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By David L. Stokes, Manager, Professional Issues
With Frank Tinney, APS Workplace Issues Advisor

Claire opened a hornet’s nest with her private practice questions ('InPsych', p24, February 2004). Going by the readers’ responses, it was relatively provocative. What is clear from a number of sources is that employment contracts are sensitive and/or perilous.

Why have a contract?

Inevitably the question is asked: “My colleague and I have a good relationship. Why should we visit a lawyer, and pay lots of money for that privilege, when we can come to an amicable agreement between ourselves that will be free of cost?”

The obvious answer to that question is: “Of course you don’t need expensive legal experts - provided that your agreement is valid and will not collapse under challenge, should that challenge ever arise”. Most of us operate very happily under “handshake agreements” that are never challenged. But occasionally disagreements arise, and conflicts that we did not believe would ever happen lead us into what seem to be irreconcilable conflicts, which require that we seek legal action to resolve them. The consequences of these disputes are often both emotionally and financially distressing.

A well thought-out and well-executed written contract can assist in avoiding these dilemmas.

In the current era of workplace agreements, private contracts and relatively novel programs such as Better Outcomes in Mental Health Care (BOMHC) and More Allied Health Services (MAHS), psychologists have found themselves having to sign agreements, some of which they later wish they had avoided or at least renegotiated.

A number of contexts that we want particularly to highlight, before we get down to the details of assessing and managing contracts, are private health settings, private schools and government contracts. Psychologists, in consultation with their professional colleagues and unions, have spent many years developing, arguing for, and defending, conditions of employment, fees or salary ranges, loadings and special understandings that are in danger of being swept away or ignored in different but comparative settings. It is crucial that we take note of what has gone before and retain the necessary and the valuable.

GPs as employers

The APS has been a strong supporter of the BOMHC initiative. It has also been encouraging, but at times critical of, the MAHS program, and both of them have been associated with the employment of psychologists by Divisions of General Practice. These have been important initiatives in bringing psychologists’ services to sufferers of mental disorders, particularly in regional and rural areas. What is of concern, nonetheless, is that without much experience of this, GPs have become employers of psychologists. This may have provided opportunities for members of the profession but is worrying from the viewpoint of appropriate conditions of service and the needs of professionals like psychologists. What salary scales are being paid? Are psychologists being provided with clinical supervision by an experienced psychologist colleague? Is clinical independence respected? Do they have professional development or conference leave? What data do they collect and what performance indicators or outcome measures are instituted? How are their patients’ files managed?

Private schools

The second group that has caught our attention in recent times has been psychologists in private schools. We have had to “go in to bat” for a number of members where, for example, employers/contractors (in these cases, school principals) wish to access or manage client files. In this case, although the school may legally “own” the file, the Privacy Act (1988) requires that personal information gained for one purpose should not be used for another or secondary purpose. In practice, this means that information gained from a student counselling session, for the health and wellbeing of that student, cannot be later used to inform administrative or educational decisions. The APS would, nonetheless, encourage school psychologists to provide advice and informed guidance to teachers and administrators regarding such matters on the basis of their knowledge. Above all, they should clarify at the time of their employment what award they are employed under, what is the nature/specifics of their contract, and what are the professional relationships and confidentiality arrangements.

Contracts with government, non-government organisations and human resources consultants

We sometimes hear from members who have become embroiled, for good reason, with these organisations, some of which require explicit contracts before the psychologist can begin to provide a service. Sometimes this occurs in the context of a private practice or sometimes in a part-time employment arrangement. On occasion, the contractor will put requirements or expectations in the contract that seem at least unnecessary if not inappropriate. Issues of privacy and file ownership, for instance, can often appear to be contravened. We urge such members to take note of our guidelines below, particularly with regard to contracts with some government and other bodies.

Some things to avoid in contracts

  • One-sided contracts where the contracted person is committing to everything and the contractor to nothing;
  • Unjust contracts;
  • Immoral, unethical or unprofessional contracts; and
  • Contracts that diminish the profession, or the conditions, of your fellow professionals.

There are some Employee Assistance Programs contractors who try to instruct the psychologist about how a particular case will be managed - e.g., the psychologist will not refer a client to a psychiatrist!

Some principles of contracts

We thought it might help to go back to basics and provide people with some of the principles and essential concepts that underlie contracts. There are some generally accepted ideas and legally entrenched principles of contracts - see the APS website Professional Practice Handbook, Section 1, ‘Contracts of employment’ and, particularly, ‘What Constitutes a Legal Contract of Employment?’. For psychology specific material, see Section 2, ‘Employment by and of psychologists’.

The purpose of a contract is to establish an employment relationship, and/or a broader business relationship, that will clearly describe the conditions of the relationship and delineate the responsibilities of the parties to the contract and the associated rewards and benefits. These conditions should be in writing and signed by, and accessible to, both parties. Each party must have a copy.

Regarding content, a contract should:

  • Identify the parties to the contract.
  • Specify the nature of the contract.
  • Identify the responsibilities of each party - if it is, or contains within it, an employment contract, the work role, main duties and responsibilities of the position should be specified. It should also identify whether the work is award-covered, and, if so, which award is applicable and whether any certified agreements or enterprise bargaining agreements apply.
  • Identify the rewards and benefits for provision of the agreed services covering any relevant award remuneration levels, including superannuation provisions and leave loadings - if it is a “fee-for-service” contract, it should specify the fee(s) payable and any other benefits (e.g., support services or access to a test library), and any conditions applying thereto - see “Rates” below.
  • Identify the procedure for dissolution/termination of the contract (noting any relevant legal specifications and requirements) - see Professional Practice Handbook, Section 1, ‘Employment law and employment obligations’ and ‘Contracts of employment’.
  • Identify privacy and client health records procedures (quality standards encompassing Federal and State legislation and ownership of clinical files).
  • Define reporting relationships.
  • Specify rates chargeable to clients, and the sharing thereof between the parties to the contract.
  • Specify procedures around private health funds (e.g., preferred provider).
  • Include a conflict resolution clause.

Conditions of employment

In preparing or examining a contract, psychologists should take note of the conditions of employment - conditions we need to protect, and that have been hard won over the years. For example:

  • Employer-paid professional supervision - see Professional Practice Handbook, Section 2, ‘General practice issues’ and, particularly, ‘Professional supervision’.
  • Employer paid/supported continuing professional development (e.g., conferences and workshops).
  • Competitive rates of pay and specific loadings. This is an issue of immense concern as many psychologists are selling themselves short in both salary and other conditions and this is having a depressing overall effect on the market.
  • Career issues and needs are respected (e.g., career opportunities, family-work balance and further studies).

In conclusion, we challenge our members to reflect carefully over work contracts to which they may become party. We are not suggesting that contracts are in any way a bad thing, just that they need careful examination and review (seeking advice where necessary) and that it is important to ensure they meet the rights and needs of both parties. We have offered some assistance to help you ensure what should be included and urge you to feel confident to negotiate any problematic aspects. Above all, make sure it is all in writing, signed and have a copy of your own.


Arthur C. Crook, APS Principal Policy Analyst, kindly consulted with the authors of this article and gave very helpful suggestions.