To be in partnership or not to be in partnership?

A glance at job advertisements in leading GP magazines over the past year or so has shown the current huge difficulty in recruiting not only partners but also salaried GPs. A survey undertaken earlier this year showed that a third of practices have at least one GP vacancy, and one in six of these have been unable to fill a post for more than a year.

If however you are considering taking up a partnership or salaried GP position, it is important to take into consideration the key issues and differences between the two in order to make an informed decision.

Rights

Partners do not benefit from, or indeed are subject to, any employment rights that are afforded to employees, except under the discrimination rules. For example, partners are not eligible as of right to, statutory maternity or paternity leave or to the compensation remedies available to employees for redundancy or constructive/unfair dismissal. An employee however benefits
from such employment rights, which cannot be excluded by a contractual term.

Partners, on the other hand, are (subject to any relevant NHS restrictions) free to agree their own “terms” – which generally should be mutually beneficial, on the basis all partners act as agents of each other and are “jointly and severally liable” for each other’s actions.

Liability

The joint and several liability of partners means that each individual partner is liable for the consequences of the acts
or omission of each of his partners without limitation. As the liability is “several” (as well as joint) this means in theory that an individual partner could be sued for 100% of the liability of another partner in the business (although it is very rare for this to arise, particularly in the case of a GP partnership). The liability of a partner extends to liability for his/her employees for whom he/she is “vicariously” liable.

The concept of joint and several liability does not apply to salaried GPs, although liability could arise if they are “held
out” as partners e.g. on practice writing paper which does not distinguish between partners and salaried GPs. The reality of the position is that a degree of protection can be “bought” through relevant insurance cover (including PI insurance) – and through indemnities between partners which should be included within a well drafted Partnership Deed.

Investment and Risk

It is normal practice for a new partner to pay an amount of money into a partnership in respect of the partnership capital, possibly including the premises, following the end of their probation period. The manner in which such capital, once contributed, is to be owned must also be decided and this may vary depending upon whether it is “fixed capital” (e.g. to buy a share of the equipment etc.) or “working capital” (i.e. to provide cash flow to support the running of the business – when the amount required might be agreed to vary from time to time).

Irrespective of how the partnership capital is contributed by an individual, a partner commits to a long term investment and assumes the responsibility of taking on the risk of “owning” a business. In return for this investment it is assumed there will be a higher degree of reward than would be the case for a salaried employee. A salaried GP would not be investing their own money into the practice – and would not be exposed to the same level of “risk”.

If a partnership makes a loss, this will usually be shared in profit sharing ratios between the partners, but if one partner cannot pay his share, the others will have to make good the shortfall. This does not apply to a salaried GP who will be guaranteed a
fixed salary.

Flexibility

As noted, being in partnership requires long term commitment and responsibility. An individual is dedicating his or her time and loyalty into a business that is intended to last for a number of years. It may also involve raising funds to buy into a property or to provide working capital for the business – and loans in support of this are likely be to structured over a term of years, not least to make the repayments more affordable.

Not everyone wants to tie themselves down in this way and being a salaried GP will allow you to terminate your employment and move elsewhere without having to disengage from a long term partnership commitment.

In conclusion, going into partnership is not a decision to be taken lightly and it is vital to not only bear in mind the differences between the two positions of salaried GP and partner but to also consider what it is that you want from your career.

Articles from the newsbrief: Five Year Forward View and integrated care; Super partnerships; Assignment of GP leases; Buying a share in the surgery premises; Who is an appropriate companion at an investigatory meeting; Why leaving that place in the sun may have become easier.

Click here to read the spring edition of Hempsons’ Practitioners Newsbrief in full.