The long running saga of the 5 NHSPS ‘test cases’ regarding service charges has reached a conclusion. The case has been much hyped by all parties, to the extent that it was named as one of the ‘top 20 litigation cases of 2022’ by one excited journalist. Many practices in NHSPS buildings have been waiting for the outcome of the case, in the hope that it would lead to a resolution of their problems with disputed service charges. In the event, the case has proved less useful than many had hoped. The judge has made clear that he does not consider it to be a test case, and that each dispute will turn on its own facts. In essence, the judge concluded that a tenancy is a contract, and that each practice is therefore bound by the particular agreed or implied terms of their occupation. What is perhaps most surprising, is that this outcome should come as a surprise to anyone.
This rather complicated litigation started when the BMA sought to bring an action on behalf of 5 practices who were tenants in various NHSPS properties, asking the Court to confirm that certain standard policies operated by NHSPS to calculate service charges had not been incorporated into the terms of the tenancies. The court refused to make a declaration to this effect, but NHSPS admitted that they could not simply change the terms of a tenancy to include the policies and a ‘victory’ of sorts was declared. This was however short-lived as NHSPS took the opportunity to countersue the 5 practices for arrears of service charges. It is this counterclaim which has now been determined. NHSPS was seeking over £1m in overdue service charges from the 5 ‘test case’ practices and claims that it is, in total, owed over £175m by its GP tenants. It is clear that very significant sums are at stake.
The facts of each of the 5 tenancies are subtly different, which was undoubtedly why they were chosen for the BMA as a ‘test case’. The main thing they have in common is a general lack of documentation and rigour around any of the normal legal processes. As a result the judge had to untangle a complex web of poorly documented issues relating to each building, including: What demise does the practice actually occupy now and in the past? Which partners have been/are tenants and are therefore liable? What are the terms of occupation? What services have been, and should have been, provided by NHSPS? To what extent did payments made represent an ‘all-inclusive rent’? Were service charges capped or in some other way limited by agreement, including by historic agreement with a PCT? Are any of the claims time-barred?
Probably the most important message from the judgement is that as an ordinary landlord, NHSPS has the right to recover a reasonable service charge for the services which it delivers. None of the practices were able to successfully argue that they should be receiving discounted or free services from their landlord, or that their rent was somehow ‘all-inclusive’. That is not to say that other practices cannot succeed with such an argument, but it would require solid evidence that such an agreement existed rather than simply relying on an absence of evidence. In the words of the judgment: “the law, where appropriate, has to step in and fill the gaps in a way which is sensible and reasonable. The law will imply, from what was agreed and all the surrounding circumstances, the terms the parties are to be taken to have intended to apply”.
The judgment did not determine how much of the £1m claimed from the 5 ‘test cases’ was actually recoverable, but it did set out the parameters by which the amount payable should be calculated. It is thus clear that the 5 practices have a significant service charge liability to NHSPS. However the judge went out of his way to make clear this cannot be seen as a precedent for other practices:
“There has been some reference to these five actions as test cases for other disputes over service charges which may arise between the Defendant and other GP practices. While I express the hope that this judgment will assist the Defendant and other GP practices in resolving disputes over services charges without the need for expensive litigation, I would be wary of classifying these five actions as test cases. As this lengthy judgment demonstrates, and as I have already said in this judgment, the resolution of a service charge dispute in any particular case essentially depends upon the evidence and arguments in that case. This is one of the principal reasons why, for reasons which I have endeavoured to explain in making my decision on whether the Charging Policy Declarations should be made, I do not think that it is sensible for any GP practice to adopt what I would describe as a policy of non-engagement; by which I mean refusing to pay service charges pending explanation of the position by the Defendant. As I have said, it seems to me that a more constructive approach would be for GP practices to take their own advice on the position, and to put their particular case to the Defendant on what is and is not recoverable by way of service charges.”
What, therefore, should practices facing NHSPS service charge disputes do now?
1) Don’t ignore the problem as it is very unlikely to just ‘go away’. Having now proven that there is no blanket ‘NHS exemption’ to paying service charges, it would be surprising if NHSPS simply wrote off the £175m it believes it is owed.
2) You should be paying a reasonable amount for the services that you receive from NHSPS, unless you can clearly demonstrate an agreement to pay less. You should accrue accordingly and pay non disputed charges.
3) If you do not agree with a service charge demand, you should challenge it in writing and explain why you believe it is incorrect. For example, why should you pay for a gardener when there is no garden, for a window cleaner who never turns up, or ‘above the going rate’ for a plumber?
4) Gather as much documentation as you can and store it safely. Since any documentation gaps can be filled by the courts, you want to have as much evidence to hand as possible.
5) Make sure your Partnership Deed is clear about what happens when partners join and leave. Your liabilities to the landlord do not automatically cease when retiring from the partnership unless the lease is assigned (which is difficult if the tenancy is undocumented), so retirees will want indemnities from the continuing partners. Likewise incoming partners will want certainty that they will not be liable for charges relating to the period before they joined, and that a suitable retention is in place for disputed charges.
6) Engage with NHSPS to get your situation ‘regularised’. For most practices this will mean that it makes sense to get a lease agreed, but this should be done in tandem with sorting out disputed historic service charges. It is in everyone’s interest to avoid further expensive litigation, so there will be deals to be done.
7) Most importantly, seek specialist advice. When it comes to buildings, no two buildings and (thus no two leases) are the same. If you start negotiating without proper legal advice, you risk giving away important legal rights without securing anything in return. The most likely outcome for all practices now is a negotiated settlement with NHSPS, but this will be very difficult unless you understand the strength of your negotiating position. With so much money at stake, skimping on advice is likely to prove a false economy.
At DR Solicitors we have very deep experience and success acting for GP tenants who are in dispute with their NHSPS landlord. We understand the issues, and the areas where negotiation is likely to prove most fruitful. Our new partnership deed also addresses these NHSPS issues. Please contact Daphne Robertson or Sue Carter on 01483 511555 for a free initial conversation about your NHSPS surgery issues.
If you find yourself in dispute with a partner or employee, then you may well find yourself in receipt of a Data Subject Access Request (DSAR). This is an increasingly common occurrence in civil and employment litigation and requires careful handling. In our experience many primary care practices do not have effective systems in place to deal with DSARs, which can then result in significant reputational damage and financial cost.
In this blog, we look at how and why DSARs are being used as a legal tactic in disputes, and how your Practice can minimise the risk of a claim arising out of one.
What is a DSAR?
The UK General Data Protection Regulation 2016 (‘GDPR’) provides data subjects with a right to access their personal data. Many practices do not realise that a DSAR can be made in any format, including orally, and can be made to anyone in the organisation.
The GDPR also provides data subjects with a statutory right to claim compensation from a provider where they have suffered material (eg medical bills, loss of wages) or non-material (eg distress, anxiety) damage. It has been established that non-material damage can include a data subject’s ‘loss of control over their personal data’.
Article 15 of the GDPR gives a data subject a further right to sue a data controller if they fail or partially fail to respond to a DSAR. ‘Fail’ includes responding late and/or not providing the mandatory information. Recent damages paid range from £750 for the ‘frustration’ felt by a data subject whose personal data had not been erased, to £18,000 awarded for distress following the inclusion of inaccurate personal data in a report.
Why are DSARs important?
DSARs, other than those held to be manifestly unreasonable or excessive, are a fundamental legal and human right that the Courts have held to be ‘purpose blind’. This has led to DSARs being used as a weapon by individual claimants and their solicitors to short-circuit the normal legal disclosure process. The hope is to pressurise a data controller into early and higher settlements by highlighting a breach and/or threatening civil action for compensation.
If poorly managed, DSARs can also result in claimants being given information to which they are not entitled, such as other people’s personal data, which would itself constitute a data breach. This then enables the claimant to increase the size of their own claim, and opens the possibility of further claims from new claimants. Unfortunately, the size of the likely awards means that some solicitors are prepared to act on DSARS and data breach claims on a no win/no fee basis, which simply encourages even more claimants to come forward. In this way a DSAR received on a small dispute can quickly snowball into multiple large claims against a practice.
Good DSARs management starts with processes and staff training. Since DSARs can be made to anyone in the practice, all staff must understand what to do if they receive one. This minimises the risk of a DSAR being overlooked. Practices should then have a single point of contact responsible for responding to DSARs, who is trained in the regulations and who has appropriate access to the relevant systems. They should also understand and manage the timelines for responding, and report directly to a responsible partner to enable quick decision-making. It would also be a good idea to know who you will approach in the event you need expert legal help.
The use of DSARs as a litigation weapon is increasing, as are the number and size of claims against data controllers. It is important that primary care practices have robust, formal procedures in place to ensure that:
- all staff can recognise a DSAR;
- all data search, collation, redaction and removal processes are GDPR compliant
- DPA exemptions are correctly applied;
- all non-disclosable information is withheld;
- any consents to disclosure are valid; and
- timeframes are strictly adhered to
Primary care providers who are uncertain about dealing with a DSAR should seek legal advice as soon as possible, particularly if there is a link to a known or potential litigation matter. If you would like more information about this or any other matter, please contact Nils Christiansen or David Sinclair on 01483 511555, email firstname.lastname@example.org
How up to date is your staff training really? Take a moment to answer these 5 questions:
- Do you have policies and procedures dealing with equality and diversity, for example in your staff handbook or intranet?
- When did you last review and update your policies and procedures?
- When did you last provide training to all staff, including your Practice Manager?
- Have you provided refresher training?
- Do you know how to investigate a complaint of discriminatory treatment?
If you have answered ânoâ, ânot sureâ or âover six months agoâ, you should read onâ.
A recent decision in the Employment Appeals Tribunal raises the question of what is considered ‘reasonable’ when it comes to employers providing ongoing training to employees. In the case of Allay (UK) Limited v Gehlen, a colleague made racist comments to Mr Gehlen, who was of Indian origin. These comments were heard by and reported to other colleagues, including two managers, but nothing was done. Allay (UK) Limited sought to defend the claim brought against it by relying on section 109(4) of the Equality Act 2010, which states that an employer can defend a claim resulting from otherwise unlawful discriminatory actions of an employee, if it can demonstrate that all reasonable steps were taken to prevent employees from committing discriminatory acts. Here, the employer pointed to its policies and procedures on equality and harassment and training given to staff in 2015.
Allay (UK) Limited’s defence failed. Although the training clearly informed staff about what to do should harassment or discriminatory behaviour occur, at least three members of staff were aware of the racist comments made to Mr Gehlen and did nothing about it. The perpetrator tried to pass off the comments as banter. The Tribunal said that this showed that the training was âclearly staleâ and that refresher training was a reasonable step which the employer could and should have taken, even though Allay (UK) Ltd was a relatively small employer. The failure to take this ‘reasonable’ step meant that they could not rely on the defence which required them to have taken all reasonable steps and compensation was payable to Mr Gehlen.
What steps should an employer take?
You may wish to review your current employee training schedule to make sure that it properly meets your requirements and provides for regular refresher training – then make sure the refresher training is undertaken.
Your policies and procedures should be reviewed regularly to ensure they are up to date both in terms of the law and relevance to your Practice. Do not rely on generic, off-the-shelf policies that are unlikely to reflect accurately your Practice’s specific needs. Similarly, your staff handbook should be bespoke to your Practice, to show that you have really considered the needs of your Practice and the policies adopted.
Achieving the standard required to rely on the defence is possible and within reach of all our primary care clients. If you would like to find out how we can help you make sure that you do not unintentionally cut off this potential line of defence, please contact Karen Black by email email@example.com or call 01483 511555
Healthcare Professionals – be careful what you indemnify
With the increase in collaborative working and working at scale it is becoming common for the owners of a primary care practice to be asked to provide indemnities, say in a sale or purchase contract or in a merger agreement. But what does giving an indemnity actually mean, and what are the risks to you?
What is an indemnity?
An indemnity contract arises when one person takes on the obligation to pay for any loss or damage that has been, or might be, incurred by another person. It is therefore a promise to make a future payment.
Why might you be asked to give one?
Over the centuries the English Courts have developed common law rules for assessing liability for breach of contract. These rules attempt to strike a fair balance between the interests of the party in breach and the party which is the victim of the breach. The factors which determine such balance include remoteness of causation, foreseeability of loss and mitigation of loss. By asking you to give an indemnity, the other party is attempting to move the balance in their favour.
A 1996 judgement by Lord Hoffman explains the difference in assessment of damages by common law rules and by indemnities:
“A mountaineer about to undertake a difficult climb is concerned about the fitness of his knee. He goes to a doctor who negligently makes a superficial examination and pronounces the knee fit. The climber goes on the expedition, which he would not have undertaken if the doctor had told him the true state of his knee. He suffers an injury which is an entirely foreseeable consequence of mountaineering but has nothing to do with his knee.”
Using the Court’s common law rules for assessing liability, there would have been no liability against the doctor because, although they were negligent, the negligence hadn’t been a factor in the subsequent injury, which was caused by a mountaineering incident unrelated to the knee problem.
If there had been an indemnity in place the Courts might well have found the doctor liable not only for the injury but also for the costs of the expedition, the rescue and all the medical treatment. This is because if the doctor had made the correct diagnosis the mountaineer would never have gone on the expedition in the first place, and therefore wouldn’t have suffered the subsequent injury, paid for the expedition or needed to be rescued.
So should indemnities ever be accepted?
There are certain areas where they’ve generally become accepted by lawyers as being appropriate – such as in a Practice merger and relating to TUPE transfers. Typically, the disposing practice agrees to indemnify the acquiring practice for any employment claims arising during the period before the transfer.
Legal advice should always be sought before binding yourself into an indemnity. A good solicitor would review the wording of the indemnity to ensure it is not unduly onerous. For example, in the case of TUPE transfers, an indemnifying practice should retain the right to defend and settle the claim itself, rather than simply committing to pay whatever is being asked of them by the other party.
Negotiation of contracts generally has little to do with what’s fair or unfair and much more to do with the negotiating strength of the parties. Often any party of whom an indemnity is requested is in such a weak bargaining position that they find it difficult to resist the request.
Although it’s easier said than done, it’s always better to negotiate from a position of strength. In the context specifically of GP practice mergers, if you can see a time in the next few years when it’s going to be necessary to find someone to take over your practice, do it sooner rather than later and try to keep a ‘Plan B’ in the background throughout.
If you have any questions about indemnities or any other queries relating the running of your primary care practice, please don’t hesitate to get in touch with one of our specialist team of expert solicitors. Please call 01483 511555 or email firstname.lastname@example.org
NHSPS put itself back in the spotlight recently, by announcing its intention to increase service charges and facilities charges for GP practices who request changes associated with Covid-19. This will undoubtedly add fuel to the many ongoing disputes over demands for increased service charges. The vast majority of our GP clients who occupy NHSPS owned and managed buildings have been living with a stalemate for the last couple of years, which is causing a variety of problems as time marches on.
The DHSC recently published its review into the current state of NHSPS. You can read the summary here and in this blog, we look at what the recommendations might mean for practices occupying NHSPS buildings.
- For readers who have been hoping that NHSPS would just go away, I’m afraid that won’t be happening anytime soon! There was found to be no benefit in divesting NHSPS of its functions, but rather a recommendation that it align itself more closely to the commissioner footprint and work more closely with NHSE. Having your commissioner and your landlord work more closely together could work either way for practices. One possibility would be that NHSE, as the ultimate funder, agrees to pick up a greater share of the disputed costs. Perhaps more likely though, is that NHSPS and NHSE will put increased pressure on practices to ‘pay up’ by turning the tenancy dispute into a GMS/PMS contractual dispute. This is one to watch carefully.
- NHSPS have been told (again) to regularise all their tenancies. This means that the pressure on GP tenants to sign up to leases will continue, but unless there is a resolution to the service charges issues most practices will continue to be reluctant to sign anything.
- The DHSC recommends that NHSPS “must make progress in customer sectors not currently engaged and ensure that agreement of FM-service and specifications, utilities and management charges are also covered”. In other words, the issues around increased service and facilities charges must be sorted out.
Readers may be aware of the ongoing High Court test case brought by the BMA on behalf of 5 GP Practices to challenge the legitimacy of some of the claimed charges. Whilst this has probably temporarily chilled NHSPS’s enthusiasm for chasing ‘arrears’, and some Practices may also have paused the process for reaching agreement on claimed charges pending the outcome of this test case, the case is unlikely to resolve soon.
The problem for practices though, is what to do about the large NHSPS liabilities now sitting on their balance sheets? As partners come and go this liability becomes a larger share of their capital accounts. We are seeing retiring partners ask why should they leave their capital behind for a liability that no-one believes is really owed? Practices should check to ensure that this question is fully addressed in their Partnership Deed, or alternatively create a separate agreement with retiring partners.
- Potentially the most significant recommendation is ‘to explore & implement changes to the funding mechanism where it will not fundamentally undermine the user-pays model, including central funding of management fees, elements of structural and external maintenance and greater use of direct payment of property costs by commissioners‘. This suggests that there may be opportunities for doing deals where the commissioner pays some or all of the service charges – both historic and possibly ongoing – as a means of breaking the deadlock.
Whilst the offer of somebody discharging your historic service charge liability (and possibly some of the future costs) might be tempting, it is likely that it will come with the strings attached including that you sign up to a new lease. We are very wary of the small print on this one!
So, has our advice to affected clients changed? In short, no. Practices should normally only sign up to a new lease once they are happy with the terms and once any historic service charge issues have been resolved. Even then, Practices need to understand their current legal position as regards their occupation of the premises before being able to make an informed decision about what does and does not constitute a ‘good deal’. This is a complex area and one with lasting financial implications for the sustainability of the practice.
When you are ready to start negotiating with NHSPS we strongly advise you seek specialist legal advice, but in the meantime, practices should agree and document how they will deal with the claimed service charge liabilities as the partnership changes over time.
We have a team of specialist property and partnership solicitors who all have deep expertise in advising primary care professionals on their premises issues. If you would like to speak to one of the team, please call Daphne Robertson on 01483 511555 or email email@example.com
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.
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 crÃ¨che (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 – for example if you wanted to change part of your existing premises into a pharmacy or community cafÃ©.
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 firstname.lastname@example.org
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,
(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.
Leasehold Dilapidations – how to prepare and protect yourself
Many GPs are apprehensive about becoming a named tenant on a leasehold surgery. There are of course a number of liabilities that could be imposed on a tenant under a lease, and you may have read our previous blogs on the subject of last man standing and the importance of agreeing a break-clause. Another issue to consider is the obligation to maintain and repair the premises both during and at the end of the lease term. Almost all surgery leases will impose an obligation on the tenant to repair the premises to some degree or another. ‘Dilapidations’ is the terminology used when a landlord seeks to enforce the repairing lease obligations.
When might the dilapidation liability occur?
In practice, most leases allow the landlord to serve a schedule of dilapidations on a tenant at any time during the lease term. This is because the tenant’s obligation to repair the premises is an ongoing obligation. If the premises are starting to fall into disrepair and the tenant is not complying with their lease terms to maintain them, the landlord needs the ability to force the process during the lease term. Whilst this right exists in most leases, unless there are significant ongoing problems relating to the tenant’s lack of maintenance in practice it is not often used by a landlord. It is far more common for a landlord to be concerned about repairing obligations when the lease is coming to an end. At this point, the landlord’s mind will be on future tenants and the rent they might achieve: the better the condition of the premises, the more valuable they are and the easier it will be for the landlord to charge a higher rent. They will therefore look at whatever rights they have available to them to improve the condition of the premises.
How much is it likely to cost?
The extent of your liability as tenant will depend on how your lease is drawn-up. For example, some leases may limit the tenant’s repairing obligation to keeping it in no better a state of condition than it was at the start of the lease term. Other leases may be what we call a ‘full repairing lease’, in which case the obligation is to repair all parts of the premises whether or not you caused that disrepair in the first place. Before you enter into a lease, it is very important to assess at the outset what your likely dilapidation liability may be at the end of the lease. You should seek legal and surveyor’s advice, so you understand the condition of the premises and what the language in the lease will mean in terms of your obligation to repair.
Be aware that dilapidation settlements are inevitably a horse trade between the landlord and the tenant. In our experience, a landlord will often seek to recover more in the first instance than they are entitled to and use this as a negotiating position to work down from. There are also important protections at law for tenants that can in some instances cap the amount they are required to pay. If you do receive a dilapidations demand from your landlord, you should consider taking surveyor’s advice as to whether the amount is appropriate and legal advice to establish whether the sum has been lawfully demanded.
How to manage the risk
Understanding your leasehold obligations will allow you to plan as a business how to avoid large and unwelcome bills from the landlord. It is good advice to accrue an amount year on year towards the costs of these liabilities. You may do this by setting up a sinking fund, into which each Partner contributes an agreed amount towards future dilapidations. You will need to set out how the sinking fund is created and managed in your Partnership Deed, so do make sure you have an up to date Partnership Deed that allows you to do this. A sinking fund also helps mitigate the risk of partners seeking to avoid a large dilapidations bill by retiring just before the end of the lease term.
In some circumstances, some of the dilapidations liability may be reimbursed through your CCG. This may be paid by way of a top-up element to your monthly rent reimbursement , in which case it is prudent to pay such sums straight into a sinking fund so it is available when you might need it. Funding may also be available at the end of a lease term, particularly where you are relocating to alternative premises with the support of the CCG.
Be prepared – adopting some relatively simple financial management during a lease term can pay dividends at the end. Make sure your partnership deed is up to date and documents how dilapidations costs will be shared and financed. Finally, if you do receive a dilapidations demand from your landlord: don’t panic; don’t just agree it at face value; and always seek professional advice.
If you have any questions on dilapidations or any other NHS premises related queries, please contact Daphne Robertson on 01483 511555 email email@example.com
Have you checked whether your practice has an NHS Pensions liability for “final pay control”? Final pay control can involve very large sums payable to NHS Pensions by a practice. We are aware of liabilities in excess of £100,000 arising as employees and partners retire.
What is final pay control?
Final pay control was introduced by NHS Pensions to discourage practices from paying inflated earnings in order to secure their staff a higher pension.
It is applicable to all Officer and Practice Staff members of the 1995 Section of the NHS Pension Scheme, including 1995/2015 transition members. In practice, this means non-GP partners and practice employees may fall within the rules. If, during the final four years of employment or partnership, a member receives an increase to pensionable pay that exceeds a defined ‘allowable amount’, the practice is liable for a final pay control charge.
Who has to pay the charge?
When the member draws their pension, NHS Pensions will calculate the charge and invoice the practice. Interest and penalties apply for late payment.
Where the member is or was an employee, the partners will be liable for the charge.
Where the member is or was a partner, the partners will be jointly liable, but who actually pays the charge will be determined by their partnership arrangements.
The charge may arise many years after an employee or partner has left the practice, as it is only triggered when the member draws their pension. The partners at the time the invoice is issued will have to pay the bill and then seek to recover monies from former partners if their partnership arrangements permit them to do that.
Although the rules are clear that an employee must not be made to pay the final pay control charge, they are less clear about non-GP partners. NHS Pensions will seek to recover the charge from all the partners jointly but how this cost is allocated between the partners is a matter for their partnership agreement.
The charge can seem unfair for non-GP partners who share in the profits, as these are inherently variable. For example if, four years before retirement, the practice had a poor financial year but this was successfully turned around, a charge may well be incurred. If four years ago there was an unusually profitable year, there would probably be no charge.
What can you do?
- When an employee or non-GP partner leaves the practice, you should check whether they are a member of one of the relevant schemes and calculate whether a final pay charge would be due. To do this, you will need to go back over the past four years of pensionable earnings, including any earnings paid by a former NHS employer during that period. If a charge is due, you should discuss with your accountant whether to accrue it in the partnership accounts.
- Where a non-GP partner is a member of one of the relevant schemes, you should consider updating your partnership agreement to make it clear how any final payment charge will be shared. We would be happy to check your partnership agreement for you.
- When merging with or acquiring another practice, as part of your due diligence exercise you should enquire about potential historic and future final pay control liabilities and ensure that it is clear who will be paying them. This should be set out in any GP practice merger or acquisition agreement which we can check for you.
- When a partner joins or leaves the practice, you should pay particular consideration to whether the final pay control charges should be accrued in the joining/leaving accounts.
If you are in any doubt about your situation, then give us a call. Contact Nils Christiansen on 01483 511555 or email firstname.lastname@example.org
Despite increasing pressure being placed on frontline care teams, the Care Quality Commission (CQC) has revealed that GP practices are providing a consistently good quality of care, with 93% rated good or outstanding.
Practices are also significantly more likely to maintain their rating upon reinspection than other NHS providers.
But what if an inspection takes place and you disagree with its findings? What are your options for challenging the ratings given?
All GP practices are subject to a comprehensive inspection by the CQC at least once every three years. This consists of inspectors collating information externally and then being on site for a day to observe. Further follow up inspections may also be undertaken, if a particular concern has been raised in a previous inspection.
Inspectors assess all practices on the following points:
- Are they safe?
- Are they effective?
- Are they caring?
- Are they responsive to people’s needs?
- Are they well-led?
They also look at how services are delivered to people in specific population groups, such as the elderly, people with long term conditions and those experiencing poor mental health.
‘Evidence’ will be gathered from multiple sources. This may include looking at feedback and complaints, assessing local and national data, speaking to service users and staff, and any insights gained through the onsite inspection. From this evidence, a report and ratings will then be produced.
When can you challenge a CQC report?
A draft copy of the report will be sent to the practice and it is as this point that you will be invited to provide feedback on its ‘factual accuracy’.
At first glance, the term factual accuracy may suggest that you can only correct stated facts, such as the number of staff they have recorded. However, in reality this is your chance to challenge all inaccuracies in the report and its findings, including questioning the evidence base and how it has been construed to justify the conclusions drawn.
Time is short. You will only have 10 working days to review the draft report and submit any comments.
Once a report has been published, you can also ask for a review of the ratings if you feel inspectors did not follow the correct process and procedures. You must tell the CQC of your intention to do this within 5 working days of the report being published.
Drafting your response
While there may be things in the report that you disagree with or feel are unfair, that alone is not enough. Any challenge must be based on specific issues with the evidence and how it has been interpreted, or the process that inspectors have followed.
If you believe a report to be an unfair representation of the level of service you provide, then how you word your response is important.
- Your aim is to describe why the service provided does not justify the rating it has been given, in relation to the Provider Guidance descriptions. It is therefore important that you refer back to the specific items in the Guidance (available on the CQC website).
- Don’t worry about fitting your comments within the boxes provided on the form. It is more important that you lay out your case clearly, so feel free to write on a separate sheet.
- Show you understand the whole process and all guidelines by making reference to The Fundamental Standards, The CQC Provider Guidance and The CQC Enforcement Policy
- Always avoid including any comments that are emotive (‘this is completely unfair’) or just opinion, (‘it’s impossible with the funding we have’). You need to demonstrate how a different opinion could/should have reasonably been reached by looking at the facts more carefully.
While it is true that many challenges are not upheld, it is by no means uncommon for challenges to succeed. The key is always in the preparation of the supporting documentation.
If you are unhappy, make sure your concerns are submitted within the deadline. This is difficult in itself as the deadlines are so tight.
We’d always recommend that you prepare fully for the inspection itself, and present the strongest evidence you can. Try to gauge at the inspection itself whether there are any concerns, since you will only have 10 days to respond once you receive the draft report and this is very little time to gather any additional evidence. Then, if you are faced with a report and ratings you feel are unfair and inaccurate, ensure you document your response in the right way.
If in doubt, ask for advice as quickly as possible from an experienced legal team, as they will be able to help you prepare your challenge, giving you best the possible chance of it being upheld.
For more information, please contact Daphne Robertson on 01483 511555 or email email@example.com
Making the decision to expel a partner is never an easy one and the reasons for doing so will vary widely.
Some situations will be straightforward. A partner may, for example, be found to be in clear breach of the partnership deed if there is an issue of gross misconduct. Unfortunately, less clear-cut circumstances are more common, such as a personality clash that is causing disfunction within the partnership and preventing it from operating effectively.
In these instances, a ‘green socks’ clause could be the answer. But can they be relied upon in practice?
What is a green socks clause?
A green socks clause is a clause that can be included in a partnership agreement, which allows partners to be expelled on ‘no fault’ grounds. Its name refers to the fact that the reason for expulsion could be as innocuous as wearing the wrong colour socks.
An example of when you may wish to use such a clause would be an under-performing partner. An under-performing partner can create unease in a practice, resulting in low morale amongst other partners and employees. Having the ability to expel such a partner, without having to rely on ‘with fault’ grounds, can be an attractive option and is often seen as an ‘easy’ way to resolve the problem.
Are green socks clauses legal?
For a green socks clause to be added to a partnership agreement, all partners must agree – which means there is no reason why it should not be effective in law. However, should an expelled partner decide to challenge their expulsion, the Courts will check that the correct process has been followed and that it has been carried out to the letter. They will also want to ensure that the process isn’t being abused in anyway, for example as a way to discriminate against an individual.
What can you do to reduce the risk?
Exercising a green socks clause is effectively relieving someone of their livelihood and their business, without explanation or rationale. For this reason, the courts will be very strict. Even the smallest deviation from the process is likely to invalidate the expulsion and expose the expelling partners to the risk of a counter claim. The Courts may also want to convince themselves that the underlying reason is not illegal (such as discrimination) so may well want to understand the expelling partners’ reasoning.
Remember that if the matter does become litigious, the process of disclosure will require that all evidence is released. This will include any emails, paper notes and other records however stored, as well as witness statements. If any of these hint at either a deviation from the process or an illegal reason, the Courts would take a very dim view. Given that tensions will be running high and the expelling partners are likely to generate a lot more correspondence than the sole partner being expelled, this can be a risky process.
For these reasons, it’s always wise to seek legal advice well before an expulsion is made. This can help you to ensure that you fully understand the process, and that emotions do not overrun in a way which could cause problems later on. You will also want to ensure that some documents are covered by ‘privilege’ and thus are not disclosable.
A well drafted green socks clause can be beneficial on two counts. It can encourage all partners to carry out their duties conscientiously, and it can make it easier to take action against anyone who falls below the required standards.
However, they should not be seen as the ‘easy option’. A better starting point where there are problems is usually to consider whether a ‘with grounds’ expulsion clause can be used.
Green socks clauses are best avoided in two-man partnerships because they become too unstable. They should also be avoided in partnerships where two or more partners are closely related. This is because the relatives are unlikely to vote against each other, effectively meaning the green socks clause can only be used against the non-related partners.
It is good practice to ensure that unanimous consent is required to exercise a green socks clause – something which is often difficult to achieve – and to include a mandatory mediation process and cooling off period.
Exercising a green socks clause is a very drastic step to take and the decision should never be made lightly. If you are considering the expulsion of a partner, we strongly recommend that you seek legal advice as early as possible to maximize your chances of success.
For more information, please contact Daphne Robertson on 01483 511555 or email firstname.lastname@example.org