Do you have a partnership agreement?

Read time: 2 mins        Added:  20/02/2023

 

Every GP practice should have a GP partnership agreement if they have two or more partners. A partnership agreement is a legally binding agreement between the partners and sets out how the partnership will operate. The BMA describes having a partnership agreement as “vital”.

Why do you need a partnership agreement?

The GP sector is constantly changing, with ever increasing pressures on GPs’ time and resources. Having a partnership agreement provides the framework for the partners to operate the practice and can significantly reduce the risk of potential partnership disputes.

If you do not have a partnership agreement, your partnership may be governed by the Partnership Act 1890 (“the Act”). This is an outdated piece of legislation that will not provide the partners with sufficient protection.

If the provisions of the Act do apply to your partnership, this can potentially cause difficulties and unforeseen problems. By way of example, any partner can wind up your partnership (regardless of the wishes of the other partners), and a partner cannot be expelled or suspended (even if he/she has committed a criminal act or damaged the reputation of the practice).

What should be in your partnership agreement?

A partnership agreement is usually a bespoke document tailored to the needs of your practice and will include terms about:

  • Premises – usually the most valuable of assets or the biggest liability of a practice
  • Profit and losses
  • Performance and training requirements
  • Additional roles and income generated from CCGs, PCNs, Federations, etc
  • Decision making
  • Pensions
  • Retirement provisions including expulsion, compulsory retirement and suspension (including last man standing provisions – i.e. can the partnership ever go down to just one partner?)
  • Restrictions after a partner has left the practice (to limit unreasonable competition)
  • Leave provisions including study leave, parental leave and holidays
  • 24 hr retirement

Once a partnership agreement is drafted, is that it? Once your partnership agreement is drafted, the hope is that it will be filed somewhere safely and your partnership will continue to operate harmoniously. Ideally the partners will only need to refer to the partnership agreement for guidance every now and again.

Unfortunately, however, the reality is that there may be a disagreement or dispute between the partners at some point in the future. If so, you will need to refer to the terms of the partnership agreement to try to resolve this issue. It is essential therefore that the partnership agreement is kept up-to-date. You should review and amend it at regular intervals and always make sure that it is updated whenever a new partner is admitted to the partnership or a partner leaves the practice for any reason.

Caroline Swift is a Senior Associate at Burnetts Solicitors LLP. They have in-depth knowledge of the structure, regulatory requirements, and specific concerns for all types of businesses in the healthcare sector. Visit Burnetts Solicitors LLP.

 

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