Blog

1. Introduction

Retirement from a GP partnership is an inevitability for all GP Partners, and it is a legally sensitive event for both the outgoing partner and the continuing partners. Without a properly drafted deed of retirement, your Partnership may be exposed to unnecessary risk, particularly where there is no partnership agreement in place (or where an existing partnership agreement is outdated).

This article outlines the importance of putting a deed of retirement in place in the event of a partner retirement.

2. Where there is no Partnership Agreement in place

Where partners have not entered into a written Partnership Agreement, the partnership will be governed by the Partnership Act 1890 (Act). This is a situation that is best avoided due to the unfavourable and outdated provisions of this Act (e.g. automatic dissolution whenever a Partner retires, which may put your GMS Contract in jeopardy. In the absence of a partnership agreement that specifically addresses retirement, a deed of retirement is vital for the following two key reasons:

• Preventing Dissolution:

Under the 1890 Act, the retirement of any partner causes a dissolution of the partnership, unless the partners have expressly agreed otherwise (which is one of the primary of the functions of a Partnership Agreement).

A deed of retirement should include clear continuation wording which ensures that the partnership carries on following the retirement and this issue of automatic dissolution is circumvented.

• Formalising and agreeing (in writing) the retirement process:

In the absence of a partnership agreement there is no agreed upon framework/process for how a partner may retire. A deed of retirement fills his gap by setting out matters such as:

• • the formal retirement date;
  • notice periods;
  • the payment of the outgoing partner’s share of capital and undrawn profits etc.;
  • restrictions on the outgoing partner;
  • indemnity provisions;
  • the handover of clinical/administrative responsibilities;
  • premises related matters (more information on this point below).

In summary, in the absence of a partnership agreement, a deed of retirement prevents the automatic dissolution of the partnership, and it provides a formalised process that is legally binding on both the outgoing and continuing partners.

3. Where there is a Partnership Agreement in place

Even where a Partnership Agreement exists, a Deed of Retirement may still be required , particularly when the partnership agreement is out of date, incomplete or does not reflect the desired retirement process/arrangement. There are two ways a Deed of Retirement can be used:

• Creating a bespoke retirement process:

In the event that the retirement process set out in the partnership agreement is unsuitable for a specific retirement for whatever reason, a deed of retirement can be used to set out a bespoke retirement process.

• Reinforcing or updating agreement retirement provisions:

In the event that a partner retires under an outdated partnership agreement, a deed of retirement can be used to overrule the outdated retirement provisions within the partnership agreement by introducing modern retirement provisions.

4. Premises related considerations

Issues and agreement surrounding the Partnership’s premises are often one of the most significant matters when a partner retires. In the absence of a partnership agreement, a deed of retirement is vital for governing matters relating to the premises, and even with a partnership agreement a deed of retirement can still be essential for the following key reasons:

• Release from a lease:

For leasehold premises, a Partner who is named on the lease as a tenant may, following their retirement, remain liable under the lease for rent, service charges, repair/maintenance costs, and breaches of the lease. A deed of retirement can be used to avoid this issue via either an indemnity from the continuing partners, or via a provision that obliges both the outgoing and continuing partners to ensure that the outgoing partner is removed from the lease.

• Freehold share ownership and buy-out arrangements:

It is common practice for a partnership to ensure that a freehold premises is owned exclusively by Partners, and an effective way of achieving this is to use a deed of retirement to bind the outgoing property owning partner to sell their property share back to the continuing partnership or incoming partner. The deed can also specify bespoke buy-out provisions, such as valuation method, payment terms, and payment timeframe.

In Summary

A well-drafted Deed of Retirement is key to ensuring a smooth, low-risk transition when a GP partner retires. It avoids unintentional dissolution, formalises the retirement process, provides clarity on financial arrangements and ensures that all premises-related matters are properly agreed.

If your practice is preparing for a partner to retire, our specialist solicitors can provide clear advice and prepare a bespoke deed of retirement that protects both the outgoing partner and the continuing partners.

To discuss how we can support your practice, please contact BMA Law at https://bmalaw.co.uk/contact/  or call us on 0300 123 2014.

Offer:

Special Offer for BMA Members: We are currently providing a limited-time fixed fee offer until 31^st January 2026 for the first draft of a Deed of Retirement, ranging from £1,500 to £1,800 plus VAT depending on whether your practice has a Partnership Agreement in place.

Contact us today for a free consultation to discuss whether your practice requires a Deed of Retirement and what key issues it should address. We can assist you through the process and ensure your partnership is fully protected from any retirement related issues.