PARTNERSHIP AGREEMENTS

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PARTNERSHIP AGREEMENTS

• Cynthia Cummings,
• Employment Adviser

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Why have a writtenPartnership Agreement?

• ensures the proper conduct of the business
  arrangement
• avoids future disputes
• negates the need to have a partnership at will

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Partnership at Will

• Partnership Act 1890
• Partnership at Will requires dissolution when
  partners leave or join
• With an agreement this can be negated
• Necessary to protect financial aspects

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New Partner

• The Partnership Agreement can be worded so a new
  partner can be included in the partnership by the
  use of a short addendum
• Agrees to bound by terms of existing agreement
• Parity within 3 years of joining(maximum)

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What needs to be in the Partnership Agreement?

• Date of agreement
• Names and addresses of partners
• Title of firm (Business Names Act 1985)
• Address of practice premises
• The nature of the business
• Commencement and duration

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The Capital

• Property
• Equipment
• Drugs stocks
• Fixture/fittings
• Working capital

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Premises -Ownership/Rent/Payments

• Expenses of the partnership
• Premises costs
• Employee costs
• Accountancy
• Stationary
• Bank charges
• Practice telephones
• Should be paid before profits divided

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Personal Expenses

• Home
• Home telephone
• Car

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Income of the Partnership

• All professional fees and earnings
• Posts outside the practice
• - part-timers
• - seniority payments
• - postgraduate education allowance

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Division of receipts

• Partnership agreement should state each partners
  share and allow for any future adjustments
• To be properly represented as a partner. PCT must
  be satisfied that
• Has appropriate profit share of at least
• Full time 1/3rd of greatest
• 3/4 time 1/4 of greatest
• 1/2 time 1/5 of greatest

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Attention to the affairs of the firm

• Time commitment to practice should be stated
• Usually expected to devote substantially all
  their time and attention
• Outside work must not conflict
• Permission should be gained from others
• Should not be unreasonably withheld

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Tax

• No longer joint and several liability on the
  partnership profits
• but
• each partner will have to complete an annual self
  assessment for Inland Revenue
• Agreements need to provide for the keeping of
  records
• Partnerships may have a tax reserve account

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Staff

• The agreement should not allow summary dismissal
• All partners would be liable for an unfair or
  constructive dismissal
• All should have opportunity to voice opinion
• Tribunal limit for wrongful dismissal no 50,000

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Decision Making

• Most matters settled by majority
• or
• eg 6 partners - decisions of 42
• 3 partners - unanimity
• All entitled to be heard
• Any partner not a party to the making of the
  decision is not bound by it
• Unanimous decisions
• Change of partnership business
• Admittance of a new partner
• Dismissal of staff members

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Holidays and Study Leave

• Should be separated allocations
• Should be same for all partners
• Restrictions on how many may be off at one time
• Employment of locums

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Sickness Absence

• Personal Health Insurance/income protection/locum
  expenses
• PCT contribute towards locum
• Most practices cover the first month
• Larger practices sometimes cover longer
• Expulsion for lengthy incapacity
• LEAVING PARTNERSHIP

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Leaving the Partnership Voluntarily

• Notice period
• Usually at least 3 months
• Detail mechanism for sorting out finances
• eg premises, drawing, capital

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Leaving the practiceinvoluntarily

• Lengthy incapacity
• Bankruptcy
• Removal/suspension from register or medical list
• Gross breach of partnership agreement
• drug or alcohol addiction
• No Green Socks Clauses!

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Retirement

• Terms of Service require GPs to retire at 70
• Retirement possible before 70 - for agreement
• Need to consider possibility of carrying an
  elderly partner not capable of doing fair share
  of work

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Restrictive Covenant

• To be enforceable, it must be reasonable
• Patients of practice at time of leaving
• One year
• Two mile - of practice area

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Defence Body Membership

• It is essential and the agreement should oblige
  partners to subscribe

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Arbitration

• BMA will mediate only in a dispute
• Provision for an arbitrator needed
• However avoid use of arbitrator if possible
• - EXPENSIVE!

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Banking and Accounts

• Bankers and Accountants should be named
• Provisions for drawing cheques
• Free access to accounts for all partners

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AND FINALLY

• When joining a partnership
• Get a feel for the practice and partners
• Ask to see accounts and other books
• Look for fairness and equity
• Have the partnership agreement checked by local
  BMA Office
• Remember - there are more GP vacancies than GPs
  to fill them at the moment
• GET IT RIGHT!

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• Salaried GPs

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PCT Contracts

• Employed directly by PCT NHS conditions should
  continue

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Contract of Employment

• Employee of Practice
• Governed by practice terms and conditions
• Will previous NHS Service be recognised?

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• Within the contract-
• Parties
• Location
• Pay
• Salary - range and starting salary

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Leave

• Annual - how much?
• When?
• Application?
• Study - how much?
• When? application? Who pays?
• Sick leave
• notification and certification
• entitlement to paid sick leave
• Maternity leave
• requirements on advising practice
• entitlement to pay

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• Notice Period
• Work outside the practice
• Defence Body
• membership
• subscription
• Mileage allowance
• Telephone allowance