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Contract issues in a changing climate

27 March 2009

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BA(Hons) PgDip(Law)


Alison is a solicitor with Lockharts Solicitors, a niche firm specialising in legal services to the healthcare professions. Alison works in the NHS and Commercial Team, providing advice on employment issues, practice mergers and acquisitions, collaboration between practices, tendering, GP retirement and succession arrangements, and  corporate structures (including formation of specialist health care provider companies and LLPs)

The law relating to staff employment contracts in general practice is in most respects the same as in any other sector. Any employment contract should ideally be in writing, although the absence of a written contract does not mean that there is no contract.

There is, in fact, no legal obligation to have a written employment contract, although the employer is obliged to provide a written statement of terms within two months of an employee commencing work (see Box 1 for a summary of what should be included in the written particulars of employment) and to confirm in writing any changes to these terms.


Of course, a written contract is advisable in order to avoid misunderstandings and disputes about terms. A written employment contract may include the statutory particulars but is also likely to include additional terms. Even when there is an employment contract, subsequent events may alter its terms. For example, the parties may expressly agree changes in the contract, eg, to working hours or remuneration.

Changes in the contract may also be implied. For example, if there is a change in the law (such as to the minimum entitlement to annual leave or maternity leave), the change will be implied into the employment contract if the old contract is inconsistent with the new law.

GMS model terms for salaried GPs
If General Medical Service (GMS) practices employ salaried GPs, they must do so on terms no less favourable than the British Medical Association’s (BMA) model terms and conditions (see Resources). These model terms set out minimum requirements for pay, leave, and other key terms of employment.

Practices do not necessarily have to employ GPs on terms that are identical to the model terms, but overall the terms should be “no less favourable”. GMS practices should be aware that a contract could be challenged on the basis that it is less favourable than the model terms.

Unless their contract with the primary care trust (PCT) states otherwise, Personal Medical Service (PMS) practices are not obliged to comply with the model terms when employing salaried GPs. The BMA recommends, however, that practices endeavour to offer terms that are broadly in line with the GMS model terms. Failure to do so could result in recruitment and retention difficulties.

Agenda for Change (AfC)
AfC came into force in December 2004 and governs the pay, terms and conditions for NHS staff. It replaces the Whitley Council terms and conditions previously in force. A4C applies to all staff employed directly by the NHS. It also applies to some general practices – for example, if the practice’s contract with the PCT states that AfC will apply to staff terms and conditions or if a staff member’s contract states that AfC applies to their employment contract.

AfC terms and conditions are generally considered to be quite generous to employees and many practices choose not to offer these terms.

Changing terms
An employment contract can be altered only if the
contract itself authorises the change, or with the agreement of the parties.

Some employment contracts will include a term that gives the employer the right to alter the terms of the contract, either generally or in relation to specific matters. However, even in the case of a general term permitting the employer to make changes, if the change is challenged, tribunals will usually interpret the clause restrictively. Changes should be minor and reasonable and should not be detrimental to the employee.

This may present problems in general practice, particularly in the current climate. For example, where practices agree to provide extended access, they may need staff to work different or longer hours but existing staff may be unwilling to change their hours.

If the extended access results in additional staffing requirements, it may be possible to fulfil these by recruiting extra staff to work during the extended hours. However, where the practice’s overall staffing requirements remain the same, this may not be possible.

With resource constraints, practices that have previously included AfC in their staff contracts voluntarily may feel that they are unable to continue to offer these terms. It may be possible to recruit new staff on less favourable terms, but a “two-tier” system of terms and conditions can cause resentment among the staff and the practice’s economic position may not permit continuation of enhanced terms
for any of the staff.

In this situation, the practice may want to try and change existing contracts so that AfC no longer applies. However, this is by no means straightforward.

In these and similar situations, the ideal position is to be able to agree changes with the staff members concerned and to negotiate amendments to the employment contracts. Changes can be agreed verbally but should be confirmed in writing, especially where the changes relate to remuneration. It is important to avoid putting pressure on employees in order to avoid any possibility of them arguing that they only agreed to the changes under duress.

Problems arise where staff members do not expressly agree to the proposed changes. The practice may then need to consider imposing the required changes and rely on the employee’s conduct to imply the change into the contract.

If the employee continues to work under the new terms without protest, this is likely to be implied as acceptance of the change. The problem with this approach is that if the employee’s agreement cannot be implied, the imposed change is contrary to the terms of the contract.

An employee could:

  • Bring a claim for breach of contract.
  • Resign in response to the imposed change.
  • Claim they have been constructively dismissed and then claim wrongful and/or unfair dismissal.

Practices will also need to be careful that any imposed changes do not adversely affect a particular group within the workforce. This could lead to a claim of discrimination.

Another method of changing terms of employment is to dismiss staff and re-employ them on new terms. This carries the risk that staff will bring claims for wrongful dismissal unless the appropriate notice is given or, if permitted under the contract, payment in lieu of notice made.

More seriously, there may be claims of unfair dismissal. In order to defend such claims, the employer must demonstrate that there is a potentially fair reason for any dismissal and that it acted reasonably. Practices taking this course of action will therefore need to ensure that the changes are absolutely necessary and follow a fair procedure.

As a minimum, the statutory dismissal and disciplinary procedure must be followed, as failure to do this will result in any dismissal being automatically unfair.

Contract issues in practice mergers and takeovers
When two or more practices merge, or if a practice takes over another practice, the Transfer of Undertakings (Protection of Employment) Regulations 2006 (“TUPE Regulations”) are likely to apply. This means the employment contracts of any staff employed by the practices that are merging or being taken over will transfer automatically to the new practice.

The TUPE Regulations are designed to protect employees affected by the transfer of a business. They provide that the terms and conditions of employment of staff being transferred cannot be altered for reasons connected with the transfer unless there are “economic, technical or organisational reasons” necessitating a change in the workforce (see Resources).

Changes in terms that are entirely positive for the transferring staff may be permissible. However, any changes which are not entirely positive for the transferring staff are void, even if the staff members themselves agree to them. This effectively means that terms and conditions can only be changed if there is a redundancy situation.

The law as it stands means that employers cannot harmonise the terms of transferring staff with those of other staff if this means making any changes not entirely positive to the terms of the transferring staff. This could be a problem for practices acquiring new staff who are on better terms and conditions than their existing staff.

Acting reasonably
Whatever practices do in respect of staff contracts, it is important to ensure that there are objectively justifiable reasons, and that a fair and transparent procedure is followed. This will help to avoid grievances and claims. It is also important to keep a written record of events for evidential purposes.

GMS model contract