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Do GP partnerships have to pay historic seniority payments to retired partners?

on Thursday, 14 December 2023.

A recent report in GP Online suggests that practices may have to find ex-partners and pay them sums of money in respect of historically underpaid seniority payments.

Even though the seniority scheme was phased out and ended in 2020, NHSE were always well behind with their calculation and payment of it, and final calculations are only now being made - apparently going back as far as 2013 in some cases. Some practices will now face clawbacks where seniority was overpaid, and some practices will receive payments where there were underpayments.

But what happens if the relevant partners, to whom these payments related, have retired in the intervening years? Do you really have to track them down and pay up? There is of course the potential for difficulty - although practices with properly-drawn partnership deeds at the time are unlikely to have to concern themselves too much.

Where overpayments to the practice are identified, the relevant sum will indeed be clawed back from the practice by NHSE - NHSE will not concern themselves with whether the partner to whom the overpayment related is still there or not. NHSE's contract is with the practice as a whole and so the ICB will deduct the money from sums due to the practice.

The good news though, is that in many cases the accountant will have advised putting a retention in the accounts - ie holding back a sum of money in case a clawback was ever made, in which case the sums should be immediately available to cover this clawback. If not, all is not lost because the partnership deed may still help. The deed should include an indemnity by which the retired partner has to cover any clawbacks - even if a final account has been signed off in the meantime. So if NHSE deducts money, and there's no retention to pay it off, you should check what the partnership deed says about it (we would be happy to review it for you to find the relevant indemnity, if you like). As long as the indemnity is there the you have a contractual right to ask the retired partner to reimburse you for the clawback.

Where it turns out there have been underpayments, a payment will be made direct to the practice. The report in GP Online suggests that practices should contact ex-partners (or their families) to arrange to pay it back. Practices should certainly check their partnership agreements before doing this! I would suggest that most practices will not end up needing to do it. Most partnership deeds will say that once a final account is signed off, it is final - ie there are no comebacks in situations like these. The ongoing partners are the ones who are taking the risk - so it's entirely appropriate that if a windfall comes in, it is for the ongoing partners to keep.

Of course, it does depend on what the partnership deed says, and VWV would be happy to check this for you if the question arises in your case.

For more information on seniority payments, or if you require legal advice in relation to partnership deeds, please contact Oliver Pool in our Healthcare team on 0117 314 5429, or complete the form below.

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