FAQ

My employment agreement has a “No competition” clause which states that within 12 months after my employment ends, I must not practice within an area less than 10km of the training practice. Are these types of clauses legally enforceable?

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ANSWER

“No competition” or restrictive covenant clauses in employment agreements prevent a doctor from practicing in the future, usually within a defined timeframe, within a certain geographic range from their current employer’s practice. These clauses are designed to protect the practice’s client base and business interests.

While such clauses may be relevant for Fellowed GP contractors, GPRA believes that they would be very difficult to uphold for registrars in the training program, as registrars typically do not control their placements and are usually required to move practices to meet their training requirements.

That said, such restraint clauses in an employment agreement are allowed under the NTCER (cl. 17) Restrictive Covenant: “An agreement may be reached between the registrar and the employer regarding reasonable restrictions on the registrar’s employment on leaving the training post, including location and time period, provided that such restrictions do not unreasonably interfere with the completion of the registrar’s training or cause unreasonable hardship for the registrar. The employer and the registrar acknowledge that a restrictive covenant must be reasonable and should not be wider than is reasonably necessary to protect the employer’s interests when judged in terms of the duration and area of its coverage and the activities restrained.”

Therefore, the employer can negotiate a restrictive clause, but this is subject to a test of “reasonableness”: it must
1. be reasonable, and
2. not unreasonably interfere with the completion of the registrar’s training or cause unreasonable hardship for the registrar.

Effectively, such clauses should not make it impossible to work elsewhere as a registrar (e.g. if you are in an area where there is only one other practice where you can be placed during training or work following fellowship).

Legal advice GPRA has obtained confirms that reasonable restraints, that aim to protect the business interests of the training practice, are lawful. There are many factors that determine whether a restraint is reasonable including:

(a) the length of the restraint;
(b) the geographic area of the restraint;
(c) the size of the town or city in which the restraint operates;
(d) the number of medical clinics falling inside the geographic area of the restraint;
(e) the number of medical clinics falling outside the geographic area of the restraint; and
(f) the capacity of the practitioner to earn a living or to exercise their profession outside of the geographic restraint area.

So it follows that, while a restraint is unlikely to be enforceable in all circumstances, registrars should not assume that a restrictive covenant will be unenforceable.

The GPRA Benchmarking survey results demonstrate that restrictive covenants are included in some registrar employment agreements, with a range of restraints, in terms of duration and geographic distance. However, GPRA recommends that registrars in all training terms should attempt to negotiate for the removal of restrictive covenants from their employment agreements. If this is not possible, carefully consider the impact that such a restraint clause may have on where you plan to practice both as a registrar and as an early career GP; while GPRA is not aware of any legal action being brought against a GP registrar or early career GP in this regard in the past, you certainly should not assume that the restraint will be unenforceable.

GPRA also suggests, if you have concerns about a restrictive covenant in your employment agreement, that you seek independent legal advice on whether the restraint is reasonable, particularly in relation to the factors above, and how this can be dealt with in terms of your future/preferred work location especially post Fellowship.