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Presentation on theme: "PARTNERSHIP AGREEMENTS"— Presentation transcript:

Cynthia Cummings, Employment Adviser

2 Why have a written Partnership Agreement?
ensures the proper conduct of the business arrangement avoids future disputes negates the need to have a partnership at will

3 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

4 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)

5 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

6 The Capital Property Equipment Drugs stocks Fixture/fittings
“Working capital”

7 Premises - Ownership/Rent/Payments
Expenses of the partnership Premises costs Employee costs Accountancy Stationary Bank charges Practice telephones Should be paid before profits divided

8 Personal Expenses Home Home telephone Car

9 Income of the Partnership
All professional fees and earnings Posts outside the practice - part-timers - seniority payments - postgraduate education allowance

10 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

11 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

12 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

13 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+

14 Decision Making Most matters settled by majority or
eg 6 partners - decisions of 4:2 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

15 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

16 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

17 Leaving the Partnership Voluntarily
Notice period Usually at least 3 months Detail mechanism for sorting out finances eg premises, drawing, capital

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

19 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

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

21 Defence Body Membership
It is essential and the agreement should oblige partners to subscribe

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

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

24 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!

25 Salaried GPs

26 PCT Contracts Employed directly by PCT NHS conditions should continue

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

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

29 Leave Annual - how much? Study - how much? Sick leave Maternity leave
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

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


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