Partnership agreements and the ‘Green Socks’ clause

What is it?

A ‘Green Socks’ clause is becoming the norm in partnership agreements for GPs and is also increasingly seen for other professionals. Partnership agreements are being specifically updated to add the clause.

The ‘Green Socks’ clause allows expulsion of a partner for no reason at all provided that all the other partners agree – the clause became known as such as expulsion is possible simply because of the colour of the socks.. The clause is intended to address the potential difficulty of justifying specific grounds for serving notice of expulsion on a partner.

How does it work?

The ‘Green Socks’ clause is intended to encourage balance and equal standing between all the partners, since each partner knows the clause could be enforced against that partner.

Each partner knows that as well as benefiting from the clause, the partner could also potentially suffer from it. It can be a powerful incentive for an errant and difficult partner to conform.

There are of course caveats – the remaining partners would need to have acted in good faith towards that partner without any element of discrimination.

The partnership would be in a much stronger position than relying on specific grounds for expulsion, which would be dependant upon proving such grounds.

Do you need help with your Partnership Agreement?

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