A GMS or PMS contract can terminate automatically, without any decision or discretion on the commissioner’s part, in a limited set of circumstances set out in the contract regulations themselves. These grounds are narrower than many practices assume, and a 2024 High Court judgment significantly clarified one of the most misunderstood triggers: what actually happens to a GMS contract when a partnership dissolves.
This article sets out the legal grounds for automatic and immediate termination, explains the 2024 case that reshaped how partnership changes are treated, and sets out what practices should do to protect contract continuity.
Automatic termination versus commissioner-initiated termination
It is worth being precise about the distinction, because the two are often conflated. Most GMS and PMS contract terminations are not automatic at all: they follow a process of remedial notices, breach notices, and ultimately a termination notice issued by the commissioner, all of which involve an element of judgment and a right of challenge. True automatic termination, where the contract simply ends by operation of the regulations without any separate decision being needed, is reserved for a narrower set of circumstances, principally where the contractor ceases to be capable of holding the contract at all.
We cover the broader breach and remedial process in Are You in Breach of Your GMS or PMS Contract? and the underlying contract types in NHS GP Contracts Explained: GMS, PMS and APMS. This article focuses specifically on the automatic and immediate termination grounds, and the practical steps that reduce the risk of triggering them unintentionally, an area that sits at the heart of our NHS regulatory compliance work for GP practices.
The legal grounds for immediate termination
The grounds on which a commissioner may terminate a GMS contract with immediate effect are set out in Schedule 3, Part 8 of the National Health Service (General Medical Services Contracts) Regulations 2015 (SI 2015/1862), principally paragraphs 65 to 69, 70(4), 70(6) and 71. The equivalent grounds for PMS contracts are set out in Schedule 2, Part 8, paragraphs 52 to 65 of the National Health Service (Personal Medical Services Agreements) Regulations 2015 (SI 2015/1879). Taken together, these cover:
- A breach of the requirement that at least one partner is included on the GP Register and on the medical performers list.
- The contractor having provided false or misleading information when applying for the contract.
- The contractor becoming disqualified, being removed from the medical performers list, being convicted of a relevant criminal offence, becoming bankrupt, or being removed from the office of charity trustee (the full detail is set out in paragraph 67(3) of Schedule 3).
- Unlawful sub-contracting of clinical services.
- Circumstances where patient safety would be at serious risk if the contract were to continue.
- Circumstances where the contractor’s financial position exposes the commissioner to a risk of material financial loss.
- A change in the partnership that threatens delivery of the contract or exposes the commissioner to financial risk.
Where none of these grounds apply, commissioners generally cannot terminate a contract on the spot. Most contractual problems, missed CQC standards, service delivery issues, minor breaches, instead go through the remedial notice process: a written notice setting out the breach and the steps required to fix it, with a minimum of 28 days to comply unless there is a risk to patient safety or material financial loss to the commissioner. Where a breach cannot be remedied because it relates to a specific past event, a breach notice is used instead, requiring the contractor not to repeat it. Repeated or unresolved breaches can eventually lead to a termination notice, but that is a decision taken by the commissioner, not an automatic consequence.
Commissioners also have a middle option, contract sanctions, short of full termination: termination of specified reciprocal obligations, suspension of specified obligations for up to six months, or withholding or deducting money otherwise payable, none of which can affect the delivery of, or payment for, essential services.
What happens when a partnership dissolves: the Bhat case
The most common source of confusion, and litigation, around automatic termination concerns what happens to a GMS contract when a GP partnership dissolves. This was addressed directly by the High Court in Bhat v NHS Litigation Authority [2024] EWHC 375 (Admin), a judgment handed down on 22 February 2024.
The case concerned a GP partnership without a written partnership agreement, a “partnership at will”, where two equity partners served a dissolution notice on a third, salaried partner who was no longer actively involved in the practice. The remaining partners immediately formed a new partnership and continued trading under the same name. The dispute centred on whether that dissolution automatically terminated the underlying GMS contract, since the contract had technically been held by the dissolved partnership.
The High Court held that it did not, in these circumstances. The regulations make clear that a GMS contract is held “with the partnership as it is from time to time constituted”, meaning partners can join and leave without the contract itself coming to an end, provided service delivery continues uninterrupted. The Court drew a distinction between a “general” dissolution, where the underlying business is genuinely wound up, and a “technical” dissolution, where the partnership as a legal construct changes but the practice carries on without interruption. Only the former was found capable of bringing the GMS contract to an end. The Court also confirmed that a partnership change of this kind can happen without the consent of all partners, or of the commissioner, so a partnership dispute does not by itself prevent a technical dissolution from occurring.
This is a significant clarification, but it is not a green light to treat partnership disputes casually. The distinction between a technical and a general dissolution is not defined in statute, only in case law, which means it remains fact-sensitive and open to further litigation as it is tested in future cases. The judgment also highlighted, rather than resolved, an important divergence between GMS and PMS contracts: a GMS contract is generally held by the partnership as constituted from time to time, whereas a PMS contract is personal to the individuals who signed it, meaning the impact of a dissolution on a PMS contract could be treated quite differently.
Practical steps to protect contract continuity
| Risk area | Practical step |
|---|---|
| No written partnership agreement | Put a formal, signed partnership agreement in place setting out clearly how partners may join and leave without dissolving the partnership |
| Property and partnership interests intertwined | Document surgery occupation arrangements separately and clearly, since disputes over premises frequently sit at the heart of partnership breakdowns |
| Two-partner practices | Recognise that a two-person partnership is generally unable to continue as a partnership if one partner leaves, and understand the separate rules that apply to becoming a GMS single-hander |
| Contractor eligibility | Monitor performers list status, disqualification risk, and any circumstances that could trigger the immediate termination grounds under paragraph 67(3) |
| PMS contractors specifically | Keep partnership deeds current given the personal nature of PMS agreements, where the Bhat reasoning may not apply in the same way |
If your practice is facing a genuine partnership dispute or a threatened termination, early advice matters more than almost anywhere else in GP contract law: as events unfold, they create facts about the nature of a partner’s departure that can be very difficult to unwind later. We look at how practices can respond once a dispute or termination notice has actually been received in NHS Contract Disputes: How GP Practices Can Respond, and our dispute resolution team can advise from the first sign of a problem.
What This Means for Your Practice
True automatic termination is rare and narrowly defined, reserved for cases where a contractor is no longer legally capable of holding the contract, or where a genuine, general dissolution of the practice occurs. Most partnership changes, including many dissolutions, do not have this effect provided the practice continues to deliver services without interruption. But the Bhat case shows how quickly an undocumented partnership can turn a straightforward partner departure into a High Court dispute about the survival of the practice’s entire NHS contract. A current, properly drafted partnership agreement remains the single most effective protection available.
We advise GP partnerships on partnership agreements, contract continuity, and disputes over contract termination. If your practice needs its partnership arrangements reviewed, or is facing a live dispute, get in touch with our healthcare team or call us on +44 207 566 1188, or email info@gurvelegal.com.
