Guidance Understanding the implications arising from the appointment of shared School Business Managers

Transcription

1 Guidance Understanding the implications arising from the appointment of shared School Business Managers May

2 Contents Page 1. Welcome and introduction 3 2. Where to start? 4 Step 1 : Who will be the employer or contracting party? 4-6 Step 2: What model suits your cluster best? 6 Step 3: Are there any particular issues you need to consider? 6-7 Step 4: What documentation do you need to put in place? 7 3. Next steps About VWV 8 Appendix 1: Options where the schools all share one employer 9-10 Appendix 2: Options where there are different employers across the group Appendix 3a: Questions to consider when employing an SBM 16 Appendix 3b: Questions to consider when contracting with an SBM 16 Appendix 4: Procurement considerations 17 2

3 1. Welcome and Introduction Welcome to this guidance which has been prepared by Veale Wasbrough Vizards. This guidance has been prepared with the following objectives: to raise a number of key questions for you to consider when setting up the contractual arrangements for your joint school business manager (SBM) to provide advice on the impact of your current form of collaboration (if any) on those proposed arrangements to highlight some of the legal pitfalls to avoid when setting up arrangements of this type and to consider the documentation you would need to put in place. It will be important for schools to think carefully about the implications of any appointment and what it means for them in terms of securing the support which they require, but also ensuring that the any liabilities are allocated appropriately amongst the schools, that the risks are managed and that the arrangements are legally compliant. For further details on different governance models available for school collaboration please refer to our separate toolkit called 'Governance models for school collaboration'. If you have any questions about the contents of this toolkit or would like to arrange a free consultation to discuss the needs of your group, please contact Alice Reeve on or at areeve@vwv.co.uk or Chloe Brunton on or at cbrunton@vwv.co.uk. 3

4 2. Where to start? In any situation where schools are proposing to engage an individual to work across their schools, they will need to consider the following legal questions: Will the individual be an employee or a consultant providing services under a contract? If the former, who will be the employer? Who will be responsible for employment costs? Who will be responsible for liabilities in the event of redundancy, unfair dismissal, discrimination or other claims? How will the pension be managed? Will the employer have admitted body status? Who will have line management responsibility including for performance management and other employment processes? Are there any VAT issues to consider? There are various different ways in which schools can jointly share the services of a SBM or other skilled individual. The most appropriate arrangement will depend on the nature of the group working together and the particular circumstances. We have set out below the different options, highlighted the key features, legal pitfalls and the documentation required for each. We have then looked at some of the contractual terms that schools may wish to consider depending on the arrangement adopted. Please note that this is intended to be for general guidance only and does not replace the need to take specific legal advice. Step 1: Who will be the employer or the contracting party? Staff employed to work in the schools across the group might have different employers depending on the category of the schools. The following table confirms who will be the general employer for the relevant category of school: Category of school Community school Foundation school Voluntary aided Voluntary controlled Pupil referral unit Employer and contracting party Local authority Governing body Governing body Local authority Local authority 4

5 Academy Academy Trust (which could be Multi Academy Trust) A common employer across the schools It might be that the employer for all of the schools in the group is the same body. This would be the case if, for example: all of the schools are community or voluntary controlled schools and so the employer is the local authority (assuming that they are all in the same local authority) the schools are foundation / voluntary aided schools and are governed by a federated governing body or the schools are academies operated within one multi academy trust. Where there is a common employer (which for ease is the terminology we have used in the examples) they will be the organisation that contracts with the SBM either under an employment contract or consultancy arrangement. The arrangements should be fairly simple. There are two options available, which we have set out as options A and B See Appendix 1. Different employers across the schools It is perhaps quite likely that there will be different employers of staff across the schools in the group. This would be the case in all of the following examples (which is not an exhaustive list): a mixture of community/voluntary controlled and foundation or voluntary aided schools a mixture of voluntary controlled and voluntary aided schools a mixture of academies and community, foundation, voluntary controlled or voluntary aided schools separate academies operated otherwise than in a multi academy trust. It is essential to identify the organisation that will be the employer of the SBM or the contracting party where services are provided on a consultancy arrangement. This may be one of the "employers" (i.e. governing body, academy trust, LA) who takes the "lead" by employing or engaging the services of the SBM and then provides services to the others in the cluster. This is the arrangement in options C and G See Appendix 2. 5

6 For ease in these examples we have referred to this organisation as the 'lead school employer'. There are other options where each of the different "employers" will enter into the contract of employment with the SBM and so will each separately employ the SBM. Option E See Appendix 2 or alternatively separately enter into consultancy arrangements. Option F See Appendix 2. A less common arrangement but one which may suit particular situations where a SBM role is indivisible or where all the schools in the cluster are closely linked will be where all the different "employers" in the cluster jointly employ the SBM under one contract. Option D See Appendix 2. Finally, you may decide to establish a new entity or use an existing one, such as an umbrella trust or joint venture vehicle which will employ or engage the SBM. Option H See Appendix 2. Step 2: What model suits your cluster best? There are various different ways in which schools can jointly share the services of a School Business Manager (SBM) or other skilled individual. The most appropriate arrangement will depend on the nature of the group working together and the particular circumstances. We have set out in Appendices 1 and 2 the different options depending on the nature of your cluster and whether there is a common employer or multiple ones, highlighted the key features of each, legal pitfalls and the documentation required for each. It might be that you have a clear view as to whether or not your SBM will be employed (under whichever suitable model) and/ or engaged under a contract for services. If so, you might like to give consideration to the questions set out in Appendix 3a and 3b as appropriate. Appendix 4 also serves as a signpost for you on some of the procurement issues to be aware if you are proposing to set up a contract for services. Step 3: Are there any specific issues you need to consider? Sharing an SBM gives rise to legal risks which the schools all need to be aware of. The nature of the risk and how this can be managed will depend on the arrangement adopted. Issues which commonly arise may include; Employment rights: Employees have certain statutory rights, including the right not be unfairly dismissed after two years' service, payments on redundancy, statutory sick and 6

7 maternity pay etc. Schools will need to be aware of these and consider how any associated costs may be met. Employment liabilities: In addition to the costs of salary, pension and other benefits schools will need to consider how to manage any potential liabilities (including legal costs and compensation payments) should an employee bring an Employment Tribunal claim for example, for discrimination or harassment arising during their employment or unfair or constructive unfair dismissal. Self-employed status: A SBM working as a consultant under a contract for services will not have statutory employment rights and will be responsible for paying their own tax and NI. Whilst this arrangement can seem attractive it is essential to ensure it stands up to scrutiny and is not in fact an employment arrangement. Determining factors include the requirement for personal service by the SBM, control exercised by the employer and mutual obligations. VAT: Where an arrangement involves the provision of services it may attract VAT and specific accountancy advice should be taken. Pension: Where a SBM is employed they will be entitled to have access to the Local Government Pension Scheme. Consideration will need to be given to who is the scheme employer for these purposes. Procurement: If a school is proposing to enter into a contract for the SBM services (rather than grant an employment contract) it will be necessary to consider the procurement issues See Appendix 4. Step 4: What contractual documentation should you put in place? There are three different types of contract which may be relevant and it is important to understand the differences and ensure the appropriate one is used for the arrangement adopted. The documentation needed for each arrangement is set out in the different options in Appendices 1 and 2. Contract of Employment: Where the SBM is employed. This contract must contain specific legally required information. For questions to consider when employing an SBM See Appendix 3a. Contract for Services/Consultancy: Where the SBM is engaged as a self-employed consultant. For questions to consider when contracting with an SBM See Appendix 3b. Agreement between the schools: In many of the arrangements it may also be necessary to have a contract between the different "employer schools" to apportion costs and liabilities. 7

8 3. Next Steps We hope this is a helpful tool in introducing some of the options and issues which need to be considered when sharing staff across a number of schools. Veale Wasbrough Vizards offer model contracts to meet the needs of schools wanting to share services and we would be happy to assist groups with putting appropriate arrangements in place. If you have any questions about the contents of this toolkit or would like to arrange a free consultation to discuss the needs of your group, please do get in touch. 4. About Veale Wasbrough Vizards and the authors VWV is a full service firm which means we can advise you on any issue you face, including procurement and shared services, commercial contracts (including catering, IT, school uniforms supplies), governance, HR & employment, PFI, property & construction, pupils: admissions, discipline & exclusions, safeguarding and safer recruitment, SEN and equality, Data Protection and Freedom of Information, and regulatory compliance. You have access to our team, wherever you are based in England. Our lawyers speak your language. Please contact us for an initial chat. Alice is a partner in our employment team who specialises in providing support to clients in the education sector, predominantly independent schools and academies. Alice provides a full range of employment law support to schools frequently dealing with sensitive and complex employment issues. These can range from restructuring or redundancy programmes to grievance and capability processes or managing allegations of professional misconduct. Alice also runs training sessions for school leaders to keep them up to date on topics as diverse as equality and handling complaints. In addition, Alice has a track record in academy conversions and has worked with many academies through their conversion and beyond, offering support in the consultation with staff and compliance with TUPE. Alice Reeve can be contacted on or at areeve@vwv.co.uk 8

9 Chloe has advised on the governance of maintained schools and academy trusts since 2005 and therefore has a wealth of education sector knowledge to support you and your school. Chloe has a particular focus on DfE policy, charity and company law, collaborative working and governance models including the establishment and operation of multi academy trusts. Chloe Brunton can be contacted on or at cbrunton@vwv.co.uk. 9

10 Appendix 1 - Options where a common employer across the schools Option A: One employment contract Arrangement Key Features and points to note The common employer employs the SBM Pros: Single contract between the SBM and the common employer. Simple and flexible arrangement. No VAT issues. Cons: Employment rights. The common employer is responsible for any employment liabilities. Documentation needed Employment contract with the common employer with provision for the SBM to work across the various schools. SBM Contract of employment Common Employer Option B: One consultancy agreement Arrangement Key Features and points to note The common employer engages the services of the SBM as a consultant Pros: Single contract. Terminable on notice. No employment rights. Cons: May be difficult to establish genuine self employed status if want to engage a specific individual and exercise control over the way in which they undertake their duties. Would have to consider procurement obligations. Where the central body is the local authority, it might be that the governing bodies of the schools would need to enter into the contracts instead and a different approach 10

11 taken. Documentation needed Consultancy agreement with the common employer SBM Contract for services Common employer 11

12 Appendix 2: Options available where multiple employers across the schools Option C: The lead school employer providing services to the group Arrangement Single employer with secondment or sharing arrangement. One lead school employer would employ the SBM and then provide services to the others in the group. Key features and points to note Pros: Straightforward arrangements for pension and line management responsibilities. Division of cost and liabilities through contractual arrangement with other schools. Cons: May be VAT implications. As this amounts to a contract for services, each school (other than the lead employer school) will need to ensure that it complies with the relevant procurement requirements. This is likely to be the most straightforward arrangement in the majority of cases where the schools do not share the same employer (i.e. where options A and B in section 2 are not available). Documentation needed Employment contract which would require the SBM to undertake duties at other schools as required. Agreement for provision of services between the lead school employer and the other schools in the group. SBM Contract of employment Lead school employer A Contract for services School B School C School D 12

13 Option D: Joint employment contracts Arrangement Key Features and points to note The employee will have a single contract with all of the school employers named jointly as the employer. Pros: Single document with employee. Flexible to spend working time as needed across the Group. No VAT issues. Cons: Potential pension difficulties - who is scheme employer for LGPS? All schools jointly responsible which can create difficulties in the event of disputes. Lack of clarity over line - management and employer responsibilities. Lack of certainty over what happens if one school wishes to terminate the arrangement. This arrangement is really only feasible if role is indivisible, schools part of same corporate group or limited number with strong ties. Documentation needed Employment contract Separate contract between the school employers apportioning liabilities. SBM Contract of employment The school employers jointly for all of the schools Option E: Separate employment contracts Arrangement Key Features and points to note Each school employer would contract separately with the employee for their part of the arrangement. Pros: Each school employer is responsible for their own contract and pension arrangements. 13

14 Cons: Limited flexibility and considerable administration. May be feasible if only 2 or 3 schools and very clear split of time and duties. Documentation needed Separate employment contracts with each school employer SBM Contracts of employment School employer A School employer B School employer C School employer D Option F: Separate consultancy arrangements. Arrangement Key Features and points to note Each school would enter into a contract for services with the SBM. Pros: Each school responsible for their own contractual arrangements Cons: Limited flexibility and considerable administration. Would need to consider procurement obligations and the schools might wish to consider how they could streamline procurement processes. Documentation needed Separate consultancy arrangements between the schools and the SBM. SBM Contracts for services School A School B School C School D 14

15 Option G: Sub-contracting arrangements Arrangement Key Features and points to note As a development of the option above one lead school could contract with the SBM and then sub-contract the services to the others. Pros: One school would take the lead for managing SBM. More flexibility. Cons: Considerable administration. May be difficult to establish that genuinely self employed given control exercised by lead school. May be VAT implications. Lead school and others in the group would have to consider procurement obligations. Documentation needed Consultancy agreement between lead school and SBM which includes providing services to other schools. Contracts for the provision of services between lead school and schools in the group. SBM Lead School A Contract for services Contract for services School B School C School D 15

16 Option H: Establish a joint venture company/ umbrella trust One further option to consider is the establishment of a separate company (which might be in the form of a 'joint venture' company or an umbrella trust which would be responsible for contracting with the SBM. This model is considered further in our separate toolkit called 'models for collaboration'. Arrangement A separate company is established/ identified which will employ the SBM. The schools then separately enter into contracts for services with the company. Key Features and points to note Pros: Ring-fences risk of liabilities (except to the extent provided in the contract for services) Cons: May be VAT implications. As this amounts to a contact for services, each school will need to ensure that it complies with the relevant procurement requirements. Documentation needed Establishment of JV vehicle or umbrella trust. Consultancy agreement between schools in the Group and JV co or umbrella trust. Academy Trusts appoint members/directors of the Trust Umbrella Trust Trust appoints directors of Academy Trusts Academy Trust A Academy Trust B Academy Trust C 16

17 Appendix 3a: Questions to consider when employing an SBM When employing an SBM it will be necessary to put written terms of employment in place which should cover legally required information. Among others, the following issues will need to be addressed in the documentation: Will it be a permanent position or fixed term? What will their specific duties be? What will be their place of work (this may be across a number of schools)? What will be the hours of work? What will their salary be? How will their pension and other benefits be dealt with? What notice provisions are required? What will be the arrangements for disciplinary and grievance processes? Appendix 3b: Questions to consider when contracting with an SBM (or with for, example, a lead school) for services The contract for services will need to Where a single school or MAT provides "services" to others in the Group consideration should be given to; On what terms is the service being made available? What are the payment terms? How long will the contract last for? Will there be a break clause? What happens if the service cannot be provider or there is to be change in how it is to be provided? Who is responsible if something goes wrong? Has the school which is buying the services complied with its own procurement policy? 17

18 Appendix 4: Procuring a contract for services If a school is proposing to enter into a contract for the SBM services (rather than grant an employment contract), it will need to ensure that it considers the following questions: Am I complying with my own procurement policy? If a maintained school, am I complying with the local authority's financial rules and standing orders in purchasing, tendering and contracting matters as well as the scheme for financing schools? If an academy, am I complying with the: - Articles of Association; and - the requirements of the Academy Financial Handbook including, in particular, the restrictions relating to connected parties. Am I complying with the EU public procurement rules? - Broadly, different rules apply depending on the value and the type of contract. High value contracts must be advertised across Europe and there are detailed rules which must be followed around, for example, minimum time periods for bidders to tender. - Each school can procure its own goods works and services but this is unwieldy, time consuming and does not always achieve economies of scale (i.e. bulk discounts). 18