
Although it may seem obvious, lay out the clinic workflow and expectations. how the clinic works. The treatment times, how patients are billed, expectations for followup, utilization of support personnel, and the number of patients to be seen daily. Be sure to have the new hire sign off on these, and if they have any issues to discuss, do so at the earliest.
