NHS Pensions and PCNs: The new rules explained
When Primary Care Networks (PCNs) were first established, it was only possible for PCN staff to get the NHS pension if they were employed in a practice or (sometimes) a GP Federation. It quickly became obvious that many PCNs would benefit from setting up their own PCN company, but the lack of a pension was an obvious barrier to this. In late 2019 NHSBSA put in place a ‘temporary determination’ enabling PCN Companies to provide the pension to their employees, and once this was available many PCNs decided to incorporate. We have written previously about why PCNs might decide to incorporate.
The concern with the old PCN pension determination was that it was always time limited and needed to be renewed every year. A Consultation was therefore undertaken on proposals to make permanent changes to the pension rules, which led to legislative changes effective from 1 April 2023 (the ‘New Rules’). Any new PCN Companies wishing to provide the NHS pension to their staff will need to apply to provide it under the New Rules. So far, so straightforward.
Unfortunately the legislation was passed just days before the expiry of the old determination, leaving NHSBSA no time to provide any guidance on how the New Rules would be applied. Worse, there was no guidance for existing PCN Companies who had been relying on the old time limited determination, and these were not mentioned at all in the legislation. During the Consultation the Department of Health & Social Care promised to extend the old time limited determination for a year until 31 March 2024 while this was all worked out, but for some reason this extension never happened and the old determination duly expired on 31 March 2023. As a consequence both new and existing PCN companies were largely left in the dark about how to secure and retain access to the NHS Pension for over 2 months. Only very recently has the uncertainty begun to clear.
Somewhat predictably the information vacuum has been filled by a degree of rumour and scaremongering, so we felt it would be helpful to explain the facts and to shoot down a few myths.
The New NHS Pensions Rules
The legislation and subsequent NHSBSA guidance has opened up two routes for PCN Companies to provide the pension to their employees. One is based on the ‘Independent Provider’ model, and the other is an ‘Open Determination’. We will look at each of these in turn:
‘Independent Provider’ Access is a long established ‘pension gateway’ for businesses which cannot automatically offer the NHS pension to their staff. Any business holding a ‘Qualifying Contract’ can apply for ‘Independent Provider’ status. If this status is obtained all staff who spend more than 50% of their time delivering the approved Qualifying Contract are NHS pension eligible. The New Rules introduce a new Qualifying Contract called the “primary care network standard sub-contract”. This is defined as ‘a sub-contract that complies with the National Health Service Commissioning Board’s template sub-contract, “Sub-contract for the provision of services related to the Network Contract Directed Enhanced Service 2022/23”’. Commenting on this less than perfect document is outside the scope of this blog, but suffice to say that in our experience NHSBSA are interpreting ‘complies with’ to mean ‘the same as’, so are telling all new applicants that they must submit a signed copy of this contract with their application for Independent Provider status. An Independent Contractor application involves a very long and complicated form filling exercise, but once completed an Independent Contractor can apply to add further ‘Qualifying Contracts’ at any time.
A ‘Determination’ is a bespoke ‘gateway’ made at the discretion of the secretary of state. This was the original approach used to provide access for PCN companies in 2019, but the old determination was time limited for 12 months which is why it kept getting renewed. That has now been replaced with a new ‘Open Determination’ which is not time limited and is therefore permanent. The application form for ‘Open Determination’ is much shorter and simpler than for Independent Provider status, but a Determination pension provider has no eligibility to provide the pension to anyone other than the category of staff covered by the particular Determination. Unfortunately the new Open Determination application form has not been published online, so you have to email NHSBSA to obtain it. For reasons that are not clear, NHSBSA seem to require applicants to sign the same NHS Standard PCN sub-contract when applying for an Open Determination as when applying for Independent Provider status, even though this is not a stated requirement in the very limited published guidance. The key thing to remember though is pension access is only available for employees of the PCN Company who spend at least 50% of their time activities related to the PCN DES.
PCN Companies are advised by NHSBSA to take advice before deciding which of the two pension routes to select. We would agree with this and further recommend that you also take advice before signing the NHS Standard PCN DES Subcontract.
Existing PCN Companies: Transitioning from the old time limited Determination
At DR Solicitors we have incorporated almost 100 PCNs, most of which will have applied for pension access under the old time limited determination rules which expired at 31 March 2023. It would be nice to think that all the PCN Companies providing the pension under the old dispensation would be automatically grandfathered to one of the new routes, but this does not seem to be what NHSBSA have in mind. The NHSBSA guidance states instead that “Existing employers, with PCN TLD access which expired on 31 March 2023, should complete an application if continued access is needed. When approved for open PCN determination access the existing EA code will be retained.” Because the EA code is retained, the Open Determination is the logical successor to the old time limited Determination as there should be no change from the perspective of the staff if this route is followed. There appears to be nothing to stop an existing PCN Company from applying for Independent Provider status instead of open access, but this would presumably result in a new EA code and thus require the staff to be transferred.
The sting in the tail is that because existing PCN Companies have to reapply, they have to comply with the rules associated with the new open determination. Most importantly, this means that NHSBSA are likely to insist they sign the Standard NHS PCN DES sub-contract, which was not a condition of the old time limited determination. Any existing PCN companies should already sub-contracts in place, but these will almost certainly not be the NHS standard sub-contract. Assuming NHSBSA continue to insist on receiving a copy of the new standard contract, existing PCN companies will either have to change this part of their legal documentation or persuade NHSBSA that their current documents are equivalent. It is unlikely that this will significantly alter the way that most PCN companies operate, but again we suggest that you take legal advice before signing any new contracts or making any changes to your existing company arrangements.
Next Steps
Firstly, don’t panic. There are new rules in place which will take some time to settle in, but once that has happened and NHSBSA has caught up with its application backlog the arrangements will be permanent and everyone should be in a better place as the arrangements are now permanent.
All PCN Companies who wish to provide the NHS pension to their staff need to consider whether to adopt the Independent Provider or Open Determination route. There are pros and cons to each, and we recommend that you look into them carefully before making a decision.
Regrettably, existing PCN Companies with the old time limited determination need to reapply. Again they should take advice, but the choice may be more obvious for them because of the benefit of keeping the EA code associated with the open determination route.
Everyone who selects the Independent Provider route will have to use the standard PCN DES sub-contract, which they are advised to take advice on before signing. It is not a particularly user friendly document.
Those who select the Open Determination route are usually required to sign the same document, even though it is not clear why. Again, take advice before doing so.
Myth Busting
We are aware of various rumours circulating about the implications of the New Rules, so we thought it would be helpful to put some of them to bed:
- The pensions access has nothing to do with the CQC. Regardless of which route you go down you do not necessarily have to register with the CQC. CQC registration is a totally different process and is unrelated to NHS pension access.
- NHS Pensions Access for PCN companies did not cease as at 31 March 2023. Quite the opposite. A ‘primary care network management company’ is now set out for the first time in legislation as a company eligible to provide the NHS Pension to its employees. The problem is that the legislation was passed just days before it went into force, leaving NHSBSA very little time to prepare for implementation. Existing PCN Companies need to re-apply, but so long as they do so there should be no problem with continued access and the pension status should then be permanent
- You do no need to decide whether you are a ‘PCN management organisation’ or a ‘PCN Provider Company’. No such distinction exists. You just need to sign a sub-contract. What this means operationally depends on how you complete the sub-contract schedules, but that should not normally affect pension access.
- You do not need to change your PCN business strategy as a result of the New Rules. You need instead to ensure that you complete the new sub-contract in a way which supports your existing PCN business strategy.
- There is not a third option of a ‘Closed Determination’. Whilst closed determinations are often involved during the process of establishing a PCN Company, they are not a generic way of providing future pension access.
Conclusion
The New Rules are a big step forward. As ever with pensions they are not straightforward, but it is important that all PCN Companies familiarise themselves with the rules and make an application for one of the two routes. At DR Solicitors we would like to see some increased flexibility around the less than perfect standard PCN sub-contract, but in the meantime it can, with care, be made to work for your PCN Company. However this is a complex area, so please do get in touch if you need any support in making the applications.
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Trusts in Primary Care: Do you need to register with the Trust Registration Service?
Regular readers of our blog will be aware of the Trust Registration Service and the recent requirement to register all ‘express trusts’. DR Solicitors have recently worked with the GPDF to help prepare guidance on the various trust relationships which exist in primary care, and the circumstances under which such trusts may be registerable. The guidance can be found in full on the GPDF website.
The guidance explains:
“A trust is a legal relationship by which one or more ‘Trustees’ hold and manage assets (such as money, investments, land or buildings) on behalf of one or more other people (the ‘Beneficiaries’), and may be created (whether expressly or by operation of law) for convenience or through necessity.
There are a significant number of trust relationships in primary care, generally created by necessity as a substitute for a ‘missing entity’ – particularly in the case of GP partnerships and Primary Care Networks (PCNs). The most common of these trust relationships relate to the ownership of a practice’s surgery, a PCN’s Bank Account, and shares held by GP partnerships in Federations or PCN companies.
Express trusts and taxable non-express trusts must now be registered with the Trust Registration Service (TRS), but the majority of such trusts in primary care settings will be able to benefit from an exemption for “public authorities” and will not need to be registered. In addition, a smaller number of such trusts will be able to benefit from an exemption for “legislative trusts”. It is therefore likely that only a small residual minority of primary care related trusts will need to register with the TRS.”
We recommend that all practices and PCNs read through the guidance to ensure that their particular trusts are likely to be covered by one of the exemptions, and for the minority of trust relationships which are not exempted to seek support from their professional advisers to assist in the registration process.
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PCN sub-contracting: new NHS template and factors to consider
NHS England have recently published a template sub-contract for PCN DES services https://www.england.nhs.uk/publication/subcontract-for-the-provision-of-services-related-to-the-network-contract-directed-enhanced-service-2022-23/
Many PCNs do not seem to realise that when buying in clinical services (as opposed to employing ARRS resources themselves) member practices are creating a sub-contract of their GMS/PMS/APMS contracts. This is true whether the supplier is a GP Federation, a PCN Company or an entirely separate third party.
Most PCNs rely on securing at least some of their resourcing from these providers, and yet many PCNs seem relaxed about documenting this significant relationship through informal SLAs, supplier provided contracts, wording in their PCN Schedules or in some cases, leaving the arrangement completely undocumented. In reality these sub-contracts are critically important in managing the risks for member practices, as a service delivery problem with a sub-contractor can lead directly to a breach of the GMS/PMS/APMS contracts of all the member practices. Having a poorly drafted or non-existent agreement might itself constitute a breach, since practices are required to include a number of important obligations in all sub-contracts to comply with their own contracts.
With the imminent transfer of responsibility for Enhanced Access, many PCNs will be looking to continue this service with the current providers, at least for the time being. This arrangement will also be a sub-contract and it may not be possible to continue the service provision in exactly the same way as before due to regulatory constraints. As a minimum however, a proper sub-contract should be put in place, and for those who have not already done so, the new NHS template PCN sub-contract would probably be a good starting point.
PCNs should bear in mind however that the published document is just a template, and like all templates it needs to be populated and tailored to the particular situation. It also needs to be amended to reflect the different requirements of each party: put bluntly, practices will want to ensure that as many of their risks as possible are passed on the sub-contractor, and the sub-contractor will want to achieve the opposite. It is important that this is taken into account when completing and negotiating the agreement. It is important to remember that, unlike GMS or PMS contracts, PCN sub-contracts are negotiable, need to be negotiated with the supplier, and the template might not suit all circumstances.
Whether or not you use the new template as a starting point, we would strongly recommend that you take specialist advice on all sub-contracting arrangements before entering into them.
For further information on sub-contracting or on any other legal issues, please contact Nils Christiansen on 01483 511555 or email enquiries@drsolicitors.com
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How might the new Trust rules impact primary care?
The Trust Register was introduced in 2017 and at that time, no registration was required for those trusts which did not pay tax. New rules were introduced on 6 October 2020 as part of anti-money laundering and counter terrorism measures, which significantly extended the scope of the register. The deadline for registration is 1 September 2022, however the situation is complex and HMRC have only recently issued guidance on how the new rules will apply.
On the face of it, many practices and PCNs may unfortunately get impacted by the new rules. The underlying problem is that neither partnerships nor PCNs are legal entities which are capable of holding assets in their own name which forces them to hold assets in the names of nominees. In normal circumstances this nominee arrangement would be a ‘trust’ relationship, and therefore potentially subject to the new rules.
The three most obvious examples where trusts are commonly used by primary care medical practices are:
- GP Surgery premises where partners jointly own the freehold or long leasehold building(s):
- Shares held by a GP partnership in a GP Federation or PCN company
- PCN nominated bank accounts where a practice is holding funds on behalf of other PCN member practices
It is important to state that the position is still unclear and there is currently conflicting advice available. DR Solicitors are therefore contributing to the production of some national guidance for primary care, which we hope will be issued soon.
One of the reasons that the issue is receiving a great deal of publicity is that there are financial and criminal penalties for failing to register. However we would direct concerned practices to the website of the Institute of Chartered Accountants in England and Wales which contains some helpful information from HMRC on initial failure to Register or late registration:
In recognition of the fact that the registration requirement is a new and unfamiliar obligation for many trustees, there will be no penalty for a first offence of failure to register or late registration of a trust. The exception is when that failure is shown to be due to deliberate behaviour on the part of the trustees. In that case, or where there are repeated failures, a £5,000 penalty may be charged per offence.
In practice, this means that, should HMRC become aware of a trust which has not been registered by the relevant deadline – either because that trust has been registered late or because HMRC has identified that trust’s existence by other means – HMRC may issue a warning letter to the trustee or agent. It would usually only charge a penalty if that letter were not acted on.
The website contains other relevant information and can be accessed at: https://www.icaew.com/insights/tax-news/2022/aug-2022/hmrc-updates-trs-manual-in-advance-of-1-september-deadline
We will be issuing more guidance on this subject very soon, so please stay subscribed to the blog.
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Should GPs worry about Directors’ Liability?
When we incorporate PCNs or GP practices, one of the most common questions from concerned GPs relates to the liability they might pick up if they become a director of the incorporated company. In this blog, we look at how real the risks are to company directors, and whether or not you need be concerned.
Financial risk
At a very basic level, it is worth remembering that liability is limited in companies but is unlimited in partnerships. So, if a partnership has assets of £60,000 and £100,000 of creditors, then the partners have personal liability for the shortfall. If a company has assets of £60,000 and £100,000 of liabilities, then the directors can liquidate the company, whereupon the £60,000 of assets are sold and the proceeds distributed to the creditors, leaving the creditors short by £40,000. In other words, in a partnership structure the partners lose out if there are insufficient assets, whereas in a company structure the creditors lose out. This is the very essence of limited liability and is why limited companies come with more onerous rules than unlimited partnerships.
In the above scenario, the shareholders of the company will have no liability: if shareholders could be liable for a company’s debts then neither stock exchanges nor pension funds would exist. Directors could theoretically have liability for some or all of the shortfall, but in practice this is extremely unlikely. However, the likelihood of a partner being held liable for the shortfall in a partnership is 100%.
Directors can incur personal liability to creditors in certain circumstances if the company is insolvent, but such liability only arises in situations which go beyond negligence and into the realms of recklessness or crime. One of those circumstances is fraud, which speaks for itself. The other is wrongful trading, which occurs when a company continues to trade when it has “no reasonable prospect” (which wording sets quite a high bar) of avoiding going into insolvent liquidation or insolvent administration. An example of this in a normal trading company might be continuing to take customer orders and customer money when there is no realistic chance of the orders being met because the company is insolvent. Again, the liability which a director would have in such circumstances is no greater than a partner of a partnership would have in identical circumstances, whilst the hurdles which a creditor would have to overcome to enforce a claim against the director would be considerably higher than in enforcing them against a partner.
By moving trading activity from a partnership of which you are a partner to a company of which you are a director, you are invariably reducing your risk of personal liability very significantly.
Breach of fiduciary duties
So what other liabilities might a company director be opening themselves up to? In law, there are seven fiduciary duties set out in statute:
- to act within powers;
- to promote the success of the company;
- to exercise independent judgment;
- to exercise reasonable care, skill and diligence;
- to avoid conflicts of interest;
- not to accept benefits from third parties; and
- to declare any interest in a proposed transaction or arrangement with the company.
To a director who is familiar with these duties in the context of a partnership, these hardly seem onerous and, most significantly, the duties are owed to the company itself, rather than to third parties. It would be the company itself, either through a majority of directors or through minority shareholder action, that would have to sue a director for breach of fiduciary duties. Whilst this is conceivable in a large, listed company, in a small private company which is run and owned by the same people, and in which decisions are made by majority, it is hard to conceive of a situation whereby it might occur.
When it comes to clinical negligence, a company can be liable for the actions of a director, but it is rare for a director to be capable of being held liable for the actions of the company unless the director has themselves done something negligent, in which case the liability arises by virtue of the director’s action rather than by virtue of them being a director. Corporate manslaughter is an exception to this principle, but for a director to be liable in respect of corporate manslaughter it would have to be established that the way in which the activities of the company were managed or organised caused someone’s death and amounted to a gross breach of a relevant duty of care owed to that person. Again, it is hard, if not impossible, to conceive of circumstances where a director of a company had more liability in identical circumstances than a partner of a partnership.
What steps can be taken to reduce the risk to directors?
A question we are often asked related to directors’ liability concerns directors’ and officers’ liability insurance (D&O Insurance). D&O Insurance first started to feature in the public awareness as a result of the various government-commissioned reports into corporate governance in the 1990s: the Cadbury Report, the Greenbury Report and the Hempel Report. These reports led to an increase in the number of non-executive directors being appointed by listed companies. As these non-executive directors usually had very limited supervisory roles, usually concerned with audit and director remuneration, but could potentially incur the same personal liability as ‘ordinary’ directors, they invariably insisted on companies taking out D&O Insurance on their behalf before they would accept appointments – simply by virtue of the enormous numbers involved in such companies. D&O Insurance in respect of a small private company, such as a PCN company or an incorporated GP practice, would be unusual as the directors invariably have a much greater understanding of the operations of a much simpler business. If however you are concerned about this residual directors liability you should speak with a specialist insurance broker about the risks more generally in primary care.
Conclusion
In summary, when you move trading activity from a partnership to a company you invariably end up reducing your potential personal liability. It is no surprise that well over three quarters of all businesses in the UK trade as limited companies, and the majority of the remainder trade as very small sole practitioners. Partnerships have their advantages, but reducing personal liability is not one of them.
If you have any questions on the topics covered in this blog or on any other legal issues, please contact Nils Christiansen on 01483 511555 or email enquiries@drsolicitors.com.
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Podcast: Nils Christiansen on the minefield of PCN incorporation
With workload becoming ever more complex and demand continuing to grow for general practice services, many PCNs are looking at incorporation as a solution to running a safe and sustainable structure going forwards. Produced by Ockham Healthcare, Nils Christiansen presents a short podcast offering practical advice on safeguarding and streamlining the PCN as a business entity.
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GP Federations and PCNs: Can they co-exist?
Some GP Federations and PCNs are working well together, some are in conflict, and others have nothing to do with each other. Why are there such marked differences around the country?
PCNs and GP Federations were both established as ways for Primary Care to work at scale. GP Federations were often ‘encouraged’ to form by dangling the carrot of CCG wide contracts – usually APMS contracts for extended access. The payment for delivering those contracts flows directly to the GP Federation, which has its own management structure and P&L. This has encouraged some practices to see Federations as arms-length service providers that have little or no relevance to the day to day running of their practice, regardless of how well or poorly the Federation delivers its service contracts.
PCNs, by contrast, do not generally have service contracts of their own and are normally much smaller than a CCG. They derive their funding from the PCN DES which is simply an extension of the GMS/PMS/APMS contracts of each of the core member practices – albeit held in a shared bank account. As a result, surpluses and deficits in the PCN translate directly into profits and losses in member practices, and a poorly run PCN would have a direct financial and regulatory impact on its members.
Whilst they have the same underlying member practices, most GP federations are also much larger than PCNs. PCNs comprise member practices with total list sizes of about 50,000, whilst the average GP Federation comprises members with total list sizes in excess of 200,000.
Prime contractor vs sub-contractor
Because Federations had their own service contracts from the outset, they needed to be independent companies. These companies were set up with their own management which was responsible for deciding how to deliver the contracted services. Whilst many Federations decide to deliver their contracts in collaboration with their member practices, it is clear that the practices are sub-contractors providing staff and resources to the Federation.
By contrast, because PCNs receive their funding directly from NHS England, if they choose to work with a Federation it is the Federation which becomes the sub-contractor providing staff and services to the PCN. The difference is crucial because the prime contractor always chooses the sub-contractor and ‘sets the rules’, not vice versa.
Culture
As control of contracts moves from federations to PCNs, the role of culture becomes important. A prime contractor’s job is to ‘manage’ the sub-contractor as the prime contractor is ultimately responsible for delivery. As a result, Federations often needed to create a culture of ‘managing’ member practices. For PCN DES delivery it is the practices themselves who are the prime contractors, so they need to manage the sub-contractor GP Federation and not vice versa. This can get even more complicated when the Federation continues to have its own contracts which it subcontracts to GP practices, as the management and control then needs to go both ways. In our experience this role reversal can create a major cultural challenge as the practices and the Federation get used to their new roles and responsibilities.
A Shared Service Centre Mindset
At root, the PCN DES encourages member practices to share resources. This is not uncommon in business and is often called a ‘shared service centre’. Member practices obviously share ARRS resources, but there is no particular reason why they should not share other functions as well. This is where a Federation can really add value to PCNs. Shared service centres benefit from scale economies, so they often work better if they are larger – which Federations are. Federations can therefore develop to offer a menu of services to PCNs, and can perhaps provide these services more cost effectively than PCNs themselves because of the scale economies. This does however require that the Federation mindset changes from one of controlling work allocation to being a provider of high quality, well managed services to PCN member practices. This change in mindset will often also require a change in the governance model and the ownership model of the Federation to more closely align it to the PCNs it serves.
Conclusion
With CCGs disappearing into ICSs and extended access funding moving to PCNs, the original purpose of Federations is fast disappearing. Some Federations have other contracts providing them with an income, but these may also be under threat as ICSs consider commissioning at an even greater scale than CCGs. This leaves many Federations with a choice of either ‘scaling up’ to ICS size and remaining as a prime contractor, or ‘scaling down’ and becoming a sub-contractor to PCNs. It may be possible for a Federation to do both, but it should then recognise that there is a fundamental difference between these two roles which may be difficult to manage.
Many Federations are recognizing that this is a strategic decision they are going to have to make very soon. It is perfectly possible for PCNs and Federations to happily co-exist, but to do so many Federations are finding that they have to change their operating model.
We have worked with many PCNs and Federations to improve their joint working arrangements, and have deep experience of what works, and what does not. For more information please contact Nils Christiansen on 01483 511555 or email n.christiansen@drsolicitors.com
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ARRS Chaos – How to avoid some of the ARRS employment traps
One of the underlying issues with ARRS resources is the challenge in deploying staff across multiple member practices. This sharing of resources cuts across the usual employment relationship where an employee works for a single employer, and across most employment laws and regulations which have a single employer arrangement in mind.
Because a PCN is a contractual construct (as opposed to a legal entity), it cannot employ staff in its own name. PCNs are therefore forced to come up with structuring and contractual workarounds to achieve the desired result.
These workarounds include:
- appointing a ‘lead practice’ to act as the employer;
- entering into a ‘joint employer’ arrangement;
- sub-contracting with a GP Federation or third party;
- incorporating the PCN.
The desired outcome is the same, namely a PCN resource who works across all the member practices, and where all the practices have the same or similar rights and obligations towards that member of staff.
Where to start? Identify the key responsibilities
The easiest way to achieve the desired outcome is to break down the various responsibilities associated with engaging staff, and agree which entity will perform it and how. Key responsibilities include:
- Recruitment responsibility
- Day to day management, eg scheduling & work allocation
- HR management, eg disciplinary and grievance procedures, annual review, agreeing pay and pay rises.
- Organising cover in the event of absence and deciding who will pay for it (ARRS does not currently reimburse this cost).
- Planning and paying for dismissal or redundancy
- Managing plans to restructure the PCN and deciding what should happen to the ARRS staff members
In a traditional employer/employee scenario, all of these responsibilities would sit with a single employer. By contrast, in a PCN the responsibilities can be shared amongst core network practices, or transferred, in whole or in part, to another organisation entirely. The answer will depend upon your structuring choices and could be any one of (1) to (4) above, but what is clear is that not all of the responsibilities need to reside in one place, indeed there may be differing optimal solutions for each different resource.
Case Studies
In our previous blog we gave some examples of resourcing problems that PCNs are encountering, and will now explore those further:
Q Who will cover my Clinical Pharmacist when they are on short term leave?
A Firstly, consider whether cover will be required for the duration of the staff member’s absence. This needs to be agreed between the practices, but full cover is more likely in the case of a clinical resource than a non-clinical one.
If cover is required, then who will provide and pay for the cover is a contractual question. Broadly, unless you’ve agreed amongst yourselves or with your supplier (in the event you’ve sub-contracted) that there will be cover, then the default position is there will be no cover.
If the employer is a lead practice, the answer should lie in your PCN Agreement or more likely, a Workforce Sharing Agreement.
If the employer is a GP Federation, Trust or similar, the answer should lie in the PCN sub-contract with that party.
Q My Occupational Therapist is under-performing and I want to move to an alternative provider – can I do so?
A This scenario clearly assumes that a third party is providing the occupational therapist. Subject to any termination provisions in the contract, you would normally be free to move to another supplier of services. However, if the occupational therapist is working exclusively for your PCN, then the switch may be a service provision change to which the TUPE Regulations will apply. The effect of this is that even if you were to move to another supplier, the under-performing occupational therapist is likely to automatically transfer to the new supplier and you could therefore still have the same person turning up for work.
In reality, this is likely to be resolved by discussion with the supplier and you will have to go through the contract management processes with that supplier. This will only be possible if you have a well drafted contract setting out the expected service levels and you are able to explain in what ways those service levels are not being met.
Q Who picks up liability in a redundancy situation?
A The answer to this is always the employer in the first instance. The employer may be able to recover the costs from the member practices but only if there is an agreement in place stipulating that they can do so. This would either be the PCN Agreement, a Workforce Sharing Agreement or a sub-contract depending on the structure.
Inevitably, this is something which is likely to be hotly contested so it is important that these documents are well drafted so that all parties are confident that they rely on them. Also bear in mind that any contractual promise is only as good as the party who has given it, so you will want to make sure you understand the financial standing of your contracting parties.
Conclusion
In summary, the use of ARRS resources is inherently complicated and goes against the normal way of employing staff. Our recommendation is that you analyse the key responsibilities and figure out which legal entity is going to be responsible for each of those and then critically, make sure that this is written into the relevant agreements. Those agreements could be a PCN Agreement, a Workforce Sharing Agreement or a sub-contract. The key is that these documents are well drafted and properly negotiated. Remember that these are all legally binding documents and are the only mechanism to achieve any of the above outcomes.
Once you’ve determined this, then the relevant employer must ensure that each contract of employment with a PCN resource reflects the unique arrangements have been made. It is unlikely that a standard ‘off the shelf’ employment contract will do this, so this will usually need some careful drafting.
As can be seen, working with an ARRS resources can be complicated and unfortunately, problems are likely to emerge. As always, the risks can be minimised by taking appropriate advice in advance.
If you would like to speak to an expert solicitor who can help you with your PCN Agreement, Workforce Sharing Agreement, employment contracts or third party sub-contracts, then please call Daphne Robertson on 01483 511555 or email d.robertson@drsolicitors.com
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PCNs – the new phase of Managing Growth
PCNs have now successfully established themselves, and are beginning to find their place in the NHS. They have usually engaged a number of ARRS resources, are normally delivering the COVID vaccines, and have, in general, achieved more in the last 2 years than many people believed possible. With 99% of practices now members of a PCN, many of the key organisations in healthcare are talking about how PCNs can deliver for them and their patients. In many ways it is hard to describe PCNs as anything other than a great success.
Take a step back for a moment to June 2019, when PCNs were set up. The focus was on getting the whole of England moved simultaneously into PCNs so it was done quickly, informally and with little consideration to structure and future-proofing. During this ‘Establishment’ phase, this informality was a strength and not a problem: risks were generally manageable and the money involved was not huge. However as PCNs have matured, the problems with this informality are becoming clear as PCNs are finding it challenging to scale-up. To continue to grow successfully PCNs are having to find new, more formal ways of working.
In our opinion PCNs now need to move on from the ‘Establishment’ phase, and into a new phase of ‘Managing Growth’
What are the key issues to be resolved in the phase of Managing Growth?
1. The models of engaging the ARRS resources need to be formalised properly. Some of the scenarios that we are seeing frequently, include:
- who will cover my Clinical Pharmacist when she’s on maternity leave?
- my Occupational Therapist is under-performing and I want to move to an alternative provider – can I do so?
- our Health & Wellbeing Coach has been shielding. We need him back in the Practice but the Federation (who provide him) says they will continue to support him to work from home. What are my options?
- we have a PCN Social Prescriber from a third party provider. She doesn’t fit in and is rude to patients, who have complained, so we’ve told the third party provider that we don’t want her any more. She has now alleged that we are discriminating against her – something we strongly refute. The third party provider also says we’ve got to pay for her until they find her somewhere else to work.
- who picks up liability in a redundancy situation?
Whilst you’re never going to stop these tricky employment scenarios occurring, the questions they are raising do not always have clear answers due to contractual uncertainty. The ideal position would have been that the questions were thought through beforehand and the answers built into contracts, but unfortunately most PCNs simply didn’t have the time to give this enough thought, and they now need to do so if they want to move into the Managing Growth phase with confidence. We will explore this further in a separate blog.
2. PCNs are going to have to develop management structures characteristic of a well-run business. For many PCNs, this is likely to lead to a decision to form some form of incorporated entity which will be run as a captive shared service centre. Such a company will act under instruction from the PCN, but will have separate legal form and therefore be able to better manage and contain risks. This could be a modified Federation or a separately incorporated PCN Company. If you missed it, you might be interested to view our V-blog on the subject of incorporating your PCN.
3. PCNs and Federations need to figure out how to work together. Federations have typically been around longer and already have contracts and resources in their name. Some have been more successful than others but they are all GP-led, local businesses. PCNs have all of the ARRS money to spend and are seen as the point of integration for future services. There is a risk that the two entities compete with each other, when usually the best answer will be reached through collaboration rather than competition.
How Federations and PCNs work together will undoubtedly differ on a case by case basis and we have seen a variety of different models emerge, but what is clear is that if PCNs and Federations are allowed to compete, neither is likely to be as successful as they would be if they collaborated.
We will discuss the different models for Federations and PCNs to work together in a separate blog.
Next Steps
In conclusion, PCNs have become victims of their own success. Unless they quickly move into the Managing Growth phase and update their management structures and contracts to reflect working at scale, they are likely to find that problems begin to emerge. The list of potential issues is long: is there sufficient financial control around the PCN funds?; are there hidden tax liabilities such as VAT?; is the staffing model clear and documented?; the list goes on.
In our view, the Managing Growth phase means looking at PCNs with a commercial mindset, and ensuring that they are managed and operated as efficiently as a well-run practice. Care must be taken to ensure that PCNs do not develop a ‘mind of their own’, but there is no reason why this should happen if proper governance structures are put in place.
We will be covering more on this subject in future blogs, but in the meantime, if you have any queries relating to your PCN, please get in touch with Nils Christiansen on 01483 511555, email n.christiansen@drsolicitors.com
News
PCN Incorporation: The Why and the How
PCNs were set up at great speed last year. They were usually established as a cost-sharing arrangement between practices that had signed the PCN DES. This has worked well but problems are beginning to emerge as PCNs gain scale. This video blog examines the various emerging issues, and explains how incorporating a PCN can address many of them. It also explains the steps you will need to take to incorporate your PCN.
There are currently very few incorporated PCNs, but many of our PCN clients see this as a logical next step in their development. Watch this vBlog to understand why.