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FAQs - converting to academy status

31 August 2016
This FAQ is designed for maintained schools, and covers: schools looking to convert to academy status, a group of schools wishing to form a multi academy trust or a school looking to convert to academy status and join an existing multi academy trust. 

If you are a single academy wanting to join an existing multi academy trust, please click here.

If you are looking to convert a single academy trust into a multi academy trust, please click here.

If you are looking to become an academy sponsor, please click here.

If you are becoming a sponsored academy, please click here.

Application to convert

1. How does my school apply for academy status?

A school that wishes to convert to academy status should complete the application to convert form on the Department for Education (DfE) website which can be found here. You will need to confirm that the governing body of the school has resolved that the school should become an academy. For foundation, trust or voluntary schools, you will also need to have obtained the consent of the foundation, trust or diocese to the academy conversion.
 
2. When can we apply for our conversion grant?

Each school can apply for its £25,000 conversion grant (plus any additional grant, if available) once the DfE has approved the conversion application and the Secretary of State has issued the school with its academy order. The school then needs to complete the support grant claim form on the DfE website. 

Consultation

3. What is the general consultation requirement?

The Academies Act 2010 requires a school to consult 'such persons as they think appropriate' on whether the school should be converted into an academy. The statutory requirement does not prescribe who should be consulted or the length of the consultation required, so the general law on consultation applies. 

Generally, we would recommend consulting with all key stakeholders, including parents, staff, pupils, other schools, the local authority and the wider community, over a consultation period of about six weeks. 

Staff will also need to be formally informed/consulted about the transfer of their employment under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (‘TUPE’) (see below). 

4. When should this consultation take place?


Some schools consult with key stakeholders both before and after they make their application. However, the Academies Act 2010 simply requires that consultation is completed before the funding agreement is signed, which is usually around two or three weeks before the planned conversion date. 

Process

6. What is the process for converting to academy status?

The conversion process involves at least five elements: 
  • the setting up of a charitable company known as the academy trust with memorandum and articles of association
  • putting in place a funding agreement between the academy trust and the Secretary of State for the running and funding of the academy school(s)
  • transferring the employment of the staff of the school(s) from the local authority or governing body (as applicable) to the academy trust in accordance with TUPE
  • negotiating a commercial transfer agreement for the transfer of assets and contracts of the school(s) from the local authority and/or governing body to the academy trust
  • arranging for the academy trust to have use of the land and buildings of the school(s), usually either by way of a 125 year lease with the local authority or the transfer of the freehold of the land, as applicable.
Where a school is joining an existing academy trust, then there is no need to set up a separate company. If the academy trust currently runs only one school then their documentation will need to be updated so that it can become responsible for multiple schools. 

Voluntary aided and voluntary controlled schools will need to enter into a church supplemental agreement with the Secretary of State and their diocese, which sets out the use of any church lands by the academy trust and protection of the religious designation of the school.

Multi academy trusts may also wish to enter into a scheme of delegation which sets out which powers of the multi academy trust board of trustees will be delegated to local governing bodies. 

Finally, for PFI schools, converting to academy status raises particular issues and additional documentation will need to be drafted and negotiated between the governing body, academy trust, local authority and the contractor. You can access a short podcast on PFI school conversions here

The DfE have specified key dates when it expects to receive draft documentation, confirmation that certain documentation has been agreed and receipt of the final, signed documents. These can be found here. It is important that these key dates are met to ensure conversion on the desired date. 

7. How many governing body meetings should be held during the process?

We usually recommend that a school holds at least two full governing body meetings during the process. 

The first meeting is held to note the actions required to achieve the conversion and agree on the establishment of a working group who will usually take a lead in approving the draft conversion documentation which will be sent to the DfE and/or local authority for approval. This will normally be held once the academy order has been received. 

The second meeting will be held approximately a month before the proposed conversion date. At this meeting, the governors will make the final decision as to whether it is in the interests of the school to convert to academy status. 

A group of schools converting to multi academy status may also want to hold ‘shadow board’ meetings prior to the incorporation of the academy trust. The shadow board is made up of representatives from each school who have delegated powers from their governing bodies to make decisions on how the academy trust should be run once it is established. 

8. When is the last point at which the school can change its mind about conversion?

A school can change its mind right up to the point where documents are sent to the Secretary of State for signature, which is usually two or three weeks before the planned conversion date.

Governance

9. What are the memorandum and articles of association?

The academy trust is a charitable company limited by guarantee. Like all companies, the academy trust will have a memorandum and articles of association. The memorandum sets out the names of the initial members of the academy trust and the articles are the rules that will govern the running of the company.

10. Who are the members?


Members of a company limited by guarantee (like the academy trust) are similar to the shareholders in a company limited by shares. They are the ‘guarantors’ of the academy trust and promise to pay £10 towards its debts should the academy trust be wound up without enough assets to satisfy its creditors. 

The role of a member is a ‘hands-off, eyes on’ role, similar to the governance role of the local authority in a maintained school. Members will have limited powers which will include the right to wind up the academy trust, amend the articles of association, appoint other members and appoint and remove one or more trustees. 

The DfE have clear preferences regarding members which state that:
  • governance structures in which members are also employees are not considered by the DfE to be best practice. Members must not be employees of the trust unless permitted by the articles of association
  • while members can also be trustees, retaining some distinction between the two layers ensures that members, independent of trustees, provide oversight and challenge. This is especially important in multi academy trusts
  • academy trusts should be established with at least three members, although the DfE encourages trusts to have at least five members in total.
11. Who are the trustees?

The individuals appointed to make strategic decisions about the day to day running of the academy trust have three names: 
  • they are directors because the academy trust is a company
  • they are trustees because the academy trust is a charity (albeit one that is exempt from registering with the Charity Commission)
  • they are governors because the academy trust is responsible for running the school(s).
For the purposes of this document, we refer to them as ‘trustees’. 

Members will always appoint at least one of the trustees. Others might be appointed by parents or co-opted by the trustees themselves. The headteacher (for single academies) or the chief executive officer (for multi academies) will also often be a trustee. The articles of association will stipulate the number and types of trustees that the academy trust should have. 

The trustees come together to form the board of trustees (‘board’). The role of the board is broadly similar to that of a governing body of a maintained school. However, there are additional duties under company and charity law that they will also be responsible for undertaking. You can access a short podcast on this here. We can also provide on-site training to support the board in their role. 

In multi academy trusts, each academy school will usually have its own local governing body (LGB). These have a similar status to committees of a maintained governing body and the only powers they have are those that are delegated to them by the board. This is normally formalised into a scheme of delegation. Whilst individuals serving on an LGB may also be trustees of the academy trust, retaining some distinction between the layers is important to ensure effective oversight and challenge. It is common for individuals serving on an LGB to be referred to a ‘governors’, although technically the governors of an academy trust are the trustees. 

12. Who should be the company secretary? Do we need one?

Whilst there is no requirement to have a company secretary, the academy trust will need someone to undertake the tasks of a company secretary, including filing the annual return, annual accounts, resolutions and forms and updating the company books. We commonly advise that schools appoint either the business manager or the clerk to fulfil this role. If you do not have anyone to fulfil this role we can provide company secretarial support and services. If you want more information about this service, please click here.

Funding

13. When will we find out how much funding we will receive from the DfE?

The funding agreement itself does not include details of the amount of grant that the academy trust will receive for the running of the academy. This information is provided in the annual letter of funding. Before the academy trust’s first payment, the DfE will send the academy trust an ‘indicative letter of funding’ detailing the amount of grant that the academy trust will receive to cover the period from the conversion date to the end of August. This letter is normally received four to six weeks before conversion. This should enable the governing body of the school(s) to review the figures within the letter at its final meeting before conversion. 

14. When can we open the bank account?


A bank account can be opened when the academy trust is incorporated with Companies House and the academy trust receives a company number. However, we recommend that schools speak to banks as early as possible, so you can explore the options and ensure that the bank account can be opened immediately on the company number being known.

Commercial Transfer Agreement

15. What if the terms of the Commercial Transfer Agreement cannot be agreed with the local authority?

If the school is a community or voluntary controlled school, the local authority will be the current employer of staff, owner of assets and a party to the contracts the governing body of the school has entered into. We would therefore strongly recommend that the school does not convert to academy status without securing these assets. In any event, it is unlikely that the DfE would allow a school to convert unless it receives confirmation that the terms of the Commercial Transfer Agreement have been agreed. In relation to foundation or voluntary aided schools, it is possible to convert to academy status without having the local authority as a party to the Commercial Transfer Agreement. However, where possible, we recommend that the school includes the local authority as a party so that it can obtain contractual comfort in connection with any period which the local authority was the employer of the school’s staff. 

16. We are a foundation or voluntary aided school and therefore already the employer of our staff. Why do we need to collate all of the staffing information for the Commercial Transfer Agreement?

It is important that the academy trust and/or the school ensures that it has all of the information relevant to employees to hand prior to conversion. This is because there will be a legal transfer of staff from the school to the academy trust. It is a good opportunity for an internal housekeeping check or, if delegated to HR and/or payroll service providers, an opportunity to ensure that all staffing information is accurate and up to date.

17. We have had construction works at the school. Do we need to do anything?

Generally, building contracts for substantial building works will last for a period of 12 years. In the event there is a latent defect in the building which results from either poor design or poor workmanship, then the academy trust will want to hold the contractor or designer to account. Therefore, the benefit of the contract or professional appointment will need to be assigned (transferred) to the academy trust. If less substantial building work has recently been completed and the works are still within the rectification period and/or retention is being held, then these contracts will also need to be novated. Additional clauses may also need to be added into the Commercial Transfer Agreement.

Transfer of staff

18. What is ‘TUPE’ and what does it do?

The Transfer of Undertakings (Protection of Employment) Regulations 2006 (commonly known as ‘TUPE’) protects employees' terms and conditions of employment when their employment is transferred from one employer to another. In the case of an academy conversion, the employment of staff will transfer from the local authority or governing body of the school (as applicable) to the academy trust. 

All staff will transfer to the academy trust on their existing terms and conditions of employment. Any changes to their terms and conditions of employment will be void if the main reason for the change is because of the transfer or a reason connected with the transfer which is not an economic, technical or organisational reason entailing changes in the workforce (‘ETO reason’). You should therefore seek advice if you anticipate making changes to the terms and conditions of staff during or after the conversion process. 

19. Do we need to consult with staff and/or trade unions?

Under TUPE, the current employer (and the academy trust where it is already incorporated and employs staff) must inform any recognised trade unions or elected employee representatives of the fact that the transfer is to take place, when it is to take place and the reasons for it. There is no obligation to consult unless it is intended that ‘measures’ will be taken. Measures include plans or proposals that you foresee and have in mind to implement, including any material change in existing work practice or working conditions. Examples include redundancies (whether voluntary or compulsory), a change to pay dates or loss of staff benefits. Even when consultation is required, there is no obligation to inform or consult with employees directly. 

However, in our experience, most schools will strive to ensure that staff feel involved in the decisions that are being taken and consultation meetings go a long way with this. In any event, the Academies Act 2010 requires staff to be consulted like any other stakeholder on whether the school should be converted into an academy. There is no need to hold separate ‘TUPE’ and ‘general’ consultation meetings.

The school land

20. Will the academy trust own the school’s land and buildings?

This will depend on the type of school and the current ownership of the land:
  • community schools – generally the land is owned by the local authority. The academy trust will occupy the school site by way of a 125 year lease and the local authority will become the landlord of the academy trust.
  • church schools – land ownership is often split between the local authority and the diocese. For any land owned by the local authority, the academy will occupy that part of the school site through a 125 year lease. Where the diocese own the land, it is usual for the diocese to grant the academy trust a licence to use the land under the church supplemental agreement.
  • trust schools – the freehold of the land will be transferred from the current foundation to the academy trust so that the academy trust will be the outright owner of the land.

Post-conversion

21. Are all staff required to have new DBS checks on conversion?

Where a maintained school is converting to become an academy, new DBS checks are not required for existing staff unless there is a concern about a particular member of staff. For new staff, the requirements set out in the Keeping Children Safe in Education guidance should be complied with. You can also find our guidance note on safeguarding checks for academy governors here.

22. Can we still use our local authority services after our conversion?

As a recipient of public monies, the academy trust must ensure that it can demonstrate ‘value for money’ in the use of its funds, which the Academies Financial Handbook defines as “achieving the best possible educational and wider societal outcomes through the economic, efficient and effective use of all the resources in the trust’s charge, the avoidance of waste and extravagance, and prudent and economical administration”. Academies must also comply with procurement law.

Therefore, whilst it is possible for academy trusts to buy back services from their local authority, it is important to be able to demonstrate that these services represent value for money.

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