Retaining your property share after retirement
Continuing our series of blogs on property issues upon retirement, this blog is for you if you intend to retain your share in the premises after retirement, whilst other part-owners of the surgery continue in the practice.
This is a scenario that we are seeing more frequently, as fewer incoming partners are willing and/or able to buy-in to the premises. Whether it is your preference to retain your share in the premises or whether it is something you have agreed to do for a period after retirement to help out your former Practice, the points you should be considering are the same:
- Check if you can you hold onto your property share
Check the terms of your Partnership Deed and any other relevant business documentation relating to ownership of the surgery, such as a Declaration of Trust. These documents will set out what should happen with your property interest upon your retirement. Many Partnerships take the view that a retiring partner should be obliged to sell their share in the surgery to the continuing partners, who in turn will be obliged to buy the share, often within a set timeframe.
Of course, what was agreed a few years’ ago in a Partnership Deed or Declaration of Trust down may not, in practice, be feasible now. However, any change to the position set out in the Partnership Deed or Declaration of Trust usually requires unanimity, so if you are thinking about deviating from the agreed position then you should be having early conversations with the continuing partners.
- Think about the tax and mortgage consequences
Whilst you are a partner, the premises are likely to be a partnership asset (your accountant will confirm if this is the case) and there are a number of tax benefits that follow. If you leave the partnership and retain your share in the premises, you will likely change the status of your property share which could have a significant impact on some tax reliefs you’ve been benefitting from, and in some circumstances could trigger additional tax liabilities such as a payment of Stamp Duty Land Tax. You should have an early conversation with your accountant to make sure you understand the impact of holding onto your share of the property on your individual tax affairs.
If the property is mortgaged you should also check the position with your bank, since many mortgages are based on the premise that the building is wholly a partnership asset. Moving a share of the building out of the partnership may be a breach of the terms of the loan.
- Protect your property income following retirement
Once you leave the partnership you will no longer be entitled to any property income that the partnership receives from NHSE England. You will therefore need to agree with all the continuing partners (both property owning partners and non-property owning partners) that your share of any surgery income is passed to you, and make sure you have legally binding contractual arrangement in place to back up this agreement. There are two main ways of doing this:
- put a lease in place: the property owners (you and the other continuing property owning partners) will, as landlord, grant a lease to the partnership, as tenant. As a landlord, you will have rights to the rental income under the lease. You can read more about putting a lease in place here
- put a Declaration of Trust in place: this document will set out the ownership arrangements between all the co-owners. Importantly, whilst at least one of the co-owners continues as a partner in the medical partnership, you can agree that they will ensure that the surgery premises income is paid from the partnership to the other property owners.
Whether you go for the Lease or the Declaration of Trust option will depend on a number of factors including: tax treatment; how long any continuing property owning partners are likely to stay in the partnership; whether the premises are charged to a bank; what sort of lease terms would you be able to agree and what will the CCG support? These are all matters which should be considered in detail before you retire, since your negotiating position is considerably more difficult after you have already retired.
Our next blog looks at the scenario of a retiring partner who wishes to sell the surgery premises, either to his former partners or to a third party.
We advise that all property owning partners need to start thinking about their property plans at least 2 years prior to their date of retirement. If you are considering retirement and would like to discuss your options in more detail then please contact Daphne Robertson on 01483 511555 or info@drsolicitors.com
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Due Diligence and Disclosure – A Guide for Healthcare Professionals
If you are thinking of acquiring, merging with or disposing of a primary care practice, then this blog is for you.
Firstly, let’s look at two scenarios. When a patient attends an appointment with his GP, the GP will probably ask a series of questions, conduct a physical examination and review the patient’s medical record. Likewise, when buying a house – you will engage a solicitor to make some pre-contract enquiries, to carry out some property searches at the Local Authority and Land Registry, and you will probably instruct a surveyor to check that the building is sound.
When acquiring a GP practice, there is no analogous method for carrying out a physical examination or survey. Similarly there are no publicly available records in relation to partnerships (and information is scant even for companies). Accordingly, the only effective option for investigating a GP practice which you may be interested in acquiring or joining, is by asking a series of questions of its owner. These questions come in the form of a comprehensive due diligence questionnaire – essentially a checklist – covering the commercial, financial, regulatory and legal aspects of the business. The answers to those questions are critical as they form the only x-rays of the target business that a buyer sees.
Just as x-rays are only as good as the ability of the people taking them and as useful as the knowledge of the people examining the results, due diligence is only as good as the questions asked and the understanding of the people reviewing the answers. Lawyers will have comprehensive due diligence questionnaires; those supplied by accountants tend to focus on finance and therefore may be less comprehensive. Prudent buyers will review the answers received themselves and also have their lawyer and accountant review them.
Just as the occasional patient might be less than honest with a doctor in an effort to obtain a particular prescription, business owners have been known to be economical with the truth when answering due diligence enquiries. A problem arises in this regard for buyers, because a peculiarity of the English law of misrepresentation means that a buyer probably cannot place legal reliance on the answers to due diligence enquiries. So why bother with it at all?
Fortunately, to overcome the problem, a buyer’s solicitor will ask the seller to give a series of warranties to the buyer concerning the state of the target business. Breach of those warranties is directly actionable in law and therefore avoids the legal problems related to misrepresentation claims. Warranties are a comprehensive series of statements about the business included in a business transfer agreement prepared by the buyer’s lawyer.
Why then do lawyers not proceed directly to warranties and cut out the due diligence enquiries altogether? Making due diligence enquiries and reviewing the answers is a relatively inexpensive process conducted at the outset of the transaction and therefore, with honest sellers at least, it flushes out any potential problems with a business cheaply and early on in the process.
Warranties differ slightly from guarantees and are essentially a checklist in the form of statements that could be made unqualified in relation to a (mythical) flawless business. To the extent that there are exceptions to the warranties the seller needs to reveal them to the buyer in a disclosure letter. This process is best illustrated by an example.
A warranty that is typically included in a business acquisition is one to the effect that the business is not currently a party to any litigation. If the business is, in fact, in the middle of a court case then the seller needs to disclose that information to the buyer in a disclosure letter, setting out the full facts of the case (dates, parties, nature of claims, nature of defences etc) and attaching copies of the relevant documentation. If the seller fails to make this disclosure then she will be giving an unqualified warranty to the buyer that the business is not involved in any litigation. Because that warranty will be untrue, it will be actionable in law by the buyer. There is therefore a considerable onus on sellers to make full and proper disclosure for fear of otherwise leaving themselves open to legal action. Warranties therefore force sellers to reveal in disclosure letters matters that they might have preferred to leave hidden and which they may not have revealed in response to due diligence enquiries.
In a well-managed transaction nothing will emerge in the disclosure letter that wasn’t already revealed in the answers to due diligence enquiries. There is therefore considerable overlap between due diligence and disclosure, leading many people to conflate the two. This is a mistake, as they are entirely different processes. Due diligence enquiries and answers are essentially an information-gathering process from which few adverse consequences can befall a seller. Warranties and disclosures, on the other hand, form the main protection available to a buyer so that she knows what she is buying ‘warts and all’ and forces the seller, on pain of legal action, to reveal all instances of human papillomavirus infecting her business. As with all documents which you may one day need to rely on in court, you would be well advised to speak to a specialist solicitor before signing any warranties and indemnities!
If you are thinking of acquiring, joining or merging with a practice and would like a free consultation with one of our experienced healthcare solicitors, then please contact Daphne Robertson on 01483 511555 or email info@drsolicitors.com
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Protecting your investment upon Retirement
If you are a property owning partner who plans to retire and keep your premises as an investment, allowing the practice to continue to run from them, then this blog is for you. We will be looking at some other variations of premises ownership and retirement, in future blogs.
There are many things to consider when you retire, not least being what will happen to what is probably your biggest investment – the surgery building. Here are some of the main considerations:
1. Whilst you have been practising from the surgery, you will have been receiving notional rent under the Premises Costs Directions 2013 (”PCDs”). Entitlement to the notional rent payment arises solely as a result of the partnership holding a ‘core contract’ with NHSE/the CCG and carrying out the services from owner occupied premises.
Following your retirement from the partnership, you are no longer a contract holder and so you lose any entitlement to notional rent. It is the continuing partners who hold the contract and they will become entitled to reimbursement of premises costs under the PCDs.
2. Before retirement, you may have relied on the Partnership Deed to protect your premises income and to identify those property-associated costs which were to be paid by you, as property owner, and those to be paid by the practice, as business occupation costs.
At the point you retire, you are no longer a party to the Partnership Deed so you need to put a new legal arrangement in place to ensure that have your property interest adequately protected. The way to do this is to put a lease in place.
3. A lease will set out the obligations on both you, as Landlord, and the Practice, as Tenant, in resect of the property, as well as protecting both parties’ interests from a legal perspective. The lease may include provision for the repair and maintenance of the building; the length of occupation and any rights of early termination; what costs each party is responsible for and what changes can be made to the property with or without your permission.
There are many factors to consider when deciding what the terms of the lease will be. How long should it last for? What will happen at the end of the lease term – will you be happy for the tenant to have a new lease? Who is to be responsible for the various elements of the building that may need to be repaired over time? These factors, along with others, will need to be thought through in advance of your retirement.
It is important that you take specialist advice from solicitors experienced in dealing with NHS surgery leases, as if you do not have the correct provisions in the lease you risk it not being approved for funding from the CCG.
4. Timing is very important. If you don’t put the lease in place prior to the date of your retirement, you run the risk of the medical practice accruing protected tenancy rights once you leave the partnership. It can also help your negotiating position if you are able to agree terms whilst you are still a partner in the business. Crucially, any lease terms will need to be approved by the CCG in order to guarantee rent reimbursement, which can take a considerable period of time. If you have a mortgage secured over the surgery premises, you will also need your lender’s consent to the granting of the lease.
Our next blog looks at the scenario of a retiring partner who owns a share of the surgery premises along with others who will be continuing in partnership, and the retiring partner wishes to retain his or her share in the premises. This is a scenario that we are seeing more of, as fewer incoming partners are looking to buy-in to premises.
We advise that GP partners start thinking about their property plans at least 2 years prior to their planned retirement date. If you are considering retirement and would like to discuss your options in more detail then please contact Daphne Robertson on 01483 51555 or info@drsolicitors.com
News
New planning regulations to impact on Surgery flexibility and valuation
If you own your surgery premises, you ought to be aware of the recently announced changes to the Planning Regulations.
The new planning regulations come into force on 1 September 2020 and are intended to reduce red tape and speed up development. One change is that GP Surgeries which currently operate under Use Class D1 will be re-designated as new Use Class E(e)â but what does that actually mean for you?
The most significant change lies in all the other uses which now form part of Use Class E (see the full list at the end of this article). From 1 September 2020, any premises with a Use Class E permission is permitted to change to any other use within Class E without having to obtain a new planning permission. This change applies to existing premises as well as new ones.
Possible benefits?
For GP Surgeries, this means that you could switch the use of your surgery premises from surgery to retail, offices, professional services or as a crèche (as just some examples) without necessarily having to apply to your local authority for a planning permission for change of use.
Wider opportunities for alternative uses may widen the potential pool of buyers which in turn, could increase value (at least for those premises that are at the end of their useful life as a surgery and are to be sold on for different purposes). We will have to wait and see the full implications of this change.
Even if you are not currently thinking of selling your premises, you could still benefit from the changes. It will be easier for you to use part of the surgery premises for another use Class E Рfor example if you wanted to change part of your existing premises into a pharmacy or community caf̩.
A word of caution
Whilst the changes could prove to give a lot of flexibility to property owners going forward, it is important to remember there are other restrictions that could limit how you can use your property. Your Planning permission could contain particular conditions which may limit the use of the property, and may override the changes permitted under the new Regulations. Associated building works may require their own independent planning permission and covenants on the legal title to the property may impose specific restrictions as to use which you may need to deal with. It is advisable to seek professional advice and undertake careful due diligence on all these areas prior to making a significant change to your property, or indeed if you are buying into surgery premises hoping to take advantage to the flexibility that these new Regulations offer going forward.
Finally, a note of warning to any Landlord’s out there – you will need to take particular care when agreeing lease terms with your tenant, to ensure you do not inadvertently give your tenant the ability to take advantage of the flexibility afforded by the new Regulations without safeguarding your investment.
Please do get in touch if you have any questions about your surgery premises or running your practice. Call Daphne Robertson on 01483 511555 or email info@drsolicitors.com
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âClass E. Commercial, Business and Service Use, or part use, for all or any of the following purposes:- (a) for the display or retail sale of goods, other than hot food, principally to visiting members of the public, (b) for the sale of food and drink principally to visiting members of the public where consumption of that food and drink is mostly undertaken on the premises, (c) for the provision of the following kinds of services principally to visiting members of the public: (i) financial services, (ii) professional services (other than health or medical services), or (iii) any other services which it is appropriate to provide in a commercial, business or service locality, (d) for indoor sport, recreation or fitness, not involving motorised vehicles or firearms, principally to visiting members of the public, (e) for the provision of medical or health services, principally to visiting members of the public, except the use of premises attached to the residence of the consultant or practitioner, (f) for a creche, day nursery or day centre, not including a residential use, principally to visiting members of the public, (g) for: (i) an office to carry out any operational or administrative functions, (ii) the research and development of products or processes, or (iii) any industrial process, being a use, which can be carried out in any residential area without detriment to the amenity of that area by reason of noise, vibration, smell, fumes, smoke, soot, ash, dust or grit. |
News
Is it time to incorporate your PCN?
Primary Care Networks (PCNs) are now a year old. The first year was a time of building foundations, but the 98% sign up to the 2020/21 DES proves that PCNs have become an important part of the primary care landscape in England. We can now expect to see a rapid build up in PCN resources, as PCNs take up increasing responsibility for local healthcare issues.
What’s the problem with existing models?
While PCNs were operating at a small scale it made sense to keep them simple. Understandably, many PCNs decided to employ the additional staff in one of the member practices, and just recharge the cost to the PCN bank account. So long as you have robust, legally enforceable, PCN agreements in place, this approach works well.
However as PCNs grow the amount of money and risk involved also increases. Many PCNs will have about 10 additional resources in 12 months time, and within the next 4 years the average PCN will be spending ca. £1m a year. We are already seeing PCNs being offered additional new contracts to address local healthcare issues.
This growth creates problems:
- PCN staff are often employed in different member practices with different terms and conditions.
- VAT questions arise as practices find they are exceeding the VAT registration threshold, and
- Contracts for new streams of funding have to be entered into by the existing practice entities, which are usually unlimited liability partnerships, because there is no ‘PCN Entity’.
Since the PCN is just a contractual relationship, it is relies on trust between the member practices. Trust can rapidly disappear when large sums of money are involved, so careful attention to legal documents is required.
Why incorporate?
If done properly, incorporation can solve many of these issues. A company can be jointly owned by PCN members so that they all have an ownership stake. As it has ‘legal personality’ the company can enter into contracts for additional non-DES funding streams. All PCN staff and costs are moved from the member practices into the company, and the company runs as a non profit making business providing services back to the core network practices. Risks are largely contained within the limited company, and the problem of irrecoverable VAT is avoided by setting up a ‘VAT Cost Sharing Group’ to include the core network practices and the company.
So what are the challenges?
DR Solicitors identified incorporation as a likely future for PCNs over a year ago, but advised that in the early stages the costs might well outweigh the benefits. Establishing and running a company is a more complex and expensive option, and is also more difficult to unwind if PCNs had not developed as expected. Companies also encounter issues with the NHS pension, the CQC, and potentially with the agency worker regulations. They are taxed differently to partnerships, and require careful structuring if they are to benefit from the VAT Cost Sharing rules. In short, they are not something to be embarked on lightly, or without proper advice.
Should our PCN Incorporate?
There is no simple answer to this question as incorporation will be right for some PCNs, but not for others. In year one there were very few PCNs who wanted to go down this route, because most were focused on starting-up and the risks were anyway quite low.
As PCNs are maturing, the incorporation model looks increasingly attractive to those PCNs that are employing staff themselves or who want to secure additional PCN-level income streams. Incorporation is less attractive for those PCNs working closely with a GP Federation or similar organisation. Many PCNs will undoubtedly decide to stay with their current cost-sharing model for the foreseeable future since there is no legal requirement or burning reason to change it.
What are others doing?
A very small number of PCNs incorporated during 2019/20, but we have seen a marked increase in interest in PCN incorporation recently. This is what we anticipated a year ago, and we would now expect that several hundred more PCNs will decide to incorporate over the next 12 to 18 months.
The key to success will be getting expert legal and accountancy advice. Incorporating a PCN is complex and there are many traps for the unwary so you will want to be confident you can rely on any advice you receive.
For assistance with incorporation or indeed any other PCN related matters, please contact Nils Christiansen or Daphne Robertson on 01483 511555 info@drsolicitors.com
News
Important changes to employment law from April 2020
Very few employers are increasing their workforce while the country is in lockdown, so there has been remarkably little discussion about the changes to employment law which have recently come into effect. Since healthcare is one of the few sectors still recruiting, it will ironically be one of the first which needs to adjust. Some of the changes are very significant, so we have set out below what you need to know.
New Section 1 Statement (of Terms)
A Section 1 Statement is the minimum information an employer is required to give an individual about their working terms and conditions. For most practices, the contract of employment (sometimes together with the offer letter) comprise the Section 1 Statement.
Currently, employers have up to two months to issue written terms to any employee working for them for more than a month. From 6 April 2020 all new joiners must be provided with written terms in a single document on or before day 1 of starting work.
The new rules apply to workers as well as employees so it is important to be aware of this wider group.
Section 1 Statements now need to include more information and it is mandatory to include details of:
- the normal working hours, the days of the week the worker is required to work, whether such hours or days may be variable, and if so how they will be varied
- paid leave entitlement beyond holiday leave, such as maternity leave, paternity leave and sick leave
- the duration and conditions of any probationary period
- all remuneration and benefits such as vouchers, health insurance etc
- any training requirements and who is expected to pay for such training
Some information can be provided in a ‘reasonably accessible place’ such as a staff handbook, but if this approach is adopted the information must still be referred to in the statement and it will be important to make clear which parts of the handbook are contractual and which are not.
An existing employee has a right to ask for a new S.1 Statement and if an employer receives a request, then it must provide the more detailed contract terms within one month of the request.
There is no obligation to provide existing workers who are not also employees with a written statement unless they are re-engaged after 6 April 2020.
If an employer changes one of the mandatory S.1 Statement details, then the employer must give existing employees a statement of change at “the earliest opportunity”, and in any event within one month. This is likely to become important as employers endeavour to change terms and conditions in response to the Covid19 crisis.
Parental bereavement leave
This new right (known as “Jack’s Law”) entitles employees who lose a child under the age of 18, or suffer a stillbirth from the 24th week of pregnancy, to two weeks’ unpaid leave as a right from day one of their employment. Parents can take up to two weeks’ leave, either in one block of two weeks or in two blocks of one week, within 56 weeks of the child’s death.
The new right applies to parents, adoptive parents, intended parents, parents-in-fact and the partner of any of these individuals as well as foster carers, employees with day to day responsibility for the child (who are not being paid for such care) and employees who expect to be granted a parental order in respect of the child. The right came into effect from 10 March 2020.
Although this new right does not extend to GP Partners unless it has been written into their partnership agreement, practices should review the new right in the context of other leave provisions for partners, such as compassionate leave.
Recommended Action Points for Practices:
- ensure a process is in place to provide all required information to all new joiners (including workers who are not employees) by day 1, at the latest;
- review template contracts of employment and offer letters for new joiners to ensure that they include the prescribed information;
- ensure processes are in place to provide updated statements on request and when any prescribed terms and conditions change;
- review training requirements and practices so that contracts/Section 1 statements can be updated accordingly
- Implement the new bereavement leave policy by updating staff handbooks and contracts
- Consider whether you wish to include parental bereavement leave in your partnership agreement or any other provision or arrangement which would assist partners in coping with a child bereavement
- Assess how the parental bereavement leave will interact with compassionate leave
For assistance in implementing these changes or for other advice on employment law, contact Daphne Robertson on 01483 511555 info@drsolicitors.com
News
Is your PCN Agreement fit for the new GP Contract
The new GP Contract for 2020/21 was recently published. Unsurprisingly, it contained a big emphasis on Primary Care Networks (‘PCN’s). It is becoming increasingly clear that PCNs are here to stay, and a significant share of future monies to General Practice will be routed through PCNs. There are already more additional PCN roles which have been set out in the new contract, and it is a reasonable expectation that by 2025 an average PCN will be responsible for managing costs of around £1m. With so much money at stake, good governance will be critical.
The role of the PCN Agreement
The PCN Agreement is best thought of as the ‘constitution’ of the PCN and it is thus central to good governance. Its principal role is to describe the purpose and membership of the PCN, how decisions will be made, what key control processes will be in place, how disputes will be resolved, and how members can join and leave. More operational matters which are not permanent and can change frequently (such as role descriptions and detailed costs) are best dealt with in a more flexible way as part of ongoing PCN management.
Characteristics of a good PCN Agreement
A well drafted PCN will have a number of key characteristics, and it is worth checking to see how many of these yours has:
1. It should be unambiguous. The PCN Agreement is a legally enforceable contract and you must be confident that you will be able to rely on it in court. Vague statements like “VAT requirements are still to be clarified” are not terms that you would want to see in a constitution or indeed any legal document. Any member practice incurreing PCN costs or liabilities will want to be sure that these can be identified and recovered – through court action if necessary.
2. It should set principles, but not all the detailed rules. For example, one principle is likely to be that all PCN related costs are shared costs, probably shared by list size. The major cost categories will be defined, but the specific costs associated with each role (like an employee’s salary and associated overhead) plus any changes to the default allocation methodology will be agreed on a case by case basis as these will differ for each role. This means of course that it is also critical to document the ongoing management decisions of the PCN
3. It should be easy to read and not full of legal jargon. PCN Members and managers need to be able to understand the rules that have been set, without having to call a solicitor every time they have a question about them.
4. It should be robust but flexible. It needs to ensure that some things are very hard to change, but other things are much easier. This combination of robustness and flexibility is one of the hardest things to achieve, and many PCNs will have erred too much on the side of caution by requiring that all decisions are unanimous. We are of the view that there are normally only a couple of things which are so fundamental that they would require unanimity.
5. It should incentivise members to participate. This is best done by making it hard to veto decisions, but permitting individual practices to opt out of particular services if they so wish.
6. It must deal with 2 levels of governance: How the Core Network Practices deal with the DES monies, and; how the wider membership deliver more integrated services to the patient population. We have seen too many PCN agreements which only deal with the first of these.
If you are in any doubt about the quality or fitness of your PCN Agreement, we would be happy to provide you with a free, no obligation assessment of it. If it needs improving we can either recommend changes, or provide you with a new, comprehensive and bespoke PCN Agreement for a very competitive fixed price.
For a free initial chat about this or any other legal concerns you might have, please contact Nils Christiansen n.christiansen@drsolicitors.com or Daphne Robertson d.robertson@drsolicitors.com or call us on 01483 511555.
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How should PCNs share their employees and workforce effectively?
Summer 2019 – memorable for heated political debate, spectacular cricket … and the establishment of Primary Care Networks!
With PCN Agreements concluded, members must now turn their attention to the growth of the network workforce. Over the next five years it is estimated that some 22 000 additional staff will become network employees. This year, each network will recruit a clinical pharmacist and social prescriber, shortly followed by a first contact physiotherapist and a physician associate next year.
First step: structure
Unlike the procedure for standard recruitment by individual practices, the introduction of the new network workforce necessitates network members to first decide how to employ network staff.
The BMA have identified five potential operating models for PCNs and each model has different consequences for the structure of the workforce within the network.
At DR Solicitors, we notice a marked preference amongst our clients for the lead provider and the federation model, but it is important to realise that in the same way as a practice can hire staff as partners, employees or locums, a PCN can hire different resources using different models. The resourcing model is therefore a critical factor to consider every time a resourcing decision is made.
Factors to consider when deciding on structure include control, tax, cost, liability operating model and resource availability. There is no one size fits all answer, and what works best may well change over time. The key is therefore adopting a model which is flexible and suits your local circumstances.
Second step: Document the sharing agreement
When agreement has been reached as to the employment structure, the sharing arrangement must be documented. In cases where the individual is employed by a PCN member acting as a lead provider, a Workforce Sharing Agreement (‘WSA’) will be required.
This Agreement sets out employer and employee responsibilities and importantly, makes clear cost sharing arrangements for the shared employee. The agreed framework for managing the shared employee should be set out in detail, including procedures to deal with absence, confidentiality, recruitment, termination, changes to Ts&Cs and more.
The WSA cannot be generic as specific details will depend on the resource being shared. For example, it should state whether the particular shared resource will need to be back-filled or not.
If the new resource is being provided from a third party like a Federation or Trust, a Sub- Contract will be a more appropriate document. This is because the primary responsibility lies with the Core Network Practices through their DES, and they will want to ensure that the same obligations are passed through to the Federation or Trust. This requires a different set of decisions. For example, in a WSA the main purpose will be to ensure that all costs and liabilities are shared, whereas in a sub-contract practices will need to decide whether to pass the risk of cost over-runs and employment claims onto the sub-contractor. Just because the PCN receives a certain amount of funding for a particular role does not mean that this is what they have to contract to spend.
Do I need any other agreements, in addition to the WSA or Sub-Contract?
The network employee will not be party to the WSA or Sub-Contract and therefore it will be necessary to have a contract of employment between the employer and the individual. There are no mandatory contractual terms for staff employed under the PCN DES, but there are nonetheless important considerations, such as the levels of reimbursement available and the newly identified responsibilities for each role.
Mobility for the employee within the network is essential and we recommend that a Licence to Attend is signed, permitting the employee to carry out work at PCN locations other than the premises of their direct employer.
Recommendations
Remember that a PCN is a wholly contractual arrangement. Since PCNs do not exist as a legal entity, there is no body of law to fall back on and this means that all arrangements within a PCN must be documented particularly carefully. Workforce sharing arrangements are no exception to this.
If one or more of the Core Network Practices are going to employ the shared resources we recommend that a WSA is concluded before terms and conditions of employment are agreed with each new network employee. Until the WSA has been agreed, you risk that some or all of the risks and costs of employment will remain with the employing practice.
If you have decided to sub-contract the resources to a different entity like a Trust or Federation, we recommend that you agree a Sub-Contract before any of the new resources start work in the PCN. This is the time when you will have most negotiating power, and will ensure that all parties are clear about who is picking up which costs and risks. An appropriate sub-contract also happens to be one of several rules regarding sub-contracting which are set out in your GMS Contract.
The area is very complex so as ever it is a good idea to take specialist advice. At DR Solicitors we have supported well over 100 PCNs so are experts in this field. For advice on Workforce Sharing Agreements, Sub-Contracts or PCNs generally, contact Daphne Robertson on 01483 511555 info@drsolicitors.com.
News
NHS Property Services lease problems – is a solution in sight?
If you are a practice which occupies an NHSPS building, then you may well have received a letter from NHS England and NHS Improvement in April which encourages GPs to regularise their leasehold and service charge arrangements with NHS Property Services. The letter states that it is in the best interests of both Landlord and Tenant to have clarity and certainty on occupancy arrangements, but also threatens ‘legal recourseâwhere it is evident that GPs and Providers are failing to engage’.
You are now being offered 3 options:
- a full lease;
- a rental agreement letter (as an interim measure); and
- a licence for you to join Open Space.
To help you decide which of the 3 options might be best for you, we have summarised our thoughts on the legal implications below. However, our views expressed in previous blogs about NHSPS remains the same, and ‘doing nothing’ may remain an option for some practices if the terms on offer are not sufficiently attractive.
Option 1: a lease
Whilst the clarity and certainty of a lease is generally the preferred outcome, this is only the case if any lease arrangement is sustainable. This is particularly the case for building maintenance costs and other ‘non rent’ costs associated with a lease.
Many readers will be aware of the ongoing service charge issues between NHSPS and many GP practices with large, and in some cases, unsustainable service charge increases being imposed by NHSPS as landlord. This has been and remains one of the major obstructions to practices being able to enter into a lease with NHSPS and it is important that these issues are resolved before any long term lease arrangement is put in place. In case you missed it, you can read our blog on what you can do about inflated NHSPS service charges.
Whilst the letter does acknowledge the ongoing problems with service charges, it doesn’t offer any clear steps or processes which might resolve the issues.
Option 2: a rental agreement letter
A ‘rental agreement letter’ is not a legally defined term, so there is little indication of what rights and obligations it might contain. The letter states that a ‘rental agreement letter’ would only be an interim measure, giving clarity on certain occupancy terms (such as rent, payment terms etc) whilst long term lease terms were negotiated. We are concerned that such a document could override your current occupancy status and any rights you may have accrued over time and thereby prejudice your negotiating position, so would certainly advise anyone considering signing such a letter to seek legal advice first.
Option 3: licence to use NHS Open Space
NHS Open Space is a ‘room hire’ service, allowing users to book rooms on a sessional basis. Users would have no right to use the space beyond the session for which they have booked it. The service might be able to compliment your existing premises if you have a short term need for extra space perhaps to run a temporary additional clinic or a staff training day, but it is not a substitute for your main surgery premises as it conveys no security of tenure. There is also no detail about how such an arrangement could be reimbursed through the NHS premises funding, and we are not aware of any current standard mechanisms for this.
Next steps:
NHSPS are clearly minded to seek to resolve this ongoing problem, so now may be the time for practices in NHSPS buildings to enter (or re-enter) into a dialogue. We sense there is a will to resolve the service charge issues on a case by case basis, and we have seen a number of positive outcomes.
When negotiating, make sure you take professional advice from a specialist solicitor and a surveyor. Remember that whilst you may not have a written lease, you still probably have a tenancy with the important tenant protections that can come with this. Knowing your legal rights can strengthen your negotiating hand and help ensure your lease is drawn up on a sustainable footing from the start.
For a free initial chat about this or any other legal concerns you might have, please contact Daphne Robertson on 01483 511555 or email info@drsolicitors.com
News
How to complete the mandatory PCN Agreement
The national template Primary Care Network Agreement has just been published by NHS England. As readers should be aware, the new Network Contract DES requires participating practices to form their PCN and submit various information by 15 May 2019. A completed ‘initial’ Network Agreement is the most substantial part of this submission and use of the national template is mandatory. The Network Agreement must then be finalised and signed by latest 30 June 2019.
What is needed by 15 May?
The initial submission does not require the Network Agreement to be in final form. All that is required by this date is:
- Names of the member GP practices (in the front of the agreement)
- Details of the Network Area, the Clinical Director and the nominated payee (in schedule 1 of the agreement)
This is the information which most practices will currently be discussing with their LMC and CCG. From a legal perspective the most important decision at this stage is the nominated payee, as this will determine who receives the DES monies in the first instance and this has significant tax, pension and control implications.
What is needed by 30 June?
The Network Agreement must be negotiated, agreed and signed by all PCN participants by 30 June. In addition, all PCN member practices must ensure they have in place a data sharing agreement and, if appropriate, data processor agreements (both using the national template which should be published soon). Each PCN must confirm to the CCG that these documents are in place before the PCN will be considered established, so if the 30 June deadline is missed the PCN will not be able to start providing services and any payments due will be rebated.
What is in the PCN Agreement?
The PCN Agreement is a legally binding document. As such it is important that practices understand the rights and obligations which they are signing up to. It incorporates four elements:
- Mandatory fixed clauses. These cannot be changed other than by direction from NHS England.
- Mandatory extendable clauses. These clauses must apply, but can be supplemented with additional wording. Examples of this include the clauses relating to information sharing and confidentiality, and processes for joining and leaving the network.
- Replaceable clauses. These are suggested default clauses, but can be modified or replaced entirely at the discretion of the PCN. Examples of this include the clauses on variation and dispute resolution.
- Locally defined clauses. PCNs can add their own clauses to the Agreement, so long as these do not conflict with other parts of the document. Examples of additional clauses which PCNs might wish to consider include indemnities and limitations of liability, since the basic template agreement does not limit liability and many practices will be hesitant to sign without this.
Do PCNs need help to complete the Agreement?
PCN member practices could in theory simply fill in the information needed for 15 May, and sign the template PCN Agreement in un-amended form plus the data sharing agreement once this becomes available. This may work for a very simple PCN, but is probably not advisable for the majority of PCNs. Key information such as decision making and how revenue and costs are to be shared is missing, and the template Agreement cannot easily be varied once signed. The default position is that all changes must be agreed unanimously, so a single member could prevent all the others from making the changes they felt were needed once the PCN was operational.
The PCN Agreement is a legally binding document which will govern an increasing share of the services to be provided by General Practice. Given that the future development and direction of PCNs is still unclear, it would, as a minimum, be advisable to increase the flexibility of the variation provisions, specify the financial arrangements and extend or modify a number of the legal provisions in the template. It is hard to see how this can be done without involving specialist accountants and solicitors who understand the tax, pension and legal implications both on the PCN and on the underlying practices.
Conclusion and Next Steps
Time is short. A limited amount of information must be submitted by 15 May, and PCNs should think particularly carefully about the nominated payee (i.e. who the PCN monies are paid to) and take advice on this from a specialist accountant in the first instance.
The information required for 30 June is much more extensive. PCNs are unlikely to have the legal and accountancy expertise required to modify and extend the Agreement template, but most PCNs will want to make changes to the template before signing the legally binding document.
We strongly recommend that PCNs now engage ourselves, alongside specialist medical accountants, to assist with developing their PCN Agreements and to ensure that they are in the best position possible for the 30 June deadline.
For further information and assistance with your PCN Agreement, please contact Daphne Robertson, d.robertson@drsolicitors.com or Nils Christiansen n.christiansen@drsolicitors.com