These are the frequently asked questions (FAQs) we get asked by maintained schools looking to convert to academy status and groups of schools wishing to form a multi academy trust. These questions are also relevant to schools looking to convert to academy status and join an existing multi academy trust.
Application to convert
Consultation
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).
Process
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 are required to prepare 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.
The DfE has specified key dates here when it expects to receive draft documentation, confirmation that certain documentation has been agreed and receipt of the final, signed documents. It is important that these key dates are met to ensure conversion on the desired date.
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.
Governance
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 has clear preferences regarding members which state that:
- Members must not be employees of the trust
- while members can also be trustees, retaining 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.
The individuals appointed to make strategic decisions about the day to day running of the academy trust and are legally accountable for its actions. They have three roles:
- 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. We offer on-site or remote 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 formalised into a scheme of delegation. Whilst on occasion 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.
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.
The role of Company Secretary is distinct to that of the Clerk or Governance Professional though it is not uncommon for the same individual to fulfil both roles.
Funding
Commercial Transfer Agreement
Transfer of staff
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.
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
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
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.
Author
Tom Briant-Evans
Senior Associate
Tom.Briant-Evans@brownejacobson.com
+44 (0)330 045 2888
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