Independent Schools Update

1
Independent Schools Update Wednesday 19th
November 2008 Welcome
2
Planning for a Downturn Christine Goodyear
3
The Current Picture

• School closures at least 8 independent schools
  have closed in 2008 and many more are struggling
  to balance the books
• Fall in pupil numbers increasing fuel, food and
  other costs (as well as salary increases)
• Pressure to keep fees affordable
• Smaller schools are more vulnerable

4
The Options (1)

• Fundamentally sound but experiencing drop in
  numbers
• Maximise opportunities for income
• and/or
• Reduce outgoings

5
The Options (2)

• Steady fall in numbers current business
  model not viable
• Consider all strategic options

6
Impact of Economic Downturn for Schools

• Fewer applications/registrations/acceptances
• Acceptances followed by late withdrawals
• Existing pupils withdrawn through financial
  necessity
• Exclusions for non-payment of fees

7
Maximise Opportunities for Income

• Tighten up on credit control procedures wont
  pay
• Chase earlier
• Exclude pupils for non-payment
• Sue
• Increase dialogue cant pay
• possibility of lump sum (from redundancy
  payment?)
• Instalment options
• Bursary?
• Inter-relationship with meeting public benefit
  test

8
Maximise Opportunities for Income (continued)

• Make sure parents understand their financial
  obligations
• Review (or introduce) parent/school contract
• How strong is the right to recover a terms fees
  in lieu?
• Does a deposit have to be repaid?
• Can you exclude children for non-payment?
• What procedure should you use?
• Should you provide an opportunity to appeal
  against exclusion?

9
Reduction of Outgoings

• Reduce staff costs
• Full scale merger
• Collaboration

10
Full Scale Merger

• Needs careful and detailed planning will not
  happen overnight!
• Two or more organisations become one
• An organisation joins an existing group
• Need for compatibility of charitable objects and
  powers
• May require Charity Commission approval
• Transfer of undertakings from one to another
• Impact of TUPE
• Surplus staff may give rise to redundancies
• Surplus premises may need to be dealt with

11
Collaboration

• One of two forms
• Group of schools enter into contractual
  relationships to provide services/contribute to
  cost
• or
• Set up centralised body into which participants
  transfer parts of their undertakings
• Might be suitable for
• HR services
• Training
• Health and Safety
• Accounting
• Legal Services

12
Collaboration

• Advantages
• Costs savings
• Increased expertise/resource (otherwise
  unaffordable)
• Flexibility of demand
• Educational autonomy
• Independence
• Disadvantages
• Arrangements insecure members may withdraw

13
Collaboration - Legal Issues

• Competition Law
• Must not enter into agreements or concerted
  practices which have as their object or effect
  the restriction of competition
• Principle that sharing information reduces
  uncertainty and uncertainty is vital to the
  competitive process
• Determined on a case by case basis
• Sharing of information on staff costs would be
  anti-competitive
• But it will lead to economic efficiencies and
  parents will receive fair share of benefit

14
Collaboration Legal Issues

• Employment issues
• Fewer issues/less upheaval
• TUPE will apply
• Consultation
• Redundancies

15
Collaboration Legal Issues

• Contractual matters
• Need for carefully drawn contracts/membership
  agreements

16
Surviving the Downturn

• Be proactive
• Good cash collection
• Control of overheads
• Active consideration/reconsideration of strategy
• Innovative ways of doing things
• Come out stronger than ever!

17
Any Questions?
18
Managing Redundancies Joanna Lada-Walicki
19
Recent National Newspaper Headlines

• Independent schools are at risk of closure
  because parents can no longer afford the fees,
  education experts have warned.
• Wispers School in Haslemere, Surrey, will not
  reopen after the summer holidays, blaming
  financial pressures and a drop in demand for
  all-girls' education.
• Wentworth College, Bournemouth, will shut next
  week, July 2008 citing the current economic
  climate, linked with a short term fall in pupil
  numbers

20
ATL Survey

• ATL carried out a survey of over 2000 staff in
  independent schools in October 2008
• 20 of teachers said their school had fewer
  pupils this September than in 2007
• 14 said their school had fewer teachers this
  September than in September 2007
• 16 said their teachers are expecting
  redundancies this academic year
• 54 fear there may be cuts to their school's
  spending in the coming months
• Small schools are most affected

21
Reducing Outgoings

• Not replacing departing staff
• Retiring staff in accordance with the statutory
  procedures and replacing with less experienced
  i.e. less expensive teachers
• Reducing overtime for support staff
• Reducing teaching hours in less popular subject
  areas (following proper consultation with staff)
  N.B. part-time contracts with power to vary the
  hours
• Cutting overtime for support staff
• Redundancy?

22
What Is Redundancy?

• Business or workplace closure i.e. if a school or
  part of a school closes
• Requirement for employees to carry out work of a
  particular kind has diminished or is expected to
  diminish
• e.g. fewer pupils means fewer teachers are needed
  
• e.g. new software means fewer employees are
  required in the Bursarial Office
• BUT a reorganisation of the responsibilities of
  the SMT will probably not be redundancy

23
Redundancy Practical Issues

• Redundancy may be the only solution if pupil
  numbers fall significantly
• Reducing staff in good time may avoid more
  drastic cuts at a later date
• The Governors are likely to identify the need to
  reduce outgoings first
• A good relationship between the Governors and the
  SMT is vital areas of over-staffing need to be
  identified

24
Redundancy Practical Issues (2)

• Outsourcing may be an option e.g. ICT support,
  but be aware of TUPE implications
• A well planned process may result in weaker
  performing staff being the ones to leave
• The Governors need to support the Head and other
  members of the SMT in implementing the redundancy
  programme

25
How To Avoid Claims

• The key to avoiding claims is to follow a fair
  process this will vary according to the
  circumstances take legal advice early!
• Designate a Redundancy Selection Panel and an
  Appeal Panel (in most cases) ensure those on
  each panel are not tainted
• Warn staff of possible redundancies
• Ensure adequate and meaningful consultation with
  staff this may enable redundancies to be
  avoided or reduced. Start the consultation
  process early
• Consider whether there is any suitable
  alternative employment

26
Collective Consultation

• Only likely to be applicable if a School closes
• 20 99 redundancies proposed within 90 days or
  less
• 30 day consultation
• 100 redundancies proposed within 90 days or less
• 90 day consultation
• Notification to Secretary of State

27
Redundancy Pool

• Correctly identify the redundancy pool this
  will vary according to the circumstances
• Consider
• Employees doing similar work if teachers,
  consider which year groups should be
  included/excluded exclusion of specialist
  teachers?
• Interchangeable roles
• Is the role unique?

28
Selection Criteria

• Consider carefully the selection criteria , the
  scoring system including weighting given to any
  key criteria e.g. relating to future needs of the
  School
• Criteria must be fair and objective and capable
  of verification
• Last In First Out needs to be objectively
  justified
• Performance importance of appraisals
• Additional skills and knowledge relevant to
  needs of the School
• Attendance record beware of absence related to
  a disability or maternity leave
• Discriminatory selection criteria e.g. related
  to pregnancy or part-time status

29
Volunteers?

• Consider
• Is the School prepared to accept volunteers?
• If so, what is the package on offer?
• Attach a condition that the School reserves the
  right to refuse redundancy if a key member of
  staff volunteers
• Consider a compromise agreement

30
Statutory Dismissal Procedure

• Ensure compliance with the statutory dismissal
  procedure or the dismissal will be automatically
  unfair 3 stage process
• 1 letter inviting employee to attend meeting to
  discuss provisional selection for redundancy
  ensure employee has selection criteria and
  his/her scores prior to meeting
• 2 meeting before any decision has been taken.
  After the meeting the employer must inform
  employee of the decision and notify employee of
  right of appeal
• 3 If the employee wishes to appeal, he/she must
  inform the employer who must invite employee to
  attend a further meeting
• Compliance with statutory process does not ensure
  dismissal is fair a longer process with greater
  staff consultation is recommended

31
Matters To Discuss

• Notification of provisional selection
• Basis for selection
• Employee has opportunity to -
• Comment on criteria and scorings
• Suggest ways to avoid redundancy
• Consider alternative employment
• Address other concerns

32
Other Considerations

• Right to be accompanied
• Trade Union Representative
• Work colleague
• Notes of meetings
• Time off to seek alternative employment
• PR parents and remaining staff

33
Statutory Redundancy Payment

• Qualifying service 2 years
• Relevant calculation
• 41 and over 1.5 wks x years of completed
  service
• 22 40 1 wk x years of completed
  service
• Under 22 ½ wk x years of completed service
• 1 week is capped at a maximum of 330.00

34
Other Contractual Payments

• Notice pay
• Pay in lieu
• Taxable?
• Benefits including pension
• Holiday pay (non-teaching staff)

35
Practical Tips

• Take legal advice early
• Ensure Governors and SMT understand the process
  prepare a timetable
• Dont underestimate to need for an value of
  effective consultation
• Consider redundancy pool and selection criteria
  carefully
• Include employees on long term sick
  leave/maternity leave

36
Any Questions?
37
Public Benefit Update Helen Harvie
38
Chronology

• Consultation on advancement of education and fee
  charging charities
• Consultation closed 11 July 2008
• Summary of responses published 7 October
• Announcement of English test cases 7 October
• Publication of results of Scottish rolling review
  cases 28 October
• Press release from Andrew Hind 28 October
• Example annual reports produced 7 November

39
Future Timetable

• End 2008 publication of supplementary guidance
• Spring 2009 publish conclusions of first
  English test cases
• From 31 March 2009 public benefit section in
  annual report
• Content of annual reports this year

40
Scottish Test Cases

• OSCR rolling review, access on website
  www.oscr.org.uk
• 30 charities of which 11 independent schools
• Mixture of prep and senior schools, day and
  boarding
• Fees ranged from 2,850 (nursery place) to
  26,211 pa
• 4 schools failed the public benefit test

41
Closer Look at 3 Schools

• George Heriots Trust, Edinburgh PASSED
• 1619 pupils, aged 3-18
• Fees 5,526 - 8,322 pa
• 130 means tested bursaries, 70 for 100
• 12 pupils assisted, 8 means-tested, 4 fully
  funded
• Total value of support 707,848 (9 annual
  income)
• Other benefits teaching practice, exam
  moderation, links with state school

42
Closer Look at 3 Schools (continued)

• Merchiston Castle School, Edinburgh FAILED
• 438 boys, age 5-16, of which 2/3 boarders
• Fees 10,485 - 16,395 pa 4,500 - 6,450
  boarding fees
• Total support 41 of pupils, just under 9
  annual income
• BUT only 1/6th of support was means-tested. Had
  set up 1m fund
• Other benefits very good

43
Closer Look at 3 Schools

• Gordonstoun School, Elgin PASSED
• 595 pupils, age 5-16, 80 boarders
• Fees 9,528 - 19,569 pa 6,039 - 6,642
  boarding fees
• Total support 32 pupils, 13.4 means-tested,
  2.7 fully funded
• Total value of support 11.5 annual income,
  more than 75 means-tested
• Other benefits very good, partnership with City
  Academy in Leicester

44
General Conclusions

• Prep schools not at a disadvantage
• Fees the higher the fees, the higher the
  benchmark
• Not impossible to pass with high fees
• Means-testing crucial no guidance on how assess
  but separate report on affordability
• No assessment of whether schools can afford
• Other benefits must be educational and add to
  overall package of benefits, cannot ignore

45
What Happened to Those Failing Test in Scotland?

• Constitutional issues 1 year to rectify
• Public Benefit 3 stages
• 3 months to confirm will apply
• 1 year to prepare action plan
• 3 years in total to implement

46
English Cases

• English test cases include 5 independent schools
• National coverage
• Manchester Grammar School 1400 boys, 11-18,
  fees 8,000 pa, assist 15.9 pupils, fully fund
  2.4, Bursary Fund

47
What Can You Do?

• Review your constitution
• Ensure objects and activities aligned
• Provide for other public benefit if necessary
• Companies Act changes

48
What Else Can You Do?

• Public Benefit Audit checklists
• Review means-testing policies, eg sibling
  discount, financial declarations
• Other public benefit activities

49
Conclusion

• Scottish cases provide a lot of useful
  information
• Cannot afford to wait and see, despite 3 year
  moratorium
• If Scottish example followed, not all will pass
  test
• If schools are charging high fees, harder to
  pass
• Must introduce means-tested support
• Other public benefit activities important, but
  only if educational
• Review constitutions

50
Any Questions?
51
Changes To Disciplinary and Grievance
Procedures Andrea Tishler
52
Current Position

• Statutory procedures for dealing with dismissal,
  disciplinary and grievance matters
• Employment Act 2002 and Employment Act 2002
  (Dispute Resolution) Regulations 2004
• Standard 3 step procedures
• Modified procedures for exceptional circumstances

53
Current Position

• Failure to follow statutory dismissal procedure
  automatic unfair dismissal
• ET obliged to
• consider reducing compensation for employees
  failure to comply
• consider increasing compensation for employers
  failure to comply
• Employees required to follow grievance procedure
  before lodging claim at the ET

54
Current Position

• Procedures heavily criticised
• Led to Gibbons Review/ACAS public consultation
• Recommended repeal of statutory procedures

55
ACAS Discipline and Grievance Code of Practice

• Replaces statutory procedures
• Basic practical guidance for employers, employees
  and their representatives
• Sets out principles for handling disciplinary,
  dismissal and grievance situations

56
ACAS Discipline and Grievance Code of Practice

• Failure to follow Code does not constitute stand
  alone claim
• ET will take Code into account in relevant cases
• Can adjust awards by up to 25 for unreasonable
  failure to comply with any provision

57
What Will It Apply To?

• All disciplinary/dismissal situations except
  dismissals for redundancy/non renewal of fixed
  term contracts
• All grievance situations i.e. concerns, problems
  or complaints employees raise with employers

58
What Does It Say?

• Discipline
• Establish facts of each case
• Inform employee of problem
• Hold meeting to discuss problem
• Allow employee to be accompanied
• Decide on appropriate action
• Provide opportunity to appeal

59
What Does It Say?

• Grievance
• Let employer know nature of grievance
• Hold meeting to discuss grievance
• Allow employee to be accompanied
• Decide on appropriate action
• Allow employee to appeal

60
Current Status

• Employment Act 2008 approved includes repeal
  of statutory procedures
• Draft Code approved by Secretary of State for
  Business, Enterprise and Regulatory Reform
• Draft Code to go before Parliament
• Both due to come into effect on 6 April 2009

61
Practical Advice

• No changes until at least April 2009
• Draft Code and Guidance Booklet available from
  www.acas.gov.uk
• Final version available from ACAS website after
  approval
• Revisit existing procedures
• Advice and guidance available from BR employment
  team

62
Any Questions?
63
Employing Migrant Teachers and Gap Year Students
64
Introduction

• New 5 tier points-based system
• Sponsorship obligations for some tiers
• Employing migrant teachers and gap year students
  will change from 27 November 2008

65
The 5 Tiers

• Tier 1 Highly Skilled Migrants
• Tier 2 Skilled Workers
• Tier 3 Low Skilled Workers
• Tier 4 Students
• Tier 5 Temporary Workers including the Youth
  Mobility Scheme

66
Employing Migrant Teachers

• Migrant teachers fall under tier 2 skilled
  workers (general)
• Sponsorship obligations for the employer
• Migrant has to satisfy a points-based test

67
Becoming a Sponsor

• A genuine organisation operating legally within
  the UK
• Border Agency will investigate history
  background and key personnel
• Must demonstrate that you are capable of carrying
  out duties as a sponsor through HR systems

68
Making an Application

• Online application form
• Supporting documents to follow by post within 10
  working days
• Cost - 300
• Apply now

69
Ratings

• Rating A or B
• Review of
• HR systems
• Civil penalties and criminal convictions of staff
• Non-compliance
• Each aspect is scored
• 1 meets all the criteria
• 2 meets some of the criteria
• 3 meets none of the criteria

70
Certificates of Sponsorship

• Reference number
• Valid for 3 months from date of issue
• Cost - 170 under tier 2
• Tier 2 requirements
• Skill level of S/NVQ 3 or above
• Labour shortage test or resident labour market
  test or intra-company transfer
• Salary and/or other allowances

71
Obligations as a Sponsor

• Record-keeping
• Reporting
• Complying with the law
• Co-operating with the Border Agency

72
Personnel

• Authorising Officer
• Key contact
• Level 1 user
• Level 2 user

73
Tier 2 Points-Based Test

• 70 points awarded
• Attributes 50 points
• Sponsorship 30 or 50 points
• Qualifications up to 15 points
• Prospective earnings up to 20 points
• Maintenance 10 points
• English language skills 10 points

74
Employing Gap Year Students

• Youth Mobility Scheme under tier 5
• No sponsorship obligations
• Migrant must come from a participating country
• Australia, Canada, Japan and New Zealand
• Visa lasts for 2 years
• Cannot be extended

75
Youth Mobility Scheme Points-Based Test

• 50 points awarded
• Sponsorship from migrants own country 30
  points
• Age 18-30 (inclusive) 10 points
• Maintenance 10 points

76
Schools Records

• Migrant must produce a valid visa
• School must see the original visa
• Take a copy and keep it on personnel file
• Must check migrants visa at least once every 12
  months

77
Penalties for Non-Compliance

• It is both a civil and criminal offence to employ
  a migrant aged 16 or over who does not have
  permission to work in the UK or who works for you
  in breach of their conditions of stay in the UK.
• Criminal penalties-
• Up to 2 years imprisonment
• Knowingly employing an illegal migrant worker
• Without reasonable excuse employing a migrant
  with false ID

78
Civil Penalties

• Civil penalties-
• Notification of potential liability
• Consideration of all evidence
• Notification of liability
• Fine of up to 10,000 per illegal worker
• Opportunity to object or appeal within 28 days

79
Any Questions?