Reading a consultant contract in India: the six clauses that decide what you actually earn

A consultant offer is not really a number. It is a set of definitions that produce a number, and two offers quoting the same headline figure can differ by a wide margin once the definitions are applied.

These are the six clauses that decide the outcome. They are the ones to read slowly, and the ones worth getting answered in writing before you sign.

1. Is the fixed component a floor, or an advance?

The single most consequential term, and the one most often misunderstood, because both arrangements are described as a "guaranteed" amount.

A fixed floor. You receive it regardless. Your revenue share is calculated and paid on top of it. In a slow month you keep the floor; in a good month you keep the floor plus the full share.

A minimum guarantee recovered against share. You receive the same amount monthly, but it is an advance. When your share is calculated, what you have already drawn is deducted from it. In a slow month you keep the guarantee. In a good month, your share is reduced by everything you have already been paid.

Over a year, in a practice that grows, these produce materially different income from identical-looking contracts.

Ask precisely this: "Is the fixed component recovered against my revenue share, or is it additional to it?" An answer that avoids the word "recovered" is not an answer.

2. What counts as your revenue

A share percentage is meaningless until the base is defined. Work through each of these:

• Consultation only, or procedures too? If you perform procedures, are they in your base or the hospital's?
• Investigations you order. Included, excluded, or a different percentage?
• Inpatients under your name. Do bed days, nursing and pharmacy revenue for your admitted patients count toward you at all?
• Cross-referrals. When you see another consultant's inpatient, whose base does it land in?
• Assisted procedures. Where you assist rather than lead.

A lower percentage on a broad base routinely beats a higher percentage on a narrow one. The percentage is the number people negotiate; the base is the number that decides the outcome.

3. The order of deductions

This is where a well-negotiated percentage quietly shrinks, and it is almost never volunteered.

Ask whether your share applies to gross billing or net, and if net, exactly what comes off first:

• consumables and implants
• hospital share of insurance and TPA package rates
• discounts given at the front desk, including corporate and camp discounts
• bad debt and unrecovered dues
• statutory deductions

The insurance and TPA question matters most in practice. A large share of Indian hospital revenue arrives as a fixed package rate that already sits below the tariff. If your percentage is applied after the hospital has taken its share of that package, your effective rate on those cases is well below the headline.

Ask: "On an insurance package case at the standard rate, what is my actual take on the same procedure, in rupees?" Ask for one worked example. A hospital operating a fair model can produce one; a reluctance to produce one is itself the answer.

4. Indemnity, and what happens after you leave

Who pays the premium is the question people ask. It is the less important one.

• What is the cover level, and is it adequate for your speciality? Surgical and obstetric exposure is not the same as outpatient dermatology.
• Claims-made or occurrence-based? An occurrence policy covers incidents that happened during the period, whenever the claim arrives. A claims-made policy covers claims made while the policy is live.
• Is there run-off cover? This is the one that catches people. Under a claims-made policy that ends when you leave, a claim arising later from work you did there may not be covered by anyone. Run-off cover — sometimes called tail cover — closes that gap. Ask who provides it, for how long, and who pays.
• Does the hospital's cover extend to you at all, or does it cover the institution while leaving you personally exposed?

This clause does not affect your income. It affects whether a single bad outcome years from now becomes your personal liability.

5. Exclusivity and outside practice

• Can you consult elsewhere, and on what terms?
• Can you retain an existing private clinic?
• Is teaching, medico-legal work, or industry advisory permitted?
• Is there a non-compete on exit — what radius, what duration?

Non-compete clauses in Indian employment contracts are frequently drafted more broadly than they are ultimately enforceable, but a clause you have signed still constrains you practically: it can delay a move, complicate a negotiation, and cost you legal fees to test. Read it as a real constraint, and negotiate the radius and duration down rather than assuming it will not hold.

6. Exit

• Notice period, both directions. An asymmetric notice period — three months from you, thirty days from them — tells you something about the relationship.
• Bond or retention amount, and what triggers it.
• What happens to unpaid variable earnings on exit. Revenue you generated in your final months is often billed and collected after you leave. Is it paid to you, and on what timeline? This is a real amount of money and is routinely silent in the contract.
• Handover obligations for your patients.

The one-page version

Ask these before you sign, and get the answers in writing:

1. Is the fixed component a floor, or recovered against my share?
2. What exactly is in the revenue base — consultation, procedures, investigations, inpatient?
3. Gross or net, and what comes off before my percentage applies?
4. On a standard insurance package case, what is my take in rupees? One worked example.
5. Indemnity: cover level, claims-made or occurrence, and who pays for run-off after I leave?
6. Outside practice — permitted, and on what terms?
7. Notice period both ways, and any bond?
8. What happens to variable earnings billed after I leave?

Questions 1 to 4 decide your income. Question 5 decides your exposure. Questions 7 and 8 decide what it costs to be wrong about the rest.

For what a role should pay in the first place, the method is in the salary benchmarking guide — and the comparison set it depends on comes from peers in your speciality who have recently negotiated in the same market.

A note on scope

This is general professional information, not legal advice. A consultant contract is a binding commercial agreement and the amounts involved justify having a lawyer read it — particularly the indemnity, non-compete and exit clauses, where the drafting matters more than the summary.

Primary sources

• Insurance Regulatory and Development Authority of India
• State Medical Councils — contact list, National Medical Commission