Sarah is a practice
manager at a GP practice and has recently interviewed a doctor who she would
like to engage as a contractor. She wants to protect the practice as the last
GP she engaged recently left and set up a clinic less than a kilometre away. A number
of patients have now signed up to the new clinic and a couple of the reception
staff have started working there, at a significant loss to the business. After
seeking legal advice, Sarah was told she could not stop the doctor doing this as
there were no post-termination restraints in his contract.
Drafting an enforceable contract
restraints in a contractor and/or employment agreement is an important factor
in trying to protect a practice in case a doctor leaves. However, Sarah should carefully
consider the parameters and wording of those restraints, to make them as
enforceable as possible, if required.
advisable to seek legal advice before drafting or finalising a contract and, specifically
when considering post-termination restrictions given the individual
circumstances pertaining to each case which will ultimately impact on the
enforceability of the terms. Some of the main factors to consider when drafting
post-termination restraints are set out below:
Legitimate protection of business
Whether or not
post-termination restraints are enforceable will be fact and case specific. However,
a court, if asked to decide on enforceability, will always consider if there is
a legitimate business interest being protected by the practice and/or if the
rights of the doctor to earn a livelihood are being unfairly fettered, when
reviewing the relevant restraint clauses.
Five areas to
consider when drafting post-termination restraints include:
business interest to be protected
For example, the restraint may
apply to the provision of GP services, rather than the wider provision of any
medical services or generally working in the medical field, which would be significantly
more restrictive and not necessarily relevant to the practice.
This may involve an agreement that
the doctor will not do the following after termination:
- Provide GP services at a competing practice.
- Solicit or attempt to solicit other staff
members to provide services.
- Solicit or attempt to solicit current patients
they have recently treated.
should be given to which restraints are actually needed to protect the
practice, rather than including a blanket restraint that may not be relevant.
This is likely to be quite a small
radius for a GP practice, given it would usually attract/have registered patients
from the immediately local area. However, if the practice was nationally
renowned for Botox treatments for example, and could show a core national client
base it needed to protect, then the relevant wider area could fall within a
legitimate protection of business interests. Often these clauses are drafted on
a “cascading” basis, to allow for different locations to be included as
alternatives, if one is found to be unenforceable.
of the restraint
This should be long enough to allow
the practice to protect its business, but not too long to be deemed as trying
to stop the doctor from legitimately earning a living. Cascading time limits
may again be specified, setting out alternative and shorter time durations if
one is found to be unenforceable.
A contract should also include a clause which
defines information that is confidential to the practice (for example, client
lists, pricing, market data) and requires the doctor to keep such information
confidential during and beyond the termination of the relationship.
Steps to take upon termination
post-termination restraints will provide the practice with a good basis to
protect its business if the GP leaves in the future. The practice can write to
the GP upon termination to remind them of their on-going obligations and the
restraints they agreed to.
practice believes the doctor is breaching these obligations, it can write to
request that the doctor stop acting in breach and/or consider commencing
proceedings, either by seeking an injunction to stop the doctor’s actions or through
damages for breach of contract. However, this should be a last resort, as it is
usually costly and time consuming.
good restraint clause makes it clear what the doctor is restrained from doing
after the termination of the contract for a reasonable time period and to
legitimately protect the business, without unfairly stopping them from earning
- Post-termination restraint clauses are an
effective way of protecting a practice when they are reasonably drafted and
considered likely to be enforceable.
- Always consider the scope of post-termination
restraints on a case-by-case basis.
- Consider the business interest you are seeking
to protect and tailor the restraints accordingly.
advice contact Avant’s Medico-legal
Advisory Service (MLAS) via email: email@example.com or
call 1800 128 268,
available 24/7 for emergency advice.