CATEGORY AUSTRALASIAN DENTIST117 COLUMNISTS “When I take a practice to market, one of the main things a buyer is paying for is the patient base and the team that helps retain those patients. One of the questions every serious buyer asks early is: who could walk out the door, and what is in place to protect the practice if they do?” Carl Burroughs The pay rise that may reset your contracts Existing contracts are grandfathered, so your current non-competes keep working for now. The catch is that any variation after commencement brings the contract under the new law, and the explanatory materials say this applies whether or not the variation has anything to do with the restraint. An agreed pay rise, a change of hours or a new title is therefore likely to count as a variation. Most practices give at least one team member one of those a year, so for a lot of owners the grandfathering may only last until the next salary review letter, with contracts re-tested one by one over 2027 without anyone deciding to change a restraint. Aspect Legal has put this point to Treasury in its submission on the draft. “The owners I worry about are the ones who assume grandfathering means they can leave their contracts alone. A routine pay rise may be enough to bring a contract under the new rules. If you are going to review your agreements, do it before the law starts, not after the first pay round.” Joanna Oakey What still protects you In her book Buy, Grow, Exit, Joanna wrote that it is a widely accepted myth that restraints in employment contracts are unenforceable. Set up properly, they can be. What changes next year is which ones you can use. The clause that stops someone working nearby goes for most of your team. The clause that stops someone approaching your patients stays, as long as it goes no further than it needs to, and so do the clauses protecting patient records and confidential information. Most practice contracts treat those as standard paragraphs nobody reads. From next year they are the protection, and they have to be written for the role and for your practice. The other restraint that stays is the one you give as a vendor when you sell your practice. The draft leaves it alone. For anyone with a sale or purchase in view: u If you are buying a practice, be very careful in the drafting of the restraints in the sale agreement, because that restraint is now the main protection for the goodwill you are paying for. If the seller stays on as an employee for a handover, their employment contract falls under the new rules, so the two documents need to be kept clearly separate. u If you are selling a practice, the restraints in your agreements with your own team help protect the value the buyer is paying for. Get them reviewed well before you go to market, so they are in order when a buyer’s lawyer opens them. “I have bought, expanded and sold practices myself, and from the moment I got the keys to a new practice I was already thinking about my exit. Don’t wait until you are ready to sell to get your practice ready for sale. A buyer’s lawyer will look closely at your employment contracts and fixing them years before a sale is far easier than fixing them in the middle of one.” Carl Burroughs What to do before the law starts Get your employment and associate agreements reviewed before the commencement date. There will be a rush as that date gets closer, and the earlier yours are done, the better. A proper review checks: u who sits above and below $190,100, and how each associate is engaged u what the contract relies on to protect the practice, and whether that clause survives the ban u whether the patient non-solicitation and confidentiality clauses would protect you on their own u whether a sale agreement and an employment contract have been run together, if you bought or sold a practice in the last two years and the vendor stayed on u whether you have any arrangement with a neighbouring practice about not poaching each other’s staff, which is caught from day one This is not a copy and paste job, because the right clause depends on the role, the pay level and how the associate is engaged. But the owners who look at it this year will be the ones who go into 2027, and into a sale, with contracts that hold. “We have seen this before with every big change to employment law. The practices that move early get it done calmly and on their own terms. The ones that wait are reviewing contracts under pressure, usually because someone has just resigned.” Joanna Oakey Book a call to have your contracts reviewed If you want to get ahead of the proposed changes, book a call with the team at Aspect Legal to review your employment and associate agreements. u Joanna Oakey, Aspect Legal joanna.oakey@aspectlegal.com.au (02) 8006 0830 Thinking about the future of your practice? Thinking about selling in the next few years? Contact Carl Burroughs at Professional Practice Sales for a confidential chat about what your practice is worth today and how to protect that value before you sell. Carl Burroughs, Professional Practice Sales carl@practicesales.com.au 0416 190 000 FOR LEASE For more details contact us today www.practicesales.com.au | 1800 375 227 Rare Eastern Suburbs Dental Opportunity Premium Fit-Out, Flexible Space and Luxury Living $1850 + GST pw
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