March 2015

Information The Academies Act 2010

The Academies Act 2010  any other matters which the school may rely on to demonstrate that it is The new academies regime aims to give performing well. selected schools the opportunity to innovate and to raise standards by giving them The (the DfE) will greater freedom to control the way in which use any available data on pupil attainment their affairs are managed. In particular, and progress when assessing schools academies: which do not collect the data outlined above, including infant schools.  are given independence from local authority control; A converting school's likely needs  are given the freedom to set their own At the heart of the conversion process is the pay and conditions for staff; incorporation by the school's governing  are not required to follow the National body of an trust (the Academy Curriculum; Trust). The Academy Trust is to be a company limited by guarantee (i.e., without  are able to set the length of the school a share capital) which has charitable day and term; and objectives. The Academy Trust will have  are given control of admissions (in overall responsibility for the running of the compliance with existing law). academy and will have control over the land and other assets of the academy. The day- At present, schools which are 'performing to-day management of the affairs of the well' are eligible to convert into academies. academy will be delegated by the Academy All other schools can also apply to convert Trust to the academy's governors. provided that they are in formal partnership with a school that is performing well. It will be for the members of the existing governing body of the school to decide and Whether or not a is to agree, in discussion with the Secretary of performing well will be assessed by State for Education (the SoSE), who the reference to the following matters: members and directors (or 'governors') of the Academy Trust should be (though Head Office  the school's three year exam result membership and governorship are not Heathervale House 2-4 Vale Avenue trajectory (results should be stable or mutually exclusive). Tunbridge Wells improving); TN1 1DJ The incorporation of the Academy Trust will T 01892 510000  the school's exam performance relative involve drafting and finalising its F 01892 540170 to local and national standards; memorandum and articles of association (its Thames Gateway  the school's latest Ofsted report (with a Constitutional Documents). The articles of Corinthian House association will form a contract between the Galleon Boulevard specific focus on capacity to improve, Crossways Business Park outcomes and leadership and members of the Academy Trust and will Dartford management); regulate the conduct of such members' Kent DA2 6QE affairs. For example, the articles of T 01322 623700 F 01322 623701 association will govern who can become a governor of the Academy Trust, how

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frequently the governing body of the recurrent expenditure. A conversion grant, Academy Trust is to meet and what, if any, typically in the amount of £25,000, is also remuneration the members or governors of available to converting schools in relation to the Academy Trust can pay to themselves. costs incurred in the conversion process (for example legal expenses and the costs of It is very important that the Constitutional new signage and stationery). The DfE Documents of the Academy Trust are expects that the cumulative effect of such drafted in a manner which ensures that grants will be that schools converting to charitable status is obtained pursuant to academy status will be no worse off section 12 of the Academies Act 2010. financially than under the existing funding regime. As a company, the Academy Trust will be registered with the Registrar of Companies We recommend that formal legal advice be (the Registrar) and will need to comply with obtained in connection with the preparation, the provisions of the Companies Act 2006 negotiation and agreement of the funding (as well as the provisions of the Charities agreement. Act 2006). This means that, among other things, the Academy Trust will need to make Commercial transfer agreement annual returns to the Registrar and produce annual accounts which comply with The commercial transfer agreement will companies legislation (and which will be in a record the terms on which the 'business' of completely different form to the accounts the school will be transferred to the prepared by the school prior to conversion). Academy Trust. It records which of the assets will transfer to the Academy Trust as Funding agreement part of the conversion process (as well as which assets will not). This agreement also In order to obtain funding for the academy, addresses the transfer of information to the the Academy Trust will enter into a funding Academy Trust and includes provisions agreement with the SoSE. The funding relating to the transfer of responsibility for agreement will set out a series of staff pensions (in relation to which, see requirements with which the Academy Trust below). must comply. These requirements relate, among other things, to: The commercial transfer agreement will include a number of provisions which may  the academy's admissions policy; have the effect of imposing liability on the school's governing body. For example, the  compliance with the independent governing body will be expected to give schools standards set out in section 157 warranties (in other words, to confirm the of the ; and accuracy of certain statements which will  the contents of the teaching curriculum. appear in the commercial transfer agreement) to the Academy Trust and will Provided that the Academy Trust complies be expected to make good any loss or with such requirements, the SoSE will damage which the Academy Trust suffers provide the Academy Trust with a number of should such warranties be inaccurate or grants towards the academy's capital and misleading. It follows that the commercial

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transfer agreement should be carefully power to make a scheme for the transfer of prepared so as to limit the potential liability the freehold title of the relevant land and of the school's governing body whilst buildings to the Academy Trust. ensuring that the Academy Trust obtains the benefit of the information, assets and The DfE has indicated that, before it will contracts which it will need in order to give its formal legal approval to the effectively manage the academy's affairs conversion of a school into an academy, it after conversion. will require that there is clarity relating to the arrangements for the occupation by the Land and buildings academy of the relevant land and buildings post-conversion. Voluntary aided/foundation schools Employees The land and buildings occupied by voluntary aided and foundation schools are In circumstances where a school converts owned by the relevant school's governing to an academy, the employment of the staff body. Once the Academy Trust has been of that school will ordinarily transfer to the incorporated, the freehold title such the land Academy Trust pursuant to the Transfer of and buildings will need to be transferred into Undertakings (Protection of Employment) the ownership of the Academy Trust. Regulations 2006 (TUPE). Staff can object Filings with the Land Registry and with HM to the transfer but are likely to have few Revenue and Customs will need to be made rights against their former employer (or in order to record this transfer. indeed the Academy Trust) if they do so. In almost all respects, transferring staff are Even though the governing body of such entitled to transfer to the Academy Trust schools owns the land and buildings used with the benefit of the same terms and by the school, however, security or other conditions of employment as they had forms of third party rights may have been before the transfer; and unilateral attempts created in favour of other parties over some to change such terms prior to, on or after or all of such land and buildings (perhaps in such transfer will be void and may entitle relation to buildings or sports facilities which the relevant member of staff to treat have been financed in part by Sport themselves as having been unfairly England or National Lottery grants). In dismissed. these circumstances, the consent of the relevant third party will be required before Whilst the transfer of employees to the the relevant freehold transfer or lease can Academy Trust takes place automatically, be finalised. the school will need to provide those employees (and any unions representing Other schools those employees) with certain information in relation to the transfer. Also, consultation In relation to other schools, the DfE intends will need to be undertaken on a collective that the relevant local authority will typically basis with the staff on any 'measures' (see grant a 125 year long lease to the Academy below) which are being contemplated Trust on a peppercorn (i.e., nominal) rent following the transfer. The Academy Trust (as at present). However, the SoSE has the and the local authority will need to liaise

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closely in relation to this transfer and the face the risk of referral to the Pensions Academy Trust must take great care to Ombudsman. ensure that it is protected from significant financial liability for any breach of TUPE and Non-teaching staff at schools fall within the from any liability for any breach of scope of the Local Government Pension employment law or a transferring Scheme (LGPS). The Academy Trust, as employee's contract of employment which the relevant employer, will be obliged to occurred prior to the conversion of a school. offer LGPS membership to staff and to Normally, information provision and make the requisite employer contributions, consultation ought to commence long which could be significant in order to reduce enough before any transfer to allow any funding deficit in the scheme. meaningful consultation to take place. Even if TUPE consultation is not required The DfE's current position in relation to the because no 'measures' are envisaged, staff transfer of pensions responsibility is that the relations best practice dictates that Academy Trust will inherit responsibility for voluntary consultation should be any LGPS funding deficit which relates to commenced in earnest with the staff to the transferring school staff. Careful generate enthusiasm for the conversion. analysis of the likelihood of such a funding deficit (and, if relevant, the size of such Only once the conversion has been deficit) will be required to ascertain whether completed can the Academy Trust consult these proposals will be acceptable in the with employees with a view to reaching case of the conversion of the school. agreement regarding any changes ('measures') to the terms of their Contracts employment (such as changes to the length, and number, of teaching terms and changes As part of the conversion process, which will to working hours), which are not changes by give the school independence from the local reason of the TUPE transfer itself but are for authority, many of the services provided to economic, technical or organisational the school by the local authority will fall reasons. away. Accordingly, the Academy Trust will need to enter new contracts for the Pensions provision of these services (even if it is proposed that, for reasons of its superior As the employer of the academy's staff, the purchasing power or otherwise, the local Academy Trust will become responsible for authority will continue to provide such the administration of staff pensions following services). conversion and for remitting contributions to the relevant pensions schemes. The contracts pursuant to which other Accordingly, the Academy Trust will need to goods and services are provided to the register with the Teachers' Pensions school (i.e. goods and services provided Scheme in respect of its teachers' pensions otherwise than by the local authority) will entitlements. Employers have a large also need to be reviewed. As the Academy number of obligations under the Teacher's Trust, a newly incorporated company, will Pension Scheme. Employers who fail to be responsible for the management of the carry out their obligations in a timely fashion school's affairs after the conversion process

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has been completed, existing contracts will protect the school's governing body against need to be assigned to the Academy Trust avoidable risks. Thomson Snell & or, where this is not possible (owing to the Passmore has the expertise to assist nature of the goods or services provided or converting schools in relation to: the terms of the relevant contract), replaced.  the incorporation of the Academy Trust; In addition, the Academy Trust will have to  the drafting, negotiation and agreement contract for a number of services which it of the funding agreement; did not require prior to conversion, including the services of an auditor (which will review  the drafting, negotiation and agreement the Academy Trust's annual accounts of the commercial transfer agreement; before they are submitted to the Registrar).  the transfer or lease of land and Conclusion buildings to the Academy Trust;  the transfer of staff to the Academy The process of conversion involves a Trust; and number of complex steps. Whilst the DfE  the assignment and renewal of has confirmed that it will provide contracts. administrative support in connection with the conversion process, and that converting Please refer to your usual contact at schools will have the benefit of a named Thomson Snell & Passmore for further case-worker to assist them, specialist legal information. advice will be required at certain stages of the conversion process. Ensuring that the conversion is completed properly will help to safeguard the future of the school and to © Thomson Snell & Passmore LLP All Rights Reserved

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