Organisational Structures and the White Paper

1. Organisational Structures and the White Paper Tim Merritt LLB (Hons) British Medical Association

2. Why Federate (or formally re-structure)? • GMS or PMS • Practice Based Commissioning • APMS • Provider Arm • GP Commissioning (White Paper)

3. Different Types of Structure • Company Limited by Shares • Company Limited by Guarantee • Social Enterprise Company (including CIC)

4. Company Limited by Way of Shares • Comprises of shareholders • Requires share capital (could be unpaid) • Shareholders/Directors liability is limited to amount of unpaid share capital • Income by way of directors’ remuneration and/or dividend issue • Ideal vehicle for revenue generation, i.e., profit making • Suitable for NHS pensions

5. Company Limited by Way of Guarantee • Comprises of members rather than shareholders • Guarantee is £1 sterling on winding-up • Suitable for profit and non-profit activities • Best vehicle for membership organisations • Not suitable for NHS pensions

6. Social Enterprise • Not for profit • Of benefit to local community BUT • Slightly more expensive than setting up limited company; • Asset Lock; • Capped profits; • No special tax status or tax breaks; and • Less flexible in its objectives • Income not pensionable under the NHS Pension Scheme (beware offers of lump sums by PCTs)

7. Articles of Association • Articles of Association – managing the company • Think about: • Board – how are they elected? • Quorum and voting • Disqualification criteria • AGMs • Conflict of Interest • What does the company want to do? (used to be in Memorandum of Association but now can be included in Articles of Association)

8. Practical Considerations • Registered office • Funding • Bank accounts and signatories • Disclaimers on websites/email • Letterheads • Staffing

9. Pensions • Company Limited by Way of Shares- only viable structure for pension purposes • Company Limited by Way of Guarantee- limited pension access (e.g. OOH) • Social Enterprise- no access to NHS Pension Scheme but staff could via Closed Direction • LLP- non-starter

10. Pensions Continued • Community Services Contracts- if already a GMS/PMS Provider, DH more relaxed about access BUT any new organisation will fail but may apply for Closed Direction • Sub-Contracting Work- no access because you are no longer the providing entity

11. TAX and VAT • Check with your accountant with regard to Tax liability • Check your employees and employment re VAT

12. TUPE • Transfer of Undertakings (Protection of Employment) Regulations 2006 • Protects Staff on a “Business Transfer” • “Business Transfer” • Sale of Business/part of it • Change of Service Provider • Transfer of a Lease • Restructure of Business

13. EFFECT • Protects Staff • Staff Automatically Transfer to New Entity • New Entity Inherits Staff, their Contracts of Employment and all rights/liabilities • Continuity Service – Preserved • Statutory/Contractual Claims • Personal Injury Claims

14. Dismissals & Varying Terms/Conditions • Protects Staff • Dismissal for reason connected with TUPE = Automatically unfair • Only Defence: Economic, Technical, Organisational (ETO) Reason • Can’t Change Terms and Conditions: Unless ETO reason

15. Contract Awards • Usually via a successful bidding and tendering process • Watch out for the small print in the ITT • Bring in advisers at an early stage • Note: you are bound by what you say in the ITT

16. The White Paper and Commissioning • See the current GPC guidance • Beware of organisations telling you what to do or what will happen • What are consortia? - the commissioning of secondary healthcare will devolve to GP consortia - public bodies regulated by statute

17. The White Paper and Commissioning Continued - Commissioning will be aimed at “any willing provider” including GP providers - Every GP practice will have to become a member of a consortium - All consortium will be regulated and controlled by The NHS Commissioning Board - The NHS Board will hold all core primary care contracts (GMS/PMS etc) – not the consortia

18. What Can GPs Do Now? • Watch out for more documentation from the GPC • Be familiar with bidding/tendering and basic contractual issues • Do not set up as consortia now – the form of structures is not yet clear

19. BMA Law • Backing and expertise of the BMA • More cost effective than law firms - no ‘never-ending’ hourly rates • Fixed price package – more than just incorporation • An enhanced membership benefit – surplus goes straight back to membership services • No fees up front • Unlimited calls/meetings • Free scoping meetings • Insurance package

20. BMA LAW: Full range of corporate/commercial services • Setting up and advising on corporate structures • Employment law related to TUPE and corporate structures and drafting employment contracts • Commercial contract review • Bidding & Tendering advice • Negotiation and advice on larger medical contracts such as Polyclinics or establishment of Walk in Health Centres • Financial and VAT advice via external tax advisors • Seminars and workshops on: Directors Duties and Company Law Reform; Employment Law; Partnership Disputes & Splits; Medical Partnership Agreements; Libel & its consequences; Negotiation, Local Disputes and Basic Contract Law; Competition Law; Structures for LMCs • Contact – jmaw@bma.org.uk / 0207 383 6976