Partnerships

Wessex LMCs strongly recommend that all practices have a current partnership agreement. As to terminology, although there are technical differences between an agreement and a deed for the purposes of these guidelines, the terms “partnership agreement”, “partnership deed” and “practice agreement” all in effect mean the same thing.

The BMA has guidance that can be seen at https://www.bma.org.uk/advice-and-support/gp-practices/gp-partners/practical-guide-for-taking-on-new-gp-partners

Deed (Agreement)

Despite regular warnings and advice about partnership deeds there are still many practices that do not have a current and effective partnership deed! If a partnership deed is not carefully drawn up to cover all likely issues then the Partnership Act 1890 will apply to all those issues where it is silent or unclear. If no current partnership agreement exists there is a risk that there is a 'partnership at will' which is governed by the Partnership Act 1890.

Some consequences of being a partnership 'at will';

Any partner may dissolve it at any time with no formal procedure
Death or bankruptcy of a partner will automatically dissolve the partnership
No partner(s) has the right to expel another for any reason
No partner(s) has the automatic right to carry on the partnership
The assets will be frozen immediately on dissolution
Staff will be made redundant on dissolution
All partners are entitled to an equal share of the assets
All partners have equal liability for the debts
No new partner may be appointed without a unanimous decision
All partners may take part in the management of the partnership

It is not a foregone conclusion that the absence of a signed partnership deed will result in a partnership at will. Much would depend on the circumstances but argument over the point can be extremely expensive itself.

The absence of a partnership deed does not prohibit NHS England from contracting, or continuing, to contract with a partnership.

If a partnership ends it is essential to comply with all of the requirements of the Standard General Medical Services Contract (part 25, 538) - Variation provisions specific to a contract with a Partnership. This may prove very difficult in a hostile situation where no partnership deed exists and it may be of key importance if NHS England for any reason wishes to withdraw the contract from a practice.

We have been advised of well documented and authenticated examples in other parts of the country where NHS England has withdrawn the contract when a partnership ended and has subsequently put the contract out to tender.

Wessex LMCS very strongly advises all partnerships to ensure that they have a current and effective partnership deed which will over-ride the Partnership Act and make provision for future succession to the contract, division of profits, removal of a partner if there is a very good reason (the so called green socks clause) etc.

It is of course essential to go to a lawyer with special knowledge and experience of general practice and partnership law. Wessex LMCS knows of, and can recommend, a number of experienced legal firms that can offer this service.

In the event of problems you may have very good reason to be grateful for a carefully drafted legal document that has anticipated and covered most eventualities.

It is worth considering a regular check to ensure that the partnership deed is still fit for purpose.

Non GP Partner

Practice partnerships may now include non-clinical members as long as one of the partners is a medical practitioner whose name is on the GMC GP register.

Practices would be well advised to seek legal advice regarding any specific clauses that they may wish to apply to non-GP partners.

Amending a Partnership Agreement

The partnership deed can effectively be amended to reflect any decisions taken at practice meetings, provided these are properly recorded in the signed and agreed minutes of the partnership meeting.

Change in Partnership

It is vitally important that when a new partner joins, he/she signs a partnership deed. A lot of practices think this should be done when the new partner has completed a mutual assessment period and don’t appreciate that the new partner is truly a partner from day one so it is crucial that before the new partner joins a deed is signed. The deed itself will make provision for mutual assessment arrangements. In the past, new joiners were usually recorded by way of a supplemental deed but with modern IT it is simplicity itself to re-print an existing deed incorporating the new partner.

"Green Socks" Clauses

One of the benefits of a well drawn up partnership deed is that it can set out the circumstances under which a partner may be expelled from the partnership without going through the difficult and expensive process of dissolving the entire partnership.

Partnerships can easily become dysfunctional based on disagreements on clinical matters or workload issues or there may be a personality clash which defies resolution. Failure to adhere to an acceptable dress code, even the colour of a partner's socks, may become the terminal irritant in a dysfunctional practice! This has given rise to the popular description of the clause included in many partnership deeds that states that any partner can be expelled for any reason if all of the other partners vote to expel them.

However, it is essential that partnerships remember that despite the green socks clause they are still obliged to comply with all anti-discrimination legislation. Failure to do so could easily result in a lot of inconvenience and unpleasantness as well as extremely expensive legal costs and compensation.

The Courts will normally consider all such clauses with regard to possible abuse and the consequent hardship of expulsion. Generally they will not allow a partner to be expelled, even if the wording of the clause permits it, if the expelled partner can show that his or her co-partners have not acted in good faith.

If in doubt it is always best to seek legal advice before expelling a partner.

Compulsory Retirement Clauses

Compulsory retirement clauses regularly appear in partnership deeds but these must comply with discrimination legislation. There is in addition a requirement for the other partners to act in good faith.

It is wise to discuss these issues with the partner to be expelled before the expulsion takes place in order to ensure that the proposed action is necessary and acceptable to all concerned. In case of doubt it is always best to seek legal advice before taking action.

Anti-discrimination Legislation

Partnerships are bound by the law as it relates to discrimination with regard to gender, sexual orientation, disability, age, race, colour, language, religion, political or other opinion, national or social origin, association with a national minority, property, birth or other status. Even a carefully worded partnership agreement will not exempt the practice from their legal obligations in this respect.

Disability Discrimination Act

The Equality and Human Rights Commission has published a Code of Practice Employment and Occupation to address issues raised by the Disability Discrimination Act 1995.

This makes it clear that the Act imposes obligations on partners in firms, as well as employers. Since October 2004 this Act has given a partner, or applicant for partnership, or a prospective partner in a new partnership, similar rights to those of an employee.

This is an extremely complex area of employment legislation and the LMC is unable to offer legal advice, although we may be able to offer some preliminary advice or support.

It would appear that it is unlawful for a firm to discriminate against a disabled person who is an existing or prospective partner with regard to;

advertisements for a position
who should be offered a position
the terms on which a position is offered
refusing or deliberately omitting to offer a position
refusing or deliberately omitting to afford access to any benefits
expulsion from the partnership
harassment or victimisation
any other detriment

The duty to make reasonable adjustments applies to a firm in just the same way as it applies to an employer and relates to 'any provision, criterion or practice applied by or on behalf of the firm' and to any 'physical feature of premises occupied by the firm.'

The cost of making reasonable adjustments may not generally be passed on to the disabled person concerned. However, if adjustments are required in relation to a partner or prospective partner who is disabled, the cost is an 'expense' of the firm, to which a disabled partner may be required to make a 'reasonable contribution'. In this respect it would be reasonable to take into account the proportion of the disabled partner's share of the profits.

Partners who believe they have suffered discrimination on the basis of disability do not need to use the statutory procedures before bringing a claim in the Employment Tribunal, but must lodge the claim within 3 months minus a day from the data of the last incident of disability discrimination.

Any practice or individual should seek specific legal advice as soon as they become aware of any problem.

Partners' Liability in Employment Disputes

If the behaviour of one partner breaches employment law, leading for example to a claim for constructive dismissal, then the other partners would normally share 'joint and several liability' for his or her actions.

If an employee, such as a practice manager, creates a similar problem, then the partners would generally share the liability, unless there had been a very clear breach of practice procedures, in which case disciplinary action should be considered. The partners may then be able to make amends in order to rectify the problem.

There are very clear statutory procedures for dealing with grievance, discipline and dismissal in the workplace and for any partner or employee to act precipitately without following the correct procedures could prove extremely expensive for the practice. Failure to follow correct procedures in an unfair dismissal case will lead to an automatically unfair dismissal and a very expensive settlement.

It is therefore of critical importance that all practices have very clear written policies that staff and partners must follow when handling all employment issues. All partners and employees must be made aware of their responsibilities in this respect.

Strict adherence to proper procedures will usually help minimise the risk. In the case of an employee who ignores correct procedures the partnership liability may be reduced. In the case of a partner, the partnership deed may cover failure to follow correct procedures.

Practices may seek insurance cover for the legal costs resulting from an employment claim, but this rarely covers any financial award made to the employee, which may be substantial. If problems do arise it is wise to seek early advice from a lawyer with special experience in employment law to try to limit the damage.

Variation of Partnership

The NHS regulations govern how NHS England will deal with the NHS contract as a result of the termination or dissolution of a partnership of two or more individuals.

The partnership deed should be set up so as to ensure that the contract with NHS England will continue in the event of a change of partnership.

Full details of the relevant regulations are to be found in The National Health Service (General Medical Services Contracts) Regulations 2004, part 8, para 106, Variation provisions specific to a contract with two or more individuals practising in partnership. http://www.opsi.gov.uk/si/si2004/20040291.htm#106c