Staff Liabilities on Conversion to Academy Status

Mon, 09 Jul 2012

By Adrienne Morgan
Education law and employment law sometimes combine in an unholy alliance to throw up some difficult issues for lawyers. Nowhere is this more true than with the law relating to academies and staff transfers. Arguments are surfacing that liabilities arising from the contracts of employment of employees of the previous maintained school who then work for the new academy do not transfer to the new academy but are the liability of the local authority. 
 
Similar arguments are being put forward in fields other than employment, such as claims for disability discrimination brought on behalf of pupils in SENDISTs e.g. reasonable adjustments for exam arrangements. Academies are arguing that they have no responsibility for any acts of their predecessor maintained schools, and that they are a new legal entity with no responsibility for what has gone before.
 
The received wisdom for employees of maintained schools was that there would be a TUPE transfer on the creation of the academy and rights and liabilities would be transferred under TUPE but this may not always be the case. What is the position on the creation of an academy, when do liabilities transfer to the new school and when do they revert to the poor old Local Authority?
 
Is the Academy a new entity?
 
S. 6(2) of the Academies Act 2010 reads as follows :-
 
“(2) The local authority must cease to maintain the school on the date (“the conversion date”) on which the school or a school that replaces it, opens as an academy (“the Academy”)”
 
From this section it seems that the school may continue as the same school even if it becomes an academy. It may be replaced by another school or continue.
 
The same terms are used in s. 4 (3) of the 2010 Act which reads that “a maintained school is ‘converted into’ an Academy if Academy arrangements are entered into in relation to the school or the school that replaces it”
 
If the school continues but as an academy then there must be an argument liabilities remain with the school and this will be the case not only for employment law but for all kinds of other claims .So the first question that a court or tribunal should ask itself is whether the school has continued and become an academy or whether it has been replaced by a new school. There is no indication in the legislation, as far as I am aware, as to the circumstances in which a school will be regarded as not having been replaced. We are firstly thrown back to the existing legislation as to whether a school has been discontinued and whether a governing body has been dissolved.
 
Does the School Continue?
 
Discontinuance has been the process for closing a school under the education legislation for many years. This involves a lengthy period of consultation. Clearly a school can be discontinued when it becomes an academy. Among the definitions for “discontinuance date” found under the Education Act 2002 para 5 Schedule 1 is the date on which a local authority is required to cease to maintain the school under s. 6(2) of the Academies Act 2010. 
 
This seems to imply that there is a discontinuance when the local authority ceases to maintain a school but the legislation appears to fall short of that definition. S.6 of the 2010 Act specifically says that the provisions relating to the procedure for discontinuance and notice of discontinuance will not apply when an Academy order is made. Opinions have been expressed that this supports the argument that the making of an Academy order is not discontinuance under the legislation. But it seems to me that it may equally support the view that this is a discontinuance and special measures have been put into place to streamline procedures for Academy conversions. We await the case law.
 
If there is a discontinuance, then the governing body will be dissolved. What has happened to the governing body will indicate whether the school has continued or whether it has been replaced by a new school.
In all cases it will be a matter of fact and degree.
 
Staff transfers to a new school
 
S. 8(2) of the Education Act 2011 provides that the Secretary of state may make a transfer scheme which provides for the transfer of staff rights and liabilities of staff from the local authority or the governing body to the Academy. Cleaning and catering contracts may be directly transferred under the provision without the need for novation. In any dispute about pre-transfer liabilities the detail of any existing scheme will be an essential part of discovery.
 
Even if staff contracts are not transferred or if they have been frustrated if the maintained school has ceased to exist, all is still not lost for employees, as in many cases where the circumstances come within the legislation staff will transfer under the Transfer of Undertakings (Protection of Employment) Regulations 2006 [TUPE]. There may be a transfer of an undertaking and/or a service provision change. It may well be that the commercial transfer agreement to the new academy will expressly say that TUPE applies and this is so in the model agreements produced. But there will be situations where it will be argued that TUPE does not apply , for example where a new Free School is set up. This is not the place to set out the detailed and complex provisions of TUPE regulations case law but there will be situations where tribunals will have to apply these, to decide where liabilities lie, the applicable contractual terms, and in situations where the new Academy wishes to change terms and conditions of employment.
 
The Default Position
 
If none of the above applies then where do pre-transfer liabilities fall? The answer appears to lie in paragraph 5 (2) (a) (iv) Schedule 1 of the Education Act 2002 which reads that liabilities for governing bodies lie with the local authority who maintained the school or such person concerned with the running of the Academy as the Secretary of State directs before the conversion date . It therefore seems that local authorities may well be picking up the bills.

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