An Introduction to Contracting –
How does independent contracting work, who contracts clinicians and why, and how is contracting different to employment? These are questions that many clinicians ask about contracting, either before they talk on contract work or sometimes even after!
Organisations often outsource social work and psychology services to fill service delivery gaps within the organisation, such as newly funded projects, extended staff leave or to provide specialist expertise that isn’t available in-house. Contractors may provide services including regional counselling, external clinical supervision, employee assistance counselling, workplace coaching or group program facilitation. Before taking the first step into independent contracting, it is useful to consider types of contracting options.
Types of Independent Contracting
As an independent contractor, you may be engaged:
- By an organisation (government, private, not for profit).
- By a third-party employment/recruitment agency or an employee assistance provider (EAP).
- As an associate clinician within a private clinical practice.
1. Independent Contracting with an Organisation
Government agencies, not-for-profits and private businesses have their own rules and guidelines for hiring contractors. For example, government agencies may require contractors to enter a formal tender process alongside other contractors. There is no guarantee that your submission will be accepted, nor any guarantee of work even if it is accepted. Organisations may accept submissions from individuals or a company structure with a number of sub-contractors, however, some larger organisations now prioritise submissions from companies or group practices rather than the old word of mouth recommendations for individuals.
Organisations may specify a length of contact, maximum period of time that a contractor can recontract and whether you will be based onsite, offsite or in your own practice rooms. When contracting directly with an organisation, it’s crucial to do your research. Ensure you understand the scope of work, contract duration, and the expectations for your role. Be proactive in asking questions to avoid any surprises later.
2. Independent Contracting for a Third-Party Company
Some clinicians choose to contract with third-party providers, such as employment or recruitment agencies or employee assistance program (EAP). These providers act as intermediaries, connecting you with organisations in need of your services
- Employment/Recruitment Companies
Large organisations may use outsource to third party employment agencies. The potential benefits are regular payments at a higher (casual) rate than an employee. This is a great way into organisations watch out for exit clauses in the contract. Some contracts include significant fees to the organisation if you want to transition from a contractor to a full-time employee within the organisation, limiting your options.
- Employment Assistance Program (EAP) providers
Many large organisations utilise employment assistance programs. They may provide short term counselling, critical incident support, workplace coaching and/or education. This can be a good entry point for clinicians starting private practice given the convenience of referrals, exposure to different client types, administrative backup and potential training and support opportunities. But check the rates of pay as they may be significantly lower than sourcing your own referrals.
3. Contracting with a Private Practice
Another way to establish your counselling practice is by working as a sub-contractor for another clinician in their private practice. This arrangement is convenient for referrals, client bookings, administrative support and sometimes access to counselling rooms. Typically, the business owner takes a percentage (between 30-40%) of your client fees in exchange for these benefits. Each practice offers different conditions and rates and some conditions may be negotiable depending on your area/s of speciality or clinical experience
Independent Contracting vs Employment
Sometimes you will be offered the choice of short-term employment or a contract. The main difference between working as an employee or an independent contractor is the way in which you are paid and the conditions that you are entitled to.
Employees
- Paid a regular wage or salary.
- Entitled to paid personal leave, recreation leave, long service leave and superannuation.
- Employer deducts tax from your earnings.
- Require a tax file number (TFN).
- Covered through an organisation’s insurance.
- Access to other benefits like salary sacrifice, gym membership, and paid professional development.
- Work under a standard employment contract.
- Have job security (even if only for a short term period).
Independent Contractors
- Invoice an organisation or business directly. Usually negotiate your own fees.
- Not entitled to paid personal leave, recreation leave, long service leave or the superannuation guarantee.
- Pay tax separately and manage your own tax obligations.
- Require an Australian Business Number (ABN) and may need to charge for GST for income over a certain amount.
- Responsible for your own professional liability through indemnity insurance (is included in AASW membership).
- May be required to set up a company structure or separate business bank account for invoicing.
- Work under a contract, which can vary in length and scope.
- Can work for more than one service at a time.
Formal definitions of employee and contractor can be found at the Fair Work Ombudsman website. www.fairwork.gov.au. It’s always a good idea to review your options carefully before committing to any contract, and to seek professional advice where necessary.
In the next blog in this series, I delve more closely into the pros and cons of independent contracting.
All the best in your contracting role!
About Melinda Austen
Melinda Austen is a clinical supervisor and workplace and leadership coach with over three decades of clinical experience working with refugees, asylum seekers, Defence veterans, Police and couples. She now helps the helpers. Melinda supports colleagues, including social workers, clinicians and other professionals such as lawyers and allied health who work with vulnerable clients. In her supervision and workplace coaching practice at person2person Consulting, she is driven by a desire to help people foster healthy, productive teams and thrive in their work. www.person2personconsulting.com