GP Partnership Agreement – What Should Be Included?

Without a valid partnership agreement, your GP Practice risks inadvertently terminating your GMS or PMS Contract with your local Health Board when a Partner leaves. You also risk automatically making all your staff being made redundant (and being responsible for the costs incurred).

Many professional services firms operate as a traditional partnership. GP Practices should however have a partnership agreement that deals with the issues which are specific to general practice – e.g. the GMS regulations, superannuation, notional rent, NHS funding/reimbursements, Sustainability Loan requirements and 24-Hour Retirement. 

An ordinary partnership agreement (i.e. one you may find on the internet) won’t normally address these matters. You should consider whether your current agreement contains the following:

Relevant Regulations

• Has your Partnership Agreement been updated since the 2018 Contract (e.g. does it still contain references to QOF and payments arising from QOF?). If so, it is out of date.
• Does your Partnership Agreement accommodate the Premises Directions in relation to rental reimbursement?

Dissolution

• We often find that older agreements do not make it clear that Partners can retire or resign without dissolving the Partnership. Clauses relating to retirement or resignation should be carefully drafted to avoid the Partnership dissolving automatically and incurring redundancy costs for staff. 
• If your Partnership Agreement is not carefully managed, you may trigger the requirement to re-tender your contract with the Health Board when a Partner leaves.

Capital

• If you own your practice premises, you will want to make sure your Partnership Agreement makes reference to both working capital (i.e. funds that go towards the day-to-day spending) and property capital (i.e. the value of the practice premises less any lending outstanding).
• Without specific reference to the contrary, the legal position is that all capital of the Partnership is owned equally under default partnership law principles.   

Shares of Profits or Losses

• Your Partnership Agreement should include provisions about how the Partners or Members (if you operate as a limited liability partnership) share the profits or losses of the Partnership.
• Again, if nothing is agreed to the contrary, profits or losses will be shared/ borne equally under the default partnership law principles.

Absence Through Illness

• Does your Partnership Agreement make the appropriate accommodations for reimbursement under the Statement of Financial Entitlement (commonly known as “SFE”)?  

Decision Making by Partners

• Should certain decisions of the Partnership be unanimous? (e.g. agreeing variations to your GMS/ PMS Contract? Signing up to new local enhanced services?  Expulsion of a Partner?)

Maternity/Paternity/Shared Parental Leave

• Does your Partnership Agreement reflect the reimbursements available under the SFE?
• Does your Partnership Agreement provide that holiday entitlement does accrue during maternity leave (to provide otherwise would be discriminatory)?

Expulsion/Suspension

• Does your Partnership Agreement provide that you can expel or suspend a Partner in certain circumstances (you cannot expel or suspend a Partner unless provision has been made to do so in your Partnership Agreement).  

Retirement/Resignation/Last Person Standing

• How long are the notice periods in your Partnership Agreement?
• Can more than one Partner retire or resign within a certain time period (e.g. six months? In the same accounting period?)
• These can be important safeguards from a succession and a sustainability perspective.  

Arbitration

• How are disputes governed under your Partnership Agreement? The default will be the court and many GP Practices will provide that an arbitrator decides on disputes. 
• Arbitration is chosen because the proceedings are private and may often be faster and cheaper than a court process. 

The dedicated Healthcare Team at Davidson Chalmers Stewart is regularly instructed by GP Practices across Scotland to prepare bespoke partnership agreements fit for a modern GP Practice. Please contact a member of our Healthcare team who will be happy to guide you through our established process for GP Partnership Agreements.