• New gender pay gap reporting obligations for academies

• Pensions obligations on academy outsourcing

• Government consultation on changes to exclusion guidance

• Key issues for academies joining a Multi-Academy Trust

• Consultations and academy conversion

New gender pay gap reporting obligations for academies

The regulations requiring academies or multi-academy trusts in England employing 250 or more employees to publish gender pay gap information came into force on 31 March 2017.

The new regime will take effect as an amendment to the Specific Duties Regulations made under the Equality Act 2010. The amended regulations - The Equality Act 2010 (Specific Duties and Public Authorities) Regulations 2017 – lists the public bodies to whom the gender pay reporting obligations apply. This includes the proprietor of an academy.

The new rules will sit alongside the existing duty for public bodies operating in England with 150 or more employees to publish information on the diversity of their workforce, in order to show how they are complying with the public sector equality duty. Although gender pay gap reporting is not mandatory under this existing duty, the Government Equalities Office and the Equality and Human Rights Commission issued guidance at the time the duty was introduced making it clear that employers should consider including gender pay gap information in the data that they publish. This duty will remain in place but the reporting date will be brought into line with the new gender pay gap reporting duty.

What information must be published, when and where?

Affected academies will have to report annually:

1. the difference between the mean hourly rate of pay of relevant male employees and that of relevant female employees;

2. the difference between the median hourly rate of pay of relevant male employees and that of relevant female employees;

3. the difference between the mean bonus pay paid to relevant male employees and that paid to relevant female employees;

4. the difference between the median bonus pay paid to relevant male employees and that paid to relevant female employees;

5. the proportions of relevant male and female employees who were paid bonus pay in the relevant 12 month period; and

6. the proportions of relevant male and female employees in four notional quartile pay bands.

The first pay reports will have to be published no later than 30 March 2018, based on hourly pay rates as at 31 March 2017 and bonuses paid between 1 April 2016 and 31 March 2017.

Academies will need to publish their pay data on their website in a manner that will be accessible to employees and the public for at least three years and will have to publish the data on a government-sponsored website.

Academies who do not comply with their new duties risk adverse publicity and reputational damage. In addition, the Equality and Human Rights Commission will be charged with monitoring compliance by public bodies and will be able take enforcement action through the courts if necessary.

Which employees are counted?

In determining whether an employer is within scope of the regulations, all employees who are employed by the academy on the snapshot date of 31 March are counted. ‘Employee’ is defined as someone who works under a contract of service, a contract of apprenticeship or a contract to do work personally. This could encompass some self-employed, non-PAYE workers who are not on the academy’s payroll. However, academies do not need to include data about such self-employed workers if it is not reasonably practicable to obtain the relevant data.

Whilst all such employees are taken into account when determining differences in bonus pay and the proportions of relevant male and female employees who were paid bonuses, when it comes to working out mean and median hourly rates of pay and the proportions of male and female employees in notional pay bands, employees do not count if they are being paid at a reduced or nil rate during the relevant pay period due to being on leave. So someone who is on maternity leave, for example, would only be counted in these calculations if they receive full pay throughout the relevant pay period.

How is the difference in mean hourly rates of pay determined?

The difference in mean hourly rates of pay for relevant male and female employees is expressed as a percentage of the mean hourly rate of pay for relevant male employees.

Example: if the average hourly rate of pay is £9.48 for relevant female employees and £15 for relevant male employees, the difference between in the mean hourly rate of pay is 36.8%. This figure represents the difference between men's and women's average hourly rates (£5.52) as a percentage of men's average hourly rate of pay.

A relevant employee’s hourly rate of pay is calculated, broadly, by dividing the employee’s weekly pay for the reference period by the number of working hours in a week for that employee (excluding overtime). There are detailed rules setting out how weekly working hours are to be calculated for employees whose hours are not always the same from one week to the next and for pieceworkers.

The figures are based on gross ‘ordinary pay’ and ‘bonus pay’ paid in the pay period spanning the ‘snapshot date’ of 31 March. The length of the pay period depends on how frequently the particular individual is usually paid, be it weekly, fortnightly, monthly or a shorter or longer period.

‘Ordinary pay’ includes: basic pay; allowances (other than payments to reimburse necessary expenses); shift premium pay; piecework pay; and pay for leave. It does not include: overtime pay; pay in lieu of leave; benefits in kind; redundancy pay; and other payments referable to termination.

‘Bonus pay’ means remuneration that (a) is in the form of money, vouchers, securities, securities options, or interests in securities, and (b) relates to profit sharing, productivity, performance, incentive or commission. It does not include ordinary pay, overtime pay, redundancy pay or payments referable to termination.

How is the difference in median hourly rates of pay determined?

The median hourly rate of pay of a group of employees is calculated by listing all relevant employees in the group in order of their earnings and identifying the hourly rate paid to the individual who appears in the middle of the list. So if there are 201 relevant female employees in a group, median earnings for that group would be represented by the amount paid to the 101st highest earner. If there are 200 employees in a group, median earnings for that group would be represented by the average between the 100th and 101st highest earners.

The difference in median hourly rates of pay for relevant male and female employees is expressed as a percentage of the median hourly rate of pay for relevant male employees.

Example: if the median hourly rate of pay is £10 for relevant female employees and £15 for relevant male employees, the median gender pay gap is 33.3%. This figure represents the difference between men's and women's median hourly rates (£5) as a percentage of the median hourly rate of pay for men.

How are the differences in mean and median bonus pay determined?

The differences in mean and median bonus pay for male and female employees are expressed as percentages of the mean and median bonus pay for male employees.

Only those employees who actually received bonus pay during the period of 12 months ending on the snapshot date of 31 March, and who are still employed on the snapshot date, are taken into account in these calculations. Any bonus payments paid to such employees in the relevant 12 month period are factored in.

Median bonus pay is determined using the method explained above in relation to hourly rates of pay i.e. by identifying the mid-point when all employees in the relevant group are listed in order of the amount of bonus pay they are paid.

How are the proportions of men and women who received bonus pay to be determined?

The proportion of male and female employees who received bonus pay are expressed as percentages.

To work out the appropriate figures, divide the number of male employees who were paid bonus pay in the period of 12 months ending on the snapshot date of 31 March by the total number of male employees and then multiply that figure by 100. Then perform the same calculation for female employees. Only those still employed on the snapshot date are taken into account for these purposes.

How are the quartile pay bands worked out?

Academies need to divide their overall pay range into four notional pay band and report the gender split (as a percentage) in each of those bands. Each pay band needs to contain the same number of employees (so far as is possible), i.e. a quarter of the workforce.

To identify the pay bands academies need to compile a single list of all relevant employees (male and female), ranked in order of increasing hourly pay and split the list into four groups. As noted above, the relevant employees are those who are employed on the snapshot date and who are not paid at a reduced or nil rate during the relevant pay period due to being on leave.

For each pay band, academies need to report the gender split i.e. what percentage of employees in the pay band are women and what percentage are men.

There is no obligation to set out the pay range covered by each of the four bands when publishing the pay data.

Must/should pay gaps be explained?

Although there is no legal obligation to publish an explanation, there is a concern that highlighting pay differences in this way could cause damage to reputation or undermine efforts to redress under-representation at certain levels of the workforce. Consideration should therefore be given as to whether to provide additional information, explaining the context for any pay gap, to give a more nuanced and accurate picture, even though this is not required by the legislation.

The draft guidance published by ACAS and the Government Equalities Office (in relation to the very similar reporting duties applying to the public and voluntary sector) suggests that a supporting narrative should be used as a gender pay gap does not necessarily mean that an employer has acted inappropriately or discriminatorily but the gap will need explaining. The guidance also states that a narrative will help anyone reading the information to understand the organisation’s view of why a gender pay gap is present and what the organisation intends to do to close it.

Academies should also formulate a communications plan well before they publish any data, to ensure they present information in a considered way and are ready to respond to challenging questions from employees, unions, stakeholders and the media.

Is there a risk of equal pay claims?

While gender pay gaps and equal pay gaps are not the same, there is clear potential for one to affect the other. The recent spike in public sector equal pay claims was spurred by the introduction of new pay and grading systems, which drew attention to historical gender pay anomalies including unequal bonus arrangements. There is a risk that gender pay gap reporting, particularly where significant differences are reported, could similarly focus attention on pay differentials and possibly lead to equal pay claims. This broader implication of gender pay gap reporting should be considered as part of risk assessment planning.

What should academies be doing now?

• ensure you can collect the range of data through your payroll systems as a first step towards analysing it

• review all current pay practices across the academy in order to understand the differentials which may exist. Be proactive – doing nothing is not an option. Understanding your pay arrangements will help you manage and present information meaningfully and in context

• consider gender pay gaps which exist on a departmental/functional level and compare these with the composition of your workforce

• analyse the rationale behind your current arrangements to identify potential risk areas

• if pay gaps are due to underrepresentation of women at more senior levels, look critically at what you are doing to attract, recruit, develop and retain female employees

• prepare a communications plan so that you are better placed to present information in a considered way and are ready to respond to challenging questions from employees, unions, stakeholders and the media

Pensions obligations on academy outsourcing

In times when budgets are stretched many academies are deciding to outsource cleaning, catering and other services to external contractors, in order to save costs. This article provides an insight into what academies should consider, from a pensions perspective, when outsourcing.

How does “TUPE” work?

The Transfer of Undertakings (Protection of Employment) Regulations 2006 (“TUPE”) apply where there is a transfer of an undertaking, business or part of an undertaking or there is a service provision change. Whilst advice should always be sought as to whether TUPE would apply in any given scenario, it is likely to apply to an outsourcing project.

Where TUPE applies non-teaching employees of the academy who are carrying out the services in-house at the academy will automatically become employees of the contractor on the contracting out date on their existing terms and conditions of employment.

Pensions issues on outsourcing

TUPE does not however protect the majority of rights under an occupational pension scheme such as the Local Government Pensions Scheme (“LGPS”) . A contractor is therefore only legally required to give employees access to a minimum level of pension provision following the transfer.

To mitigate against the impact of the potential loss of pension benefits on outsourced employees a number of public sector pension protections were introduced and HM Treasury’s new Fair Deal policy 2013 (“New Fair Deal”) applies to academies.

What does New Fair Deal say and what do academies need to do?

At the tender stage, in advance of when the outsourcing contract is being negotiated, the academy must consider including appropriate provisions on pensions which comply with the requirements of New Fair Deal.

For academies, the New Fair Deal (broadly) requires that:

  • staff who are members of the LGPS and who are compulsorily transferred from the academy to a private sector contractor, and who remain continuously employed on the delivery of the outsourced service or function, will remain eligible to be members of the LGPS while they continue to be employed on the transferred service or function ;
  • it is the responsibility of the academy to ensure that the terms of the outsourcing contract require the contractor to provide protected staff with continued access to the LGPS in their new employment; and
  • academies should also ensure that staff protected by the New Fair Deal are provided with continued access to the LGPS on any subsequent compulsory transfer while they continue to be employed on the contracted-out service or function, including any transfer to a sub-contractor or on a sale by the contractor of part of its business.

Is New Fair Deal mandatory?

Although New Fair Deal does not have the force of law, the Department for Education – and public sector unions – will expect academies to comply with it as a matter of practice.

Admission agreements

Continued access to the LGPS for staff post-transfer is provided by the contractor entering into an admission agreement, which will be a tripartite agreement between the contractor, the academy (who must stand as guarantor of last resort of the contractor’s LGPS liabilities) and the relevant LGPS administering authority. The contractor may also be required to obtain a bond from a third-party provider, which will help to protect the academy against financial risk as ultimate guarantor.

Other issues

The terms of the outsourcing will usually be set out in an outsourcing agreement (also known as a “service contract”), entered into between the academy and the contractor and any obligations contained in this will need to be taken into account. Academies can expect contractors to seek protection against any existing deficit relating to the relevant staff (which would otherwise transfer to the contractor along with the contracts of employment), and also against the need to make good any deficit which may be present when the contract comes to be let again.

Academies need to ask questions of potential outsourcing contractors about how the they will manage the provision of the LGPS access for transferring academy staff and on subsequent transfers. Academies should also ensure that the provisions of the outsourcing contract adequately manage the pensions risks associated with outsourcing.

Government consultation on changes to exclusion guidance

The Government has commenced a process of consultation regarding proposed changes to the statutory exclusion guidance for maintained schools, academies and pupil referral units in England. The rationale for the proposed changes to the existing guidance (which was issued in 2012) is to provide greater clarity to head teachers, independent review panels and governing bodies on their responsibilities when considering exclusion decisions.

The consultation was launched on 14 March 2017 and will close on 25 April 2017. The consultation can be accessed here:

https://consult.education.gov.uk/school-absence-and-exclusions-team/statutory-exclusion-guidance/supporting_documents/Exclusion%20Guidance%202017%20consultation%20document.pdf

As part of the process, the Government has issued a revised draft of the statutory guidance which can be accessed here:

https://consult.education.gov.uk/school-absence-and-exclusions-team/statutory-exclusion-guidance/supporting_documents/Draft%20statutory%20guidance%202017.pdf

What changes are proposed?

A number of changes have been proposed to clarify the existing guidance. For example, changes have been made to clarify:

• that exclusions cannot be extended or converted (extending a fixed-period exclusion involves excluding the pupil for a further fixed-period on the expiry of the current term);

• what is meant by the ‘civil standard of proof’ and the ‘balance of probabilities’ (i.e. that it is more likely than not that an incident happened / an allegation is true);

• head teachers’ responsibilities regarding notifying parents of an exclusion, including in respect of the provision of information regarding when their child may not be out in the public following an exclusion;

• the responsibilities of the governing body when a pupil is excluded, including regarding the information which must be provided to parents, their duties regarding removing a permanently excluded child from the roll and their responsibilities for marking the attendance register following an exclusion;

• the role of the local authority when a pupil is excluded, including regarding arranging alternative education, Education, Health and Care (EHC) plans and legal responsibilities regarding financial adjustments and payments related to an exclusion;

• the role of the governing body in reviewing an exclusion decision, including where the exclusion decision takes a pupil’s number of days excluded to between five and 15 in one term, how to manage cases in the context of a public examination or national curriculum test and how the governing body should approach reconsideration of its decision when recommended or directed to do so by an independent review panel;

• the role of the special educational needs expert in an exclusion process;

• the responsibilities of the independent review panel when considering exclusion decisions and the notifications it must make once a decision has been reached;

• a number of the descriptions of legal requirements which are currently insufficiently clear.

The guidance has also been updated to reflect a statutory change in January 2015, when regulations were amended to clarify that a governing body’s duty to arrange education from the sixth day of a fixed period exclusion is triggered by consecutive fixed-period exclusions totalling more than five days. Revisions have also been made to reflect the changes introduced by the Children and Families Act 2014 regarding the education of pupils with special educational needs and disabilities (including to reflect the introduction of EHC plans).

In addition, two non-statutory annexes to the guidance have been produced. The first of these is designed to support head teachers through the exclusion process and ensure they feel confident regarding their rights and responsibilities. The guide helpfully includes a checklist of questions for head teachers to consult when managing an exclusion process. The second annex is designed to support parents in understanding the various steps of the exclusion process, including the steps they may take to challenge an exclusion decision and the arrangements for children who are excluded.

Comment

Whilst the revised guidance does not introduce any new rights or obligations, it acts to clarify the existing framework and the new annexes are likely to be welcomed by head teachers and parents alike as helpful reference points when following an exclusion process. It is anticipated that the revised guidance will come into effect on 1 September 2017.

Key issues for academies joining a Multi-Academy Trust

The process of transitioning to a Multi-Academy Trust (“MAT”) is one that involves changes in management, governance and financial decision-making. Where exactly should school business managers begin and how can they make the process as painless as possible?

The legal process of moving to MAT status is itself, quite straightforward. However, the practical changes that are required make this more of a challenge than many within the academy will realise, and responsibility for those changes usually rests with the school business manager.

Here are our top tips to ensure a smooth and effective transition:

Ensure that trustees, members and senior leaders understand the change in governance structures when becoming a MAT.

MAT boards have responsibility for all the academies within the MAT and not just your existing academy. Invoking a skills audit will ensure MAT trustees have the appropriate competencies for this wider role and ensures the success of the MAT being established. Inevitably some changes will need to be made to the composition of the board to reflect a MAT structure – e.g. MAT boards are unlikely to have parent trustees or principals on them.

MATs are required to have a Local Governing Body (“LGB”) or Advisory Body (“AB”) for each academy within the MAT ensuring a local school focus. Staff and parent representatives will sit on the LGB/AB.

A MAT will also need a CEO or executive head as the executive lead for all academy operations. Early identification of an experienced individual to take up this role is key.

We recommend training for those within the MAT on the new MAT structure and those schools joining the MAT so that they fully understand the legal framework that they are joining and what role/responsibilities they will have within it.

Devise an effective committee structure with clear roles and authorities

LGBs/ABs are committees of the board of trustees. The trustees determine their composition and put in place schemes of delegation for each LGB/AB setting the level of delegated decision making they each have in relation to their respective academies – this may differ between academies.

Having a trustee on each LGB/AB will ensure appropriate oversight and lines of communication between these two bodies. Identifying and appointing an effective chairperson is essential, as is a MAT wide code of conduct so MAT members, trustees and LGB/AB governors sign up to the same principles and standards of conduct.

Committees of the board (other than LGB/ABs) e.g. finance, resources, curriculum, can be established to perform their functions across all academies, reporting into the board. Again, having clear terms of reference and schemes of delegation is key to their effectiveness. In a large MAT, consider using committees on a geographical or key stage cluster basis to reduce the number of committees and committee meetings.

Trustees should start thinking at an early stage what form their schemes of delegation should take, remembering that there is a requirement that they are published. The greater clarity and detail there is about the level of decision making (especially financial decisions), the more effective they will be. Consider adopting a traffic light system of decision making.

Use of standard reporting templates to streamline information flows

To reduce the length, and increase the effectiveness, of MAT trustee meetings, MAT’s should design reporting templates for LGBs/ABs/other board committees and senior management to complete and submit on a periodic basis ahead of trustee meetings. These reporting templates should illicit key information about each academy/business function in a succinct manner making it easier for trustees to interpret academy/business data and identify problem areas/issues for discussion. They also enable consistent and targeted reporting back up to the board.

Greater purchasing power

One of the key benefits of being in a MAT is the opportunity for centralising back office functions, costs and buying services on a larger scale (and hopefully with a larger discount). Early due diligence on each the academies joining the MAT to identify their key supply arrangements, supply costs and contract periods will enable trustees/business managers to ascertain where cost savings can be made and when might be an appropriate time to procure MAT wide supplies.

Having a central purchasing function can be a more effective way of buying in services by allowing skilled individuals to run the process on behalf of the MAT academies, reducing the amount of time spent on multiple procurements and ensuring that the MAT takes a standard approach to risk, liability and contract terms.

Once you have a MAT wide contract with a supplier, it will be easier to negotiate the inclusion of more schools as they join the trust. For growing MATs, try negotiating a sliding scale of discounts with suppliers – as the number of academies enjoying the services increases, the price per academy should reduce.

Centralisation of business functions and costs

By identifying functions which all academies need, e.g. finance, HR administration, estates management, LGB clerking etc. MATs can design models for centralising these functions to avoid duplication of effort and cost. Identify the best location/people from across the MAT to provide these central functions and put policies in place to ensure consistent delivery/procurement across all academies within the MAT.

Applying a top slice to each academy’s GAG funding to meet these central costs is permitted under the MAT’s funding agreement but academy principals need to agree to a top slice model and the level of the top slice has to be proportionate to the level of services actually being received by the academy. Keeping any top slice model under regular review will help to ensure it remains effective and affordable and that resources aren’t wasted on obsolete or unnecessary supplies which academies have no need for.

Merge academy trading activities

Understand what commercial or trading activities each academy within the MAT is undertaking, e.g. CPD training delivery, sports facilities hire. It’s possible that the combined level of commercial/trading activity is significant enough to warrant establishing a trading subsidiary. This can be more tax effective and mitigate the risk of these commercial trading activities for the MAT. Bringing in a dedicated professional to run these commercial activities could maximise the profits from the activities which can then be gift aided to the MAT.

Consultations and academy conversion

With the Government still keen that many maintained schools voluntarily convert to become an academy, obtaining the views of interested stakeholders is as important as ever. Schools that are subject to intervention by the Secretary of State for Education fall outside the remit of this briefing.

Prior to a maintained school (which is not subject to intervention) converting to an academy, or an academy trust entering a funding agreement for a new academy, a consultation must be undertaken in accordance with the Academies Act 2010. The duty to consult those that are “appropriate” rests solely with the governing body (for maintained schools converting) and the academy trust (for a new academy). The thoroughness and transparency of the consultation will be a key component of the Secretary of State decision on whether to approve an academy proposal.

In its guidance entitled Free schools: Pre-opening proposer group guidance for: mainstream, special, alternative provision and 16-19 free schools, the DfE provides some helpful information that can be applied to a consultation relating to any type of academy. We set out below some key areas which should be explored prior to a consultation taking place:

Plan – it is important to map out how and when a consultation will happen i.e. before a funding agreement can be signed but after other matters such as a prospective site have been advanced.

Who by? Should an external body undertake the consultation on the governing body’s or academy trust’s behalf?

Who will be consulted? Different interested stakeholders (e.g. parents, staff, other local education providers) will have a different interest in the academy proposal and accordingly, more information or detail may need to be provided, for example to local unions or campaign groups.

Can more than one consultation be undertaken at one time? The admission arrangements for a new academy (except 16-19 academies) must be consulted upon in accordance with the timeframe set out under the DfE’s School Admissions Code. Many trusts undertake an admission consultation at the same time as consulting about whether to establish a new academy.

How long? No timeframe for a consultation is specified under the Academies Act 2010 however, the School Admissions Code states that an admission consultation should be for at least six weeks.

Equality issues – Many consultations are only available online which may not be accessible to those with protected characteristics under the Equality Act 2010 (for example for those with a disability) or those whose first language is not English. Other consultation methods such as translation of consultation documents, mailshots, leaflets, open meetings or media announcements may need to be utilised.

Reporting of consultation outcomes – A summary of consultation responses should be provided to the local community, the governing body/academy trust and the DfE.

Governing bodies and academy trusts have free reign to design a consultation process as they see fit. However, if the DfE considers that a consultation has failed to meaningfully engage with all relevant stakeholders or has not been undertaken at a formative stage when the proposal can still change, then the Secretary of State may refuse to enter into a funding agreement for the proposed new academy. This will inevitably cause delay and may even necessitate a further period of consultation being undertaken.