In these unprecedented times, independent schools are under unprecedented financial pressure. Schools are closed; parents are asking about refunds; staff are self-isolating; commercial contractors demand payment.
We have prepared a checklist to help you keep on top of this fast-moving crisis….
Parents
Most schools are receiving enquiries from parents asserting that they will expect a refund of fees during periods when the school is closed, or seeking to withdraw children at short notice.
Don’t panic. Double check the relevant terms of your Parent Contract. Most model contracts contain terms that help to protect the school in this crisis and should ensure the following effect:
- Parents must give at least a term’s notice to withdraw their child or cancel acceptance of a place; or pay a term’s fees in lieu of notice;
- There is no refund or reduction of fees in the event that the child is absent from school;
- School reserves the right to change the way in which education is provided including provision of education remotely in the event that the school has to close;
- School reserves the right to require the child to remain at home in the event of epidemic, pandemic or other health risk, and continue to provide education remotely;
- Where events occur which are outside the school’s control, including epidemic and pandemic, and where the school acts reasonably to minimise the impact, fees remain payable during a specified period e.g. six months.
Schools that are charities must think carefully before agreeing to refunds or a proposed reduction in fees during periods of closure that are not permitted under the contract. Governors are trustees of the charity and owe a duty to act in the interests of the charity and to act reasonably and prudently.
Where governors conclude that discounted fees are necessary in the school’s interests in order to preserve as many pupils in place as possible, it is imperative that parents understand this is by way of concession, not the contractual position, and that these decisions and the reasoning should be carefully recorded in governor meeting minutes.
Staff
The government’s position regarding employment has evolved considerably over the last days, and continues to do so.
On Monday 23 March, the Prime Minister announced that travelling to and from work is permitted, but only where it is absolutely necessary and cannot be done from home.
This statement itself has caused a good deal of confusion. For example: is it the “work” that has to be necessary; or the “travel” that is necessary to get to school and do the work?
This statement has flip flopped as to whether the “work” has to be necessary i.e. only key workers. However, the latest understanding is that: anyone can go to work provided their work cannot be done from home, and providing anyone doing so strictly maintains required two metre distancing.
So, for example, schools may take the view that grounds staff may be required to attend as their work cannot be carried out remotely, and appropriate distancing can be maintained within the school’s estate.
Job retention scheme
On Friday 20 March, the government announced the implementation of a Job Retention Scheme and the introduction of the concept of a ‘furloughed employee’. We explore the details of the scheme in this article The Job Retention Scheme – further guidance.
Commercial contracts
While schools remain closed, or working with skeleton staff and children of key workers only, schools should consider commercial contracts in case these may be impacted.
Check all commercial supplier contracts including catering, maintenance and transport in order to establish the options available to you in the circumstances.
In particular you should consider the following provisions:
- Force majeure: A force majeure event is the occurrence of an event which is outside the reasonable control of a party and which prevents that party from performing its obligations under a contract. The agreement will sometimes contain a clause that will set out how the parties’ obligations are affected by this event – for example delaying performance or terminating the agreement. Force majeure clauses vary from contract to contract so it is always important to read the particular clause before seeking to rely on it, with specific consideration paid to whether a pandemic is specifically covered by the clause. In each case the party seeking to rely on the clause would typically need to demonstrate that an event beyond their reasonable control has affected their ability to perform their obligations under the contract and that they have taken all reasonable steps to mitigate the consequences.
- Termination: The school (and the supplier) will have the right to terminate their agreement in a variety of circumstances, but the two that will likely be available in each agreement will be to either terminate the agreement immediately in the event of a breach, i.e. the supplier fails to provide the services in line with the agreement, or terminate on a ‘without cause’ basis, allowing the agreement to be terminated following a prescribed notice period. Due to the contentious nature of terminating due to a breach and the need to provide reasons, the school should pay particular attention to their right to terminate on a ‘without cause’ basis. In cases where there is a short or even reasonable notice period, it may be the most cost effective and practical solution available. It is possible that a force majeure clause will also give the school the opportunity to terminate the agreement immediately.
- Service levels: Depending on the nature of the services, there may be provision in the contract to allow the school to reduce the level or frequency of the services provided. This will allow the school to reduce the cost burden for a period but keep the supplier in place for the remainder of the contract. It is important to note, however, that the lack of such a provision does not prevent the school from negotiating with the service provider and seeking to come to a similar arrangement a specified period of time, though any such variation to the contract should be completed formally.
If the above options are not readily available to you or, if you do not feel that they are appropriate for your specific circumstances, it may be possible for you to end the contract by asserting that it has been frustrated, which sets aside an agreement where an unforeseen event renders the parties’ obligations impossible. Alternatively, consider engaging in the dispute resolution process.
If you are considering any commercial agreements, we strongly recommend that you seek professional advice before doing so.
Sponsored students
The Covid19 crisis has resulted in some international students withdrawing home, while others remain stranded in the UK, whether at school or in the care of education guardians. Immigration rules relating to visas and sponsorship of students have been temporarily relaxed in response to the crisis. The latest news can be read in our article Immigration for schools update: Sponsored students affected by Coronavirus.
As specialist charity law solicitors, we are ideally positioned to give expert legal advice for independent schools and can assist with any legal matter in relation to the pandemic, including helping with Covid recovery of debt to help with cashflow at this challenging time. Get in touch for more information.
