Practical Law

Our third and final blog on the Academies Bill covers the legal issues that schools, considering applying for Academy status, will have to consider.  Some 900 outstanding schools have expressed an interest in applying for Academy status and the government hopes that a significant number of new Academies will be  established by September 2010.  However, given the myriad of legal issues for schools to consider before taking a decision to convert to Academy status, the government’s hope is unlikely to be realised, particularly given that the Department for Education’s (DfE) guidance to governing bodies states that any applications for an Academy order to take effect in September 2010 must be submitted by 30 June 2010, the conversion process is likely to take a minimum of three months and the Bill is unlikely to be in force before August 2010. 

A school’s governing body will have new responsibilities as it will be responsible for establishing the Academy Trust, a company limited by guarantee (see Practice note, Companies limited by guarantee), which enters into  a funding agreement with the Secretary of State for the running of the Academy and will have control over the land and other assets.  The management of the Academy will be delegated to the governing body, appointed by the Academy Trust. Their key responsibilities will be ensuring the quality of education provision, challenging and monitoring the Academy’s performance, managing the finances and property and employing staff. For more information on provisions concerning charitable status in the Academies Bill, see Legal update, Academies Bill to make qualifying Academies exempt charities.

Some of the key legal issues for schools are as follows:

• There is no requirement for a local authority to approve a school’s conversion since all that is required is for the governing body to pass a resolution. 
• If the Bill is enacted, as currently drafted, there will no longer be a requirement on the Secretary of State to consult local authorities before entering into an Academy agreement. This will mean that the process for making Academy orders is almost devoid of any obligation to consult other than in relation to a foundation school where the governors will have to consult the foundation and obtain the consent of the school trustees.
• Although under the Bill there is no legal requirement for a school to carry out a statutory consultation, a school may discuss its intention to convert to an Academy with parents and students to ensure they understand the proposed change.
• Although the Bill does not expressly provide for consultation, common law may impose an obligation to consult given the long-established principle that the common law will supplement a statutory procedure in order to satisfy the requirements of fairness.  Clearly it may be arguable, given the potential impact of an Academy order on a local authority, pupils and parents, that fairness requires that such bodies and persons are consulted before an order is made.
• In relation to existing school staff, the current employer of the staff (whether that is the local authority or the governing body depending on the type of school) will need to conduct a TUPE consultation with all staff (both teaching and non-teaching) and the unions as part of the staff transfer process. It is essential that both the school and the local authority are aware of each other’s obligations under the TUPE regulations in relation to those staff who will transfer from the authority to the Academy Trust. Although no minimum period for statutory consultation is prescribed under TUPE, sufficient time must be given for staff to consider the proposals and for agreement to be reached.  Clearly those schools who wish to convert to Academies by September 2010, and who have submitted their formal request before 30 June 2010, will need to start the relevant consultation process as soon as possible, which may be complicated by the fact that the school term is coming to an end.  For more information on the key issues arising from TUPE, see Practice note, TUPE: overview.
• Given that staff are entitled to transfer from a local authority maintained school to a new Academy on the same employment terms and conditions, any subsequent change to a teacher’s pay or conditions of employment after the transfer has gone ahead and the Academy has opened will require the Academy Trust, once established, to consult with staff and their union representatives.
• In relation to teachers’ pensions, the Academy Trust will need to register with the LGPS and the independent Teachers’ Pensions Scheme (TPS) since it is the trust that, as the employer, will have responsibility for administering the pension scheme.

What is apparent is that the employment and pensions issues are likely to be the most difficult to resolve and, given the government’s hope that some schools will become Academies within a very short space of time, local authorities should start now to give careful consideration to the issues in order to protect their position and avoid being pressurised into negotiations that may be detrimental to them. Consideration should be given to:

• Whether indemnity protection should be obtained in relation to the proposals affecting staff.  Although local authorities may have previously indemnified individual Academies for pre-transfer liabilities, because of the potential scale of the number of schools converting it may be sensible for local authorities to give limited, or no, protection in relation to transferring staff (see Standard clause, Standard local authority TUPE and pension clauses: clause 2.2).
• Apportioning risks and liabilities in relation to some categories of staff in a transfer agreement or a service level agreement where the local authority supplies cleaning or catering staff to an Academy and the arrangement ceases a TUPE transfer may take place. Schools need to consider whether they need to terminate any contracts for services being provided by the local authority if they are to achieve Academy status  by September 2010.
• Pensions issues, particularly in relation to transferring obligations for past service deficits in the LGPS or the TPS and to imposing additional pension obligations on any onward transfer to ensure that the pension provisions of those staff whose services may subsequently be outsourced by an Academy are not reduced. For more information on an Academy Trust’s obligation to provide comparable pension benefits, see Practice note, Academies: negotiating the transfer agreement between the Academy Trust and Local Authority: Employment and pensions: Transfer of Undertakings (Protection of Employment) Regulations 2006.