A GP partnership agreement sets out the obligations, responsibilities and restrictions of partners at a GP practice. It is the most important document that should be provided to any incoming partner.
What happens if I don’t have a GP partnership agreement in place?
Whilst a partnership does not need to have a formal partnership agreement, not having one means that the partners would be governed under the Partnership Act 1890, and would be considered as having a ‘partnership at will’.
Partnerships that are governed as a ‘partnership at will’ are therefore governed by legislation regarded as being outdated in that does not cover many aspects that a typical GP partnership agreement would have.
What are the risks of operating as a ‘partnership at will’?
GP’s in a partnership that is currently operating as a ‘partnership at will’ are risking issues such as:
- Not being able to enforce a probationary period on new partners.
- No equality in the share of profits, losses and capital.
- No appropriate limits on the authority a partner has, meaning that any partner could enter into arrangements that would bind the partnership.
- A partner being able to serve notice to leave the partnership at any time, which would result in the partnership automatically ending.
- The partners being unable to expel another partner from the partnership.
- No protection for assets held by the partners individually.
- No protection against the automatic dissolution of the partnership, for example in the event that a partner became bankrupt.
- A partner unable to retire without bringing the partnership to an end upon retirement.
- No cover for leave and locum costs.
- No assistance in identifying how assets are to be valued and paid if a partner leaves.
Furthermore, ‘partnerships at will’ do not deal will the possibility of a practice being involved in a primary care network, as well as annual leave, parental leave and study leave entitlements. ‘Partnerships at will’ are also unclear as to what the practice’s decision-making and management rules are.
What does a GP partnership agreement include?
Typically, a GP partnership agreement would set out clear mechanisms that deal with the above issues, including a formalised process for any GP joining or leaving the partnership.
Additionally, where the practice’s premises are leased or owned by the partners, a GP partnership agreement would also contain specific provisions to deal with this. Partners that own the practice premises should consider incorporating the following premises specific points into their GP partnership agreement when taking on a new partner:
- Will the new partner be expected to ‘buy in’?
- Who will the new partner acquire their interest from? Will there be a proportionate division of ownership?
- How will the valuation of the ‘buy in’ be ascertained?
- Will an independent surveyor be used?
How can Nelsons help?
If you have any questions in relation to GP partnership agreements or any related subjects, please contact Ziaur Rahman or another member of our Corporate team in Derby, Leicester or Nottingham on 0800 024 1976 or via our online enquiry form.
