Why Are So Many Clinics Overclassifying Allied Health Staff?

I see this all the time.

A clinic hires someone experienced. They’ve worked in a hospital. They describe themselves as “senior.” Sometimes they even tell you they were a Level 3 or Level 4 in their previous role.

From there, it feels logical to match that level in your practice.

But this is where things quietly go wrong.

Private practice owners are often making classification decisions based on systems that simply don’t apply to them.

Why Hospital Levels Don’t Apply in Private Practice

This is the most important distinction to understand.

Hospitals Don’t Operate Under Awards

Most hospitals operate under Enterprise Agreements, not Awards.

Even more importantly, many hospital employees are state government employees. That means they are not covered by the Fair Work Act at all. They fall under state-based industrial relations systems.

So while hospital roles might use similar language like Level 1, Level 2, or Level 3, those classifications are not based on the same framework as the Health Professionals and Support Services Award used in private practice.

They are different systems, with different rules, negotiated for different environments.

Enterprise Agreements and Awards Are Built for Different Purposes

Enterprise Agreements are negotiated documents. They can include:

• Different definitions of seniority
  
• Different expectations of responsibility
  
• Different progression pathways
  
• Different allowances and structures
  

Awards, on the other hand, set minimum standards across an industry.

So even if a hospital didn’t have an Enterprise Agreement, the way roles are classified and paid in public health would still not automatically translate to private practice.

This is why relying on hospital levels as a reference point creates confusion.

What Actually Determines Level 3 in Private Practice?

This is where most clinics get caught out.

In private practice, Level 3 is not about how long someone has been in the profession.

It is about responsibility.

Experience Alone Does Not Equal Level 3

Under the Award, Level 3 generally requires additional responsibilities beyond managing your own caseload.

This might include:

• Supervising or mentoring other clinicians
  
• Contributing to service development
  
• Leading programs or areas of practice
  
• Taking on training or coordination duties
  
• Having accountability beyond individual clinical work
  

A clinician can be highly skilled, very experienced, and still be correctly classified as Level 2 if their role is focused purely on delivering clinical services.

That does not make them “junior.” It just means the role itself does not meet the definition of Level 3.

Can You Still Pay Experienced Staff More?

Yes. Absolutely.

This is where private practice differs significantly from public health.

An Award sets the minimum you must pay, not the maximum you are allowed to pay.

You can pay above Level 2 rates to attract or retain experienced clinicians without classifying them at Level 3.

The key difference is this:

• Classification determines the legal minimum
  
• Pay strategy is a business decision
  

In government roles, pay is tightly tied to classification. That’s why public health employees often place so much emphasis on their level.

In private practice, you have flexibility.

Why Overclassification Becomes a Bigger Problem Over Time

Some clinics think, “We’ll just leave them at Level 3. It’s easier.”

Short term, that might feel harmless.

Long term, it’s expensive.

Award Rates Are Increasing Significantly

Over the next few years, minimum pay rates for allied health professionals are expected to rise substantially. For many roles, increases are estimated at around 25 percent in total.

If someone is overclassified now, every future increase compounds the issue.

You’re not just paying more today. You’re locking yourself into higher minimum obligations for years to come.

New Classification Structures Are Coming. This Is Your Opportunity.

New classification structures are expected mid-year.

This creates a natural and legitimate opportunity to:

• Review current classifications
  
• Correct any overclassification
  
• Align roles properly with Award definitions
  

This does not mean reducing pay.

It means correcting the classification on paper so it accurately reflects the role.

The classification determines the minimum you must pay under the Award. Paying above that remains your choice.

What If Staff Compare Their Pay to Hospital Enterprise Agreements?

This conversation is becoming more common.

Staff look up hospital Enterprise Agreements. They see higher numbers. Then they question why private practice doesn’t match it.

Here’s the reality.

Public Health Is Not the Market Benchmark

When I worked in corporate HR doing remuneration benchmarking for companies with 150 to 400 employees, we didn’t compare ourselves to the highest-paying organisations.

We used market data that showed:

• 25th percentile
  
• 50th percentile
  
• 75th percentile
  

As a medium-sized business, we typically aimed to pay somewhere between the 50th and 75th percentile, depending on:

• How difficult the role was to fill
  
• The individual’s experience
  
• Market demand
  

We never aimed to compete with the very top end of town.

Instead, we competed differently.

How Private Practices Compete for Talent

Working in private practice is a choice.

Many clinicians choose it because they value:

• Flexibility
  
• Autonomy
  
• Variety of work
  
• Professional development
  
• Being part of a smaller team
  

Those benefits don’t always exist in large public systems.

If someone wants everything that comes with small business and expects public health pay structures, there may be a mismatch in expectations.

That doesn’t mean pay doesn’t matter. It means you need to be clear about what you compete on.

How Should Private Practices Benchmark Pay?

Your most relevant comparison points are:

Public health can be a reference point, but it should not be the benchmark.

• Other private practices
  
• Clinics of similar size
  
• Businesses with similar service models

You also need to consider internal equity. If one person is paid significantly more than others in similar roles without clear justification, that creates its own risks.

What If Pay Is the Deciding Factor?

If pay truly is the most important factor for someone, you have options.

• They may choose to move into public health
  
• You can set clear performance or revenue targets tied to higher pay
  
• You can offer structured incentives, bonuses, or development pathways
  

What matters is that pay decisions are intentional, documented, and aligned with your business model.

The Bottom Line for Clinic Owners

If you take nothing else away, remember this:

• Hospital levels do not automatically apply in private practice
  
• Experience alone does not determine Award classification
  
• Overclassification today becomes expensive tomorrow
  
• New Award structures are the perfect time to correct this properly
  
• You can pay above Award rates without inflating classifications
  

Getting this right protects your margins, your compliance, and your confidence as an employer.

And it puts you back in control of your wage structure, instead of reacting to comparisons that don’t actually apply.