Agency vs direct billing for locum GPs

A locum GP typically splits work across three models:

• Agency-placed: an agency finds the shift, you sign its contract, the agency pays you and bills the host workplace. Whether the agency also withholds tax or pays super depends on the contract, so check each remittance.
• Direct billing: you contract with the workplace, Medicare or the patient pays you (the workplace may run the billing for you), and you pay the workplace a service fee. You keep the net and run your own tax, super and GST.
• PAYG / hospital bank: you are an employee for each shift. The hospital or health service pays you through payroll, withholding tax and paying super as your employer, and there is no GST for you to charge.

The three produce very different numbers on the same patient workload. The right question is not "which pays more per shift" but "which lands the most in your bank once tax, super, and GST are run".

Sessional's indicative market estimate for a locum GP day rate runs from $1,200 to $3,500, with a typical figure around $1,870. These are educated estimates from public market data, not quotes, and the locum GP rates page breaks them down by setting. On agency labour-hire work, Super Guarantee at the current rate of 12% is usually owed on top of the rate, by the agency rather than the host workplace: check your remittances rather than assuming it is included.

What looks simple has overhead hidden in it. The agency keeps a margin between what the host workplace pays and what you see. Indicative estimate: Agencies typically mark up 15 to 25% of the clinic-paid rate. Direct bookings skip this. You also have less control over who the host workplace is, when cancellation risk lands, and whether the shift gets reclassified (a remote rate downgraded to regional because the agency and host disagreed on the MMM category). Agency work removes admin load but adds rate compression.

The MBS Online factsheet on the bulk billing incentive changes (last updated 1 September 2025) states that, subject to the passage of legislation, from 1 November 2025 bulk billing incentives can be claimed when any Medicare-eligible patient is bulk billed. The incentive item that applies differs by Modified Monash area, so direct-billing gross per shift depends on your consult mix, your bulk-billing share and where the workplace sits. This guide does not quote incentive amounts or a typical shift gross: check the item descriptors on MBS Online and work from the billing revenue you actually record. The Medicare bulk billing guide sets out the method.

The service fee then decides what reaches you. Where the relevant-contract provisions apply, a workplace can owe payroll tax on the contractor's share of billings (see the Thomas and Naaz explainer), and that exposure is commonly given as the reason for a higher fee. Several states have since added GP-specific relief, mostly tied to bulk-billing: Victoria (from 1 July 2025), NSW (a rebate from 4 September 2024), Queensland (a permanent exemption from 1 December 2024), South Australia (from 1 July 2024), and the ACT (from 1 July 2025). Where a workplace genuinely bulk-bills and qualifies, the payroll-tax driver on the service fee is reduced. Tasmania and the Northern Territory have no medical-centre specific payroll tax ruling, and RevenueWA says Western Australia's payroll tax law is not harmonised with the other jurisdictions on contractors, so the relevant-contract reasoning does not carry across directly. Verify the workplace's state and relief position rather than assuming.

You are also responsible for your own super. Concessional contributions are deductible up to the $32,500 cap, but money you contribute is locked into super, so plan contributions against the cash you need through the year.

PSI rules (see the PSI diagnostic guide) apply when more than 50% of your income comes from your personal skills. For locum GPs that is almost always true. The concern is whether you pass a Personal Services Business test: results test, unrelated clients, employment, and business premises. If you do, normal small-business tax treatment applies. If you do not, PSI attribution means the income is taxed at your personal rate with tight deduction limits.

The 80% rule bites when 80% or more of income comes from a single client. For agency work the client is usually the agency that pays you, not the patient or the host workplace; for direct patient billing, ask your tax agent who counts as the client. A GP who works exclusively through one agency is at or above 80% with that agency, and Sessional's PSI diagnostic then flags that an ATO PSB determination is likely to be needed. A GP who spreads work across several agencies and direct-billing workplaces may sit below the 80% line, and is then assessed against the four tests.

The diagnostic builds its income streams from your last 12 months of shifts, grouped by workplace and income source. If one agency places you at several workplaces, those shifts show as separate streams, so add up that agency's share yourself before relying on the 80% result.

When you log a shift, Sessional asks how you were paid and needs an answer: agency-managed, direct contractor (workplace-paid), direct patient billing, public hospital casual or bank, public hospital VMO or contract, mine site or remote industrial contract, aeromedical or retrieval, event medical cover, or other. The answer drives four things today:

• Invoicing and pay checks: direct and contract sources keep the invoice controls. Agency-managed and public hospital casual shifts offer no Sessional invoice; once delivered, you can mark a pay check against the remittance or payslip (paid correctly, paid short with the amount received, or not paid yet). "Other" blocks both until you choose a source.
• Super Guarantee tracker: the financial year's shifts are grouped by income source and labelled "Likely owed" (agency, mine site, aeromedical), "Review" (direct contractor, VMO or contract, event medical, other), "Covered via PAYG" (public hospital casual) or "Not applicable" (direct patient billing), with the SG owed, the super you record as paid, and the gap.
• PSI diagnostic: direct contractor, direct patient billing and event medical streams count towards the unrelated-clients signal; agency, hospital, mine site and aeromedical streams do not.
• Tax planner: public hospital casual shifts appear as a separate PAYG slice with no reserve, and an agency shift you marked as paid short reserves on the amount you received.

Sessional does not combine the three models into one take-home figure, set GST treatment from the income source, or tag payroll-tax exposure to a workplace. To compare the models on your own numbers, filter the earnings dashboard by workplace and date range: the monthly breakdown shows shift count, average rate and gross for each month, and the per-shift margin table shows gross minus any expenses you link to a shift. The tracker, diagnostic, planner and dashboard are part of the Plus and Pro plans. See Sessional for locum GPs for the rest of the GP toolkit.