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Ask the experts: How should we divide up our seniority allowance following a practice merger?

Jenny Stone provides advice on allocating seniority income.

QUESTION: Two years ago, my husband and I merged our two-GP PMS practice with a neighbouring one-partner practice, the GP’s other two partners having recently retired. Before the merger, we had meetings with the (then) PCT about merging after terminating one of the contracts and our PMS contract was terminated accordingly.

Our two-partner practice's seniority allowance was £11,286 at this time. The other practice, formerly three-partner but with only one partner at the time of the merger, received a seniority allowance of approximately £22,835. After the merger, the combined seniority allowance agreed was £22,835.

My husband retired on 31 March 2013 and the seniority allocated to the two of us was £11,286 (as my husband has 34 years reckonable service and I have 30 years) with the remainder of the £22,835 allocated to the other partner whose reckonable NHS service was not more than eight years in total. We estimate average income for 2012/13 to be comfortably above £130,000 for myself and the partner with eight years’ service and my husband would probably satisfy the two-thirds of average income rule.

For the year 2013/14 there are only two partners as we agreed to employ salaried GPs to cover the workload rather than recruiting a partner to replace my husband.

Finalising the accounts for 2013/14, I think the £11,286 ought to be allocated to me and the remainder of the £22,835 allocated to the partner with eight years’ service. I retired from general practice on 3 April 2014. Even though this may not satisfy the criteria for the seniority entitlement of the two of us in the 2013/14 accounts, I believe this is the fairest way of allocating this payment

I have tried to gain clarification from NHS England querying whether or not we would be asked to pay back the money in future, if it was felt we didn't satisfy the criteria for the seniority payments. We would hope not, because the PCT was party to this agreement in the first place, but we want to double-check and have yet to receive a reply from NHS England.

I am not happy for the seniority allowance to be treated as a profit-sharing arrangement.

ANSWER: Normally, for PMS practices, if the seniority is based on an historic amount and not paid on the partners’ actual number of years of service, the partners would agree to allocate an amount equivalent to their seniority entitlement for their actual years' service.

If the historic amount in the baseline is more than the amount allocated, this would be left as partnership profits and shared in profit-sharing ratios.

As your husband left the partnership on 3 March 2013, the fairest way to deal with the seniority income is to allocate each of you an amount equal to the number of years' service. If you have 30 years’ service, your seniority should be £8,692 and if your GP partner has eight years, his seniority should be £753. This means that, of the £22,835 that is paid in your baseline for seniority, £9,445 will be allocated to the two of you individually and the balance will be left as partnership profits and split in profit shares.

How you allocate the seniority in your practice is up to you as long as it is agreed with all partners.

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