Keeping children safe in education – revised statutory guidance
On 5 September 2016, the Department for Education’s revised guidance, ‘Keeping children safe in education’, came into force. The document is the Government’s statutory guidance which all schools, academies and colleges must have regard to when carrying out their duties to safeguard and promote the welfare of children.
The revised guidance was introduced following a process of consultation through which the Government explored ways of reinforcing the importance of Part One of the guidance (regarding staff roles and awareness), focusing on a child centred and co-ordinated approach to safeguarding, clarifying the role of the designated safeguarding lead, highlighting the importance of early help and data sharing and introducing new provisions regarding online safety and children with special educational needs and disabilities.
The revised guidance includes a number of important changes which will be of interest to academies:
• Responsibility for safeguarding - the revised guidance contains an increased emphasis on safeguarding being everyone’s responsibility, the importance of information sharing (including regarding children missing from education) and a joined up child-centred approach. The guidance, for example, stresses the importance of all staff receiving training, all staff receiving regular updates and providing all staff with an opportunity to contribute to, and shape, safeguarding arrangements.
• Part One - a increased spotlight is placed on Part One of the guidance (the section which sets out what school and college staff should know and do) as a starting point for all staff to read and have mechanisms in place to support understanding.
• Staff training and updates - the revised guidance includes new provisions regarding staff training and updates – staff should receive safeguarding updates via e-mail, staff meetings or e-bulletins as required, but at least annually.
• Awareness - there is an increased emphasis on staff awareness of all forms of abuse including, for example, sexting and peer-to-peer abuse.
• Definition of abuse - the guidance contains a revised definition of abuse, recognising its increased complexity, and highlights the need for staff to understand that complexity.
• Vulnerable children - the particular importance of awareness around looked after children and those with additional vulnerabilities (for example, special educational needs and disabilities) is highlighted in the revised guidance, recognising that such children can face additional safeguarding challenges.
• Early help and intervention - the guidance also stresses the importance of staff being aware of early help processes and having policies and procedures in place to ensure action is taken in a timely manner, including importantly where children are in immediate danger. It also clarifies the appropriate protocols for staff to follow when reporting concerns.
• Online safety - importantly, the revised guidance includes a new requirement to have appropriate online monitoring and filtering systems in place to safeguard them from potentially harmful and inappropriate online material.
• Designated safeguarding lead - the revised guidance clarifies the role and responsibilities of the designated safeguarding lead and introduces more prescriptive requirements regarding the regular updating of their knowledge and skills (for example, by e-bulletins, meeting other designated safeguarding leads or taking time to read and digest safeguarding developments), including regarding the Prevent Duty. The guidance also includes some interesting new provisions regarding the ability to appoint a deputy safeguarding lead.
• Female Genital Mutilation - the guidance sets out the statutory duty on teachers to report FGM (which came into force in October 2015) and generally updates the provisions regarding FGM, including to refer to honour based violence.
The introduction of the revised guidance provides academies with a valuable opportunity to review their existing policies and practices around safeguarding to ensure they remain compliant with the statutory guidance and best practice.
We are able to work with you to develop recruitment and safeguarding policies and review your existing policies to ensure that they are up-to-date, accord with best practice and are effective in managing the potential risks. We also have extensive experience of training staff in relation to the management of recruitment and safeguarding issues including the effective application of internal procedures, external disclosures and how to navigate the problematic cases in a fair, reasonable and lawful way.
A copy of the revised DfE statutory guidance is available here.
Changes in employment law to watch out for in 2017
There are a number of new regulations and requirements due to come in to force in 2017, which will have an impact on Academies. Below, by way of a reminder, is a summary of what to look out for.
Trade Union Act and the 40% threshold for important public services
The Government has published final regulations under the Trade Union Act 2016 which specify in more detail which public services are subject to the 40% ballot support threshold.
Readers may remember that the Act introduces, amongst other things, a new requirement that there must be at least 50% voter turnout in a ballot for industrial action and a simple majority of those voting must vote in favour of the action.
In ballots where the majority of those voting are “normally engaged” in the provision of important public services, at least 40% must vote in favour of the action.
Last year the Government consulted on the type of occupations and functions which should be subject to the 40% threshold and the regulations have been published following that consultation setting out the further detail.
The Regulations confirm that important public services includes teaching and other services provided by teachers and head teachers for children of compulsory school age at a school, a 16-19 Academy or a further education institution. Fee-paying schools are excluded.
The Regulations, which must be approved by Parliament, will come into force on 1 March 2017, or, if Parliament has not approved them by that time, 21 days after approval. Guidance will also be published.
Gender Pay Gap reporting
The Government has published, in final draft form, regulations which will come in to force next year and which will oblige employers in the private sector with at least 250 employees to report on their gender pay gap.
Similar regulations covering public sector employers are to be published early next year. The regulations will be supported by guidance from ACAS and the Government Equalities Office.
Initially, it was unclear as to whether public sector employers were going to be expected to comply with the new duty, however, it is now clear that they are.
Public sector bodies, including Academies, are already subject to the public sector equality duty and, in the case of those employers with 150 or more employees, to the requirement to publish information annually on the diversity of their workforce. The new rules will sit alongside these existing duties and the reporting dates will be brought in to line.
Affected employers will have to report annually the difference between the mean hourly rate and the median hourly rate of pay for male and female employees; the proportion of male and female employees in four notional quartile pay bands and information in relation to bonuses.
The snapshot date is 5 April 2017, meaning that employers will have to publish their first gender pay reports no later than 4 April 2018.
Whilst many Academies will not be expected to comply with the new duty as they will not have the requisite 250 employees, multi-academy trusts and those looking to become multi-academy trusts will need to consider whether their employee numbers means the duty will be triggered. As many multi-academy trusts continue to add schools, it is likely that we will see more employers within the academies sector who are required to comply with this duty.
Due to come in to force in April 2017 the levy will apply to employers with payroll bills of £3 million or more. The levy will be 5% of the employers’ tax bill, less an annual allowance of £15,000. For example, an employer with a pay bill of £5,000,000 will be subject to a levy of £25,000 less the £15,000 making a total levy of £10,000.
Draft regulations on the calculation and payment of the levy have been published and further regulations on additional details such as assessment, repayment and records, will be published in the coming months.
Reaction to the levy has not been positive, with many seeing it as simply an additional tax bill, however the levy is designed to support the Government’s target of funding 3 million more apprenticeships during the current Parliament. Employers will have access to funding for training via the Digital Apprenticeships Service and levy-paying employers will be entitled will be able to access more funding than they have put in via Government top-ups.
Whilst the £3 million pay bill minimum requirement means that a large number of employers will not be expected to pay the levy, again, with existing and expanding multi-academy trusts, we may start to see more employers in the academies sector caught by this duty.
To grow or not to grow? That is the question
In October 2016 Sir David Carter, National Schools Commissioner, unveiled plans to introduce mentor multi-academy trusts. It is envisaged that this scheme will encourage larger academy chains who have been through the journey of forming a MAT to help those forming new MATs. This is a clear message from the Commissioner that he believes successful MATs are a vital feature of the education landscape for the future. Scalable growth if not an easy thing for a MAT to achieve. A number of well-known chains have all had to relinquish schools. This undoubtedly led to unwelcome distractions within each MAT as well as resulting in a period of disruption for the affected schools.
At present, approximately 65% of secondary schools are academies of which around half are part of a MAT. Although only approximately 15% of primary schools are academies the number is growing fast and almost three quarters of those that have converted are in a MAT.
Many maintained school governing bodies and standalone academies are wrestling with the pros and cons of forming or joining a MAT. Notwithstanding, the removal of the mooted hard conversion date, there a strong reasons to engage with the process now, particularly where local authorities are facing relentless cut backs and there is an outflow of experienced staff. Against this backdrop, there is likely to be merit in seizing control of a school’s destiny rather than having to make potentially harder and more limited choices in the future.
There is no doubt that governors face difficult decisions which will have long term consequences for their respective organisations. Many feel ill equipped to make such decisions when faced with a plethora of choices that the possibility of joining or forming a MAT raise. So what are the fundamental pros and cons of joining or forming a MAT?
• The opportunity to establish an organisation with an ethos and vision that is tailored to the schools in the MAT and the communities they serve.
• Sharing best practice. This can range from teachers working collaboratively and innovatively to create units of work for particular subject areas across the MAT to successful behaviour management procedures being replicated within other academies.
• Wider opportunities for teaching staff enabling better recruitment and retention.
• Centralising business services can free up teaching staff to focus on delivering outstanding education.
• Economies of scale, e.g. in relation to purchasing of goods and services.
• Surrender of autonomy – schools joining a MAT should not expect representation on the MAT board and will need to work to a scheme of delegation set by the MAT.
• Decision making and managing risks becomes more complex as a MAT grows. Trustees need to have confidence in their schemes of delegation and importantly need to be presented with sufficient information from each of the schools to manage risks effectively whilst at the same time not being overwhelmed by data that is impossible to process.
• Individual schools in the MAT that are good or outstanding and the MAT itself can suffer reputational damage in the event of adverse publicity or other difficulties experienced elsewhere in the MAT.
Establishing your own MAT should not be undertaken lightly and governors should not underestimate the drain on governor and SLT resources. It can, however, allow a group of schools with a shared vision to set their own terms of engagement rather that accepting someone else’s.
Due diligence will be key when joining an established MAT. It will be essential to establish that the MAT is well run financially. It will also be vital to understand what the MAT is offering when compared to other MATs, e.g. what can the MAT in question offer in terms of:
• shared outlook, ethos and vision;
• representation at MAT board level or other means of ensuring that the school’s voice is heard;
• school improvement services;
• value for money – what will your school get for its budget top slice?;
• access to the other schools in the MAT – travelling long distances for cross-school working/meetings can create significant inefficiencies;
• autonomy – are you going to be free to manage your own affairs (at least whilst provision is good or outstanding) or will you be effectively running a franchise under which all of the provision has to be delivered to the MAT’s specifications?
Aside from robust due diligence the most important aspect is likely to be trust. Do you have confidence that the ethos of the MAT you are proposing to join is such that your school will fit within in it and prosper? It is vital to keep asking how the proposal is going to improve the educational experience of the learners that your school serves.
Are you thinking about data privacy?
Academies hold a great deal of personal information in relation to students, parents/guardians, staff and suppliers, to name but a few. This data is a key asset for all academies and is fundamental to day-to-day business, but is an increasingly risky asset, which if compromised, miss-handled or lost can have severe consequences including regulatory enforcement action, complaints, negative and very embarrassing publicity, poor staff morale and can also potentially complicate the ability to manage and discipline staff.
Current UK data protection laws are contained in the Data Protection Act 1998 (the “DPA”) and good practice is endorsed by the Information Commissioner’s Office (the “ICO”). Education institutions must inform all individuals about how their personal data is handled; implement policies to ensure that personal data is kept (and destroyed) securely at all times; to ensure staff are properly and regularly trained in information handling and the implementation of safeguards, including when sharing personal data with third parties such as payroll or IT providers.
Very often, data protection is only considered where there is a trigger event, for example a loss of data, a request from an individual to exercise their DPA rights of access or where the ICO has received a complaint. Suppliers are often appointed with little regard to their data security practices and without any due diligence on their practices. Typically, data protection issues are dealt with on an ad-hoc basis by either HR departments or management. The depth of governance documentation in place to ensure compliance with the rules, also varies from institution to institution. The ICO, however, expects all organisations, including education institutions, to take information handling and data privacy rights very seriously, train staff appropriately and ensure robust procedures are followed (not simply sat on a shelf to gather dust), especially where children’s personal information is involved.
A new privacy law – the General Data Protection Regulation (“GDPR”) is now on the horizon and will represent a substantial enhancement of the obligations and compliance requirements imposed on academies and all organisations handling personal information. The GDPR takes the form of a European Regulation and, notwithstanding recent uncertainties arising from the Brexit referendum and the subsequent litigation, the Government has announced that this new privacy regime will still come into force in May 2018. The GDPR will bring in a number of new requirements, including, to name a few:
• compulsory self-reporting of relevant security breaches to the data protection regulator and potentially affected individuals within strict timescales;
• very prescriptive information must be communicated to all individuals whenever personal information is first collected (including the basis for which the data is collected, the third parties data will be shared with and data retention periods);
• new rights for individuals in relation to access, portability and erasure of data that is held within systems;
• a need to undertake data protection impact assessments when implementing new systems; and
• new and stricter principles on when, and on what basis, information can be handled.
Of particular note, education institutions must be able to demonstrate compliance with the GDPR, maintaining records and documentation to show how they comply, such as on the security measures in place, how long data is retained and details of which third parties data is shared with. This will be a substantial compliance requirement, which will demand a more proactive approach. The GDPR also brings a new requirement to appoint a Data Protection Officer (“DPO”) in certain circumstances, depending on the nature of the data processing but the appointment will be mandatory for all “public authorities” (this is likely to include academies) and the DPO will have a “protected” status. The DPO must be trained to deal with data protection compliance and has a number of specific duties to help an organisation meet the requirements of the new law. Further, the DPO must be named in several documents when communicating with individuals and when interacting with the ICO.
Failure to comply with the GDPR requirements once in force will expose organisations to claims of unlimited compensation where an individual can show they have suffered damage or distress, as well as fines of up-to 20 million EUROs or up to 4% of annual turnover in the previous financial year, whichever is higher. The maximum fining power for the ICO will therefore increase by a multiple of 40. Ahead of May 2018, the ICO is already showing a more aggressive approach to enforcement action, with a record fine of £400,000 being levied for inadequate security practices very recently.
The ICO has produced a guidance note, ’12 steps to take now’ on preparing for the changes under the GDPR, worthy of consideration: https://ico.org.uk/media/1624219/preparing-for-the-gdpr-12-steps.pdf. Assessing current compliance practices should therefore become an agenda item for all senior management teams. There will be no hiding place when the GDPR comes into force and failing to prepare now will be preparation for failure.
Solvency Issues for Academy Trusts – a reminder
Conversion to an academy suits some schools very well and financially they are thriving. For others, it feels like constantly squeezed budgets made worse by unexpected EFA funding clawbacks and declining pupil numbers. But how bad does it have to get before academy trustees need to consider the “I” word?
Academy trusts are of course companies and as such, trustees are also directors and therefore subject to very prescriptive duties and responsibilities under both the Companies Act 2006 (“CA”) and also in relation to financial distress and insolvency regimes under the Insolvency Act 1986 (“IA”) – something that maintained schools and, for the short term, colleges are not privy to.
Whilst we have not yet seen the formal insolvent winding up of an academy trust, we are aware this has been considered, and sadly more commonly these days it seems, whilst the academy suffers financial distress. It is important for academy trustees to understand their key duties and responsibilities as directors if their trust is in financial difficulties and the personal consequences if they fail to act quickly enough. The difficulty in such circumstances is getting a balance between the everyday desired educational priorities and demands with the competing legal duties to creditors and risk of personal liability as a director in the event it all goes wrong and formal insolvency results. More often than not these competing demands leave the trustee/director feeling they are in a no win situation. It is imperative that trustee directors fully understand these risks and their legal duties in circumstances where an academy trust is in financial distress or, insolvent.
Here’s a reminder of the basics:-
1. What is insolvency?
There is no legal definition of insolvency. Common reference is made to an entity being “unable to pay its debts, as they fall due”. Two tests are applied to determine when an academy trust is deemed insolvent:
• the debt test – a debt exceeding £750 remains unpaid once demanded for more than 21 says; and/or
• the balance sheet test - the liabilities of the academy trust (including contingent and prospective liabilities) exceeds its assets.
In applying these tests, multi-academy trusts (“MATs) must consider their collective assets and aggregate liabilities across all of their activities and not just in respect of one academy.
There are various insolvency regimes for academies in England and Wales including: liquidation / winding-up; administration (rescue of the business as a going concern); receivership (administrative or fixed charge); or company voluntary arrangements.
2. Types of Directors
A number of different types of directors can be subject to the duties and responsibilities under the CA and IA including:
• statutory directors appointed under the academy trust’s articles of association (executive and non-executive directors);
• de facto directors, being a person who holds him/herself out as a director of the trust but has not been formally appointed as such; and
• shadow directors, being a person in accordance with whose direction or instructions the directors of an academy trust are accustomed to act.
Subject to the level of delegation, it is possible that in a MAT a Local Governing Body (“LGB”) could be deemed to be a de facto and/or shadow director of an insolvent academy trust.
3. Duties of Directors
Directors of a solvent academy trust (which would include de facto and shadow directors as noted above) have a number of duties including: (a) duties as directors under company law, including common law and the Companies Act 2006; and (b) as trustees under charity law.
In a distress situation however, the duties of the directors and the priorities that are afforded to each duty will change. It is imperative that the directors of an academy trust fully understand these risks given the risk of personal liability. In general terms, this means:
• the duties of directors codified under the Companies Act 2006 cease to have priority;
• the directors duty to act in furthering the charitable objects of the academy trust will shift; for the academy trust to instead act in the best interests of its creditors;
• the duty to avoid causing the academy trust to make a preference (section 239 of the Act);
• the duty to avoid causing the academy trust to make transaction at undervalue (section 238 of the Act);
• a risk of civil liability for wrongful trading (section 214 and 246ZB of the Act);
• a risk of civil / criminal liability for fraudulent trading (section 213 and 246ZA of the Act); and/or
• misfeasance (section 212 of the Act), breach of trust, breach of duty of care or acting in conflict with the interests of the trust;
In practical terms this will mean that the behaviours and decision-making of the directors will, and should change, day to day depending on the creditor position of the academy trust and whether it has a reasonable prospect of avoiding insolvency. Failure to comply
with these duties could lead to personal liability of the directors or, even disqualification from acting as a director in the future.
4. Director’s disqualification
Under the Company Directors Disqualification Act 1986, a Court may make a disqualification order against a person that he cannot be a director of an company or, be concerned in the formation or management of a company for a specified period. The minimum period of a disqualification order is 2 years, and the maximum is 15 years. Administrators and liquidators of a company are required to submit reports about directors to the Secretary of State if it appears to them that the conditions for disqualification are satisfied in relation to a person who is or has been a director of an insolvent company. Officeholders take the statutory duty to report seriously (to avoid any criticism if they fail to report and it comes to light later that the directors did breach their statutory duties). Insolvency practitioners have powers of investigation, which can be exercised to obtain evidence for use in disqualification proceedings.
5. Practical Tips
Whilst the Department for Education (“DfE”) has stepped in to provide financial assistance/support to academy trusts in financial distress; the insolvency tests and risks identified above still apply. Such support does not exempt the academy trust or its directors in any way. Academy trustees should not rely on such a bail out to simply “save” the company or to satisfy their duties and potential personal liabilities as directors in the event of insolvency.
In any situation of financial distress of an academy trust, the directors should be mindful of the following:
• Seeking professional advice, including legal and financial advice, at the earliest opportunity. This will assist in demonstrating to any appointed insolvency office holder that the directors have taken reasonable steps to obtain appropriate advice.
• Consider whether there are any members of the LGB (or other senior leaders) who may be considered shadow directors and therefore subject to the duties noted above. Even if not appointed as a statutory director, it is possible that key individuals (such as an LGB member) could be deemed to be a director of the academy trust; at risk of personal liability; and held to account for decisions taken.
• Holding regular Board Meetings and clearly minute all decisions taken by the Board of the academy trust and the benefit to creditors. It is often useful to have professional advisors in attendance to minute all decisions taken.
• “Directors of MATs should take particular care where a particular school in the MAT is in financial distress, that no conflict of interest has arisen in relation to any corporate decisions and that the board is acting in the best interests of the creditors of the particular distressed school (for example, to avoid any allegations of a preference in the event of any subsequent insolvency).”
• Reviewing its Funding Agreement with the DfE. This may contain restrictions on asset-pooling and use of funding across different schools within a MAT.
• The cash flow solvency of the academy trust (and any subsidiaries) and its ability to make payments to its creditors as they fall due.
• The balance sheet position of the academy trust (and any group company) as a whole and in particular whether the academy trust’s aggregate assets exceed its aggregate liabilities and taking into account any contingent liabilities.
• Seeking funding from all possible sources (in addition to the DfE) in order to continue to trade or alternatively, for the DfE to fund the orderly closure of the academy trust.
• Taking every step to act in the best interests of creditors and if possible, to reach consensual agreements with creditors mindful of personal liability risks as a consequence of avoidance claims in the event of subsequent formal insolvency.
The Digitisation of Litigation - the Briggs Report Recommends Radical Changes to the Civil Courts Structure
On 27 July 2016, the Judicial Office published Lord Justice Briggs’ eagerly awaited report on the Structure of the Civil Courts in England and Wales.
Despite recognising that the civil courts of England and Wales provide a “world-class justice service”, Briggs LJ identified five main weaknesses which impact on the quality of this service (and with which any academy who has engaged in litigation may recognise!):
1. Access to justice for ordinary individuals and small businesses.
2. The “tyranny of paper” and the use of inadequate and obsolete IT facilities.
3. Delays in the Court of Appeal.
4. Under investment in civil justice in the regions.
5. Weaknesses in the enforcement process.
In order to tackle those weaknesses, Briggs LJ makes a number of recommendations in his Report, the key points of interest being as follows:
1. Online Court – Briggs LJ outlines proposals for a new “Online Court” which (to begin with) will be aimed at money claims up to £25,000. The Online Court will be accessible via smart phones and tablets and has a suggested implementation date of 2020.
2. Case Officers – The suggestion is that case officers trained and supervised by Judges will take on case-related responsibilities (mainly box work) which is currently undertaken by Judges.
3. Deployment of Judges – Briggs LJ’s idea is that no case should be too big to be resolved in the regions and he sets out proposals for how this might work in practice.
4. Enforcement – Briggs LJ recommends that the County Court should be responsible for the enforcement of judgments and orders of all civil courts. If this course of action is not possible, then centralisation, harmonisation, rationalisation and digitisation of enforcement should be pursued.
5. Transfers between the High Court and County Court – Briggs LJ recommends that all the remaining financial limits on the jurisdiction of the County Court be removed plus increases to the minimum threshold for issuing claims in the High Court.
The message then is the courts should be lighter on their feet and more accessible- so that justice can be achieved without lengthy and expensive litigation. Alongside the headline grabbing concept of the “online court” and increased emphasis on the role of the county court is the promotion of the concept of the case worker. That is a structure which some Ombudsmen have adopted to triage cases and “speed up justice” to considerable effect. Whether the same approach works to develop swifter results for civil litigation remains to be seen.
The themes of the report also chime with the underlying current of civil justice reform to push for more cases to be resolved by alternative dispute resolution. We can expect therefore to see the role of mediation, adjudication and expert determination continue to be promoted. In recent years those alternative approaches to litigation have proved increasingly popular as a means of achieving dispute resolution cost effectively. They also offer the potential for the parties to retain a greater degree of control over the outcome. And from the perspective of the judiciary, they take pressure off court resources.
So the future landscape for litigation in England and Wales continues to shift. Whether it’s evolution or revolution depends somewhat on how many of Briggs LJ’s wide ranging recommendations are implemented. What is clear though is that old fashioned court litigation is no longer the only game in town. For anyone involved in a dispute, thinking pro actively and creatively about how to resolve it will be the key to success - and the options continue to expand.