The Covid-19 pandemic has forced higher education institutions (HEIs) to move almost exclusively to remote learning for large periods of the last year. However, longer term, HEIs will no doubt be looking at the benefits of continuing with remote learning and/or a hybrid of in-person and remote learning.
The Covid-19 pandemic has forced Higher Education Institutions (HEIs) to move almost exclusively to remote learning for large periods of the last year. But, longer term, HEIs will no doubt be looking at the benefits of continuing with remote learning and/or a hybrid of in-person and remote learning.
When considering whether to make that move, HEIs should also consider the potential knock-on effect it can have on their energy contracts. Often these contracts have long terms, and so it is important that HEIs understand the potential implications and the options that may be open to them, including a potential right to seek a price review with suppliers or to terminate. Based upon our recent experience advising clients on these matters, we have set out below the various considerations and options.
Energy contracts often have a minimum volume of energy that must be consumed on an annual basis. Therefore, a drop in consumption will not negate the liability to pay for that minimum volume. Even if there is no minimum volume, the contracts often have clauses defining the size of the buildings being supplied and that those buildings must (1) not be demolished and (2) remain occupied. Changes in occupancy levels often trigger a review of charges, which could result in an increase in those charges.
Given the length of energy contracts, it would be wise to see whether the parties can work together to find a workable solution. A negotiated solution could take a variety of different forms, depending upon the commercial strategies of the parties. This could include, for example, amending the length of the contract, decreasing the committed volume, and/or changing the pricing structure.
Reaching a negotiated solution is often the best scenario for both parties. If the parties agree to vary the contract, then it is important to ensure that the variation is carried out in accordance with the contractual process and that it is properly documented.
Another option is to try to force a price change for the energy. If a variation cannot be agreed between the parties, then whether one party has the ability to actually force a change to the price depends upon the wording of the relevant clause in the contract. Often these clauses require the parties to engage in good-faith discussions followed by arbitration (or less frequently expert determination), if the parties cannot reach agreement. In some situations, the clause may permit the contract to be brought to an end if an agreement is not reached. Understanding the process and the ultimate goal is fundamental to formulating the correct strategy.
The pandemic does not automatically mean that HEIs will have the ability, under their energy contracts, to demand an immediate review of the financial model. This is because, typically, long-term energy contracts already have those reviews at various intervals (e.g. five years, 10 years, 15 years etc), depending upon the length of the term. Unfortunately, this means that it is down to luck as to whether a review of the financial model falls at the right time.
If there is a right to trigger, HEIs will then have to consider whether the review will achieve the aim of the clause, i.e. to restore the contractual bargain between the parties, based on the revised consumption needs.
If HEIs can trigger the review of the financial model, then they should make sure that they follow the procedural steps outlined in the clause. HEIs should also make sure that they are aware of the potential outcomes that could follow by triggering the review, before taking any steps, as, for example, these contracts sometimes only provide for an upwards-only review of the charges. Therefore, whilst energy consumption might have decreased, triggering a review might actually result in fixed charges increasing.
If there is a dispute, then HEIs should check any dispute resolution clause within the contract and invoke the prescribed procedure. Most contracts contain a dispute resolution clause, which is often found towards the end of the contract (and forgotten about!).
The dispute resolution clause usually specifies how disputes are to be resolved and this may include: (1) a series of escalating stages through which the parties will attempt to resolve the dispute, i.e. a meeting with the manager and then escalation to a senior manager; (2) negotiation; (3) mediation (optional or compulsory); and (4) arbitration or litigation. Generally, whichever procedure is specified in the contract, the parties are required to follow it to save time and avoid incurring unnecessary legal costs. It can often be possible to reach a resolution with an energy provider through the dispute resolution procedure without matters escalating.
Commercial contracts typically include clauses that give parties the right to terminate in particular circumstances: for example, when certain specified breaches of the contract take place, or on the occurrence of force majeure or insolvency events. However, for the purpose of this article, we are only looking at situations where contracts allow a party to terminate for convenience (aka ‘no-fault ’)) where no breach or relevant event has occurred.
Generally, clauses that allow termination for convenience cannot be invoked until after a certain notice period or minimum term has passed. A party looking to exercise a right to terminate must make sure that it actually has the right to terminate, i.e. that all the conditions allowing termination are satisfied. If so, then effecting termination will be a simple matter of following the correct procedural steps. It is critical that any contractual notice provisions are complied with.
It is important that HEIs consider their termination strategy carefully, and do not rush into a decision without properly analysing the legal position, as wrongful termination may give rise to exposure to significant damages.
With remote learning likely to result in a sustained decrease in energy consumption, HEIs should consider whether their energy contracts still provide an attractive commercial position. If they do not, then HEIs should take steps to review their contractual rights, obligations and options in order to ascertain the best way forward. We are here to help if you need any support when assessing your options.
If you have any queries arising from the issues raised in this article, then please contact Chloe Poskitt.
There’s been little evidence of interventions or financial management reviews this year and it appears the Education and Skills Funding Agency (ESFA) has re-focussed on financial delivery. It’s also telling that there were no discernible changes to the reporting of financial irregularities in the Academies Trust Handbook 2022.
The Children’s Commissioner, Rachel De Souza, has recently published a report “Beyond the labels: a SEND system which works for every child, every time”, which she intends to sit alongside the DfE’s SEND Review (2019) and SEND Green Paper (2022) and which she hopes will put children’s voices at the heart of the government’s review of SEND system.
Emma Hughes, head of HR services at Browne Jacobson, explains how CST’s updated executive pay report and the linked benchmarking service from XpertHR can help trust boards make robust decisions on pay.
There’s greater opportunity than ever for parents, carers and guardians to voice any concerns they have relating to their child’s education and for their concerns to be heard and to be taken seriously. While most staff in schools and academies are conscious of their legal duties relating to complaints management, many are struggling to cope with such a significant increase in the volume of complaints they must manage.
We’re pleased to collaborate with Lloyds Bank, who recently asked us and audit and risk specialists Crowe UK to offer guidance that academy trusts would find helpful when considering setting up a trading subsidiary.
The DfE has published new guidance and opened the application process for window two of the Trust Capacity Fund (TCaF) for 2022/2023, with a fund of £86m in trust capacity funding focused particularly on education investment areas.
The Independent Inquiry into Child Sexual Abuse was established in March 2015. We now have its report. As you would expect with such a broad scope, the report is long and makes a number of far-reaching recommendations. In this article, Dai Durbridge highlights seven of the 20 recommendations, sets out how they could impact on schools and suggests what steps to take now.
Browne Jacobson’s education team has been named as winner of the ‘Legal Advisors to Education Institutions’ category at the Education Investor Awards 2022 for a record sixth time.
Since the new Suspensions and Exclusions Statutory Guidance was published, we have received a lot of questions about the use of managed moves. For the first time, the Statutory Guidance does explain what a managed move is, but in relatively broad terms and does not cover the mechanics of how a managed move should operate.
Over 3000 young people from across the UK and Ireland took part in a virtual legal careers insight event, aimed at making the legal profession more diverse.
Holly Quirk, an associate barrister in Browne Jacobson’s Manchester office, was awarded the Legal Professional of the Year Award at this year’s Manchester Young Talent Awards.
The risk of assault against staff is, sadly, something that all schools need to consider carefully. Here one legal expert explains what they can do to protect staff and ensure they fulfil their duty of care.
Browne Jacobson’s education team has again been confirmed as a national powerhouse after securing five Tier 1 rankings relating to Education in the latest edition of Legal 500 and maintaining a Band 1 UK-wide ranking for Education in Chambers & Partners UK 2023.
Created at the end of the Brexit transition period, Retained EU Law is a category of domestic law that consists of EU-derived legislation retained in our domestic legal framework by the European Union (Withdrawal) Act 2018. This was never intended to be a permanent arrangement as parliament promised to deal with retained EU law through the Retained EU Law (Revocation and Reform) Bill (the “Bill”).
In this article we set out the criteria, expectations and support schools should consider if notified they fall within this new category.
The words “Grammar schools” are once again being whispered in government and the question of whether the creation of new grammar schools will finally be implemented as a central focus to DFE policy has re-surfaced.
As a result of a recent Charity Commission legal action, the former trustee of a Welsh charity was ordered to pay over £117,000 to Wrexham charities which support cancer patients.
Academy trusts no longer need to seek consent for contractual indemnities within the ‘normal course of business’. What do trusts need to consider?
In this article we set out the most common issues we encounter, along with guidance on assessing and mitigating the risk from assaults.
In this article we set out some of the support that's available to schools in a bid to reduce the overhead that complaints management generates.
As we start the Autumn term, the first part of the process for changing school admission arrangements can begin.
On 21 September 2022, we had the pleasure of hosting a Whitehall & Industry Group (WIG) lunchtime briefing, delivered by the Director General for the DfE’s Strategy Group, Julia Kinniburgh.
Law firm Browne Jacobson and the University of Nottingham are launching a ground-breaking two and a half year Knowledge Transfer Partnership which aims to develop and embed long-lasting equality, diversity and inclusion (EDI) principles and learnings into the firm’s practices and processes, amongst its key client-bases and the national legal sector.
In an academic environment, there can be pressures to publish, particularly where funding is dependent upon research and reputation. Whilst there can be competition between Higher Education establishments to be the first to publish, there can also be internal conflicts over authorship rights where several individuals have contributed to the work.
The Health and Safety Executive (HSE) have announced they will be carrying out a programme of inspections to primary and secondary school establishments from September 2022. The inspections will assess how schools are managing the risks from asbestos and meeting the Duty to Manage requirements, set out in Regulation 4 of the Control of Asbestos Regulations 2012.
In July, the long-awaited statutory guidance on the Subsidy Control Act 2022 (Act) was published in draft form (Draft Guidance). A consultation on the draft guidance has recently ended and the results have not yet been published – it may therefore change before the final version is published.
In July 2022, the Supreme Court handed down its long-awaited Judgement in the case of Harpur Trust v Brazel relating to the correct calculation of statutory holiday pay for part year workers. This decision has implications for all part year workers on contracts which subsist all year round, whether their hours are normal or irregular.
Universities and colleges are not immune from deception by unscrupulous bad actors. The extent to which educational institutions can manage and control risk not only depends on financial management and internal controls, but also the robustness of security and processes which can be exploited from outside the organisation.
The new set of Legal 500 directory rankings have been published and we are proud to once again be recognised as one of the country’s leading firms advising the Education sector.
Browne Jacobson has been ranked as a Top Tier law firm in 25 key practice areas in Legal 500 UK 2023, the independent directory of comparative law firm performance. The firm also continues to underpin its status as one of the leading law firms in the East Midlands region with 16 Tier 1 rankings.
In University of Dundee v Chakraborty, the Employment Appeal Tribunal (EAT) considered whether a first draft of a grievance report could retrospectively be deemed to be privileged.
Since the UK left the EU and are now able to move away from the EU data protection regime, the UK government have implemented a national data strategy with the aim of reducing the burden on organisations but maintaining a high data protection standard.
The Chancellor’s recent mini-budget provided a significant announcement for business as it was confirmed that the off-payroll working rules (known as “IR35”) put in place for public and private sector businesses from 2017 and 2021 will be scrapped from April 2023.
The law around disability discrimination against pupils is not straightforward – but the reputational risk, let alone costs, of falling foul of the law are huge, so it’s worth upskilling staff whenever possible, as these two lawyers outline.
On 20 July 2022, the Supreme Court issued its long-awaited judgment in the case of Harpur Trust v Brazel, upholding the decision of the Court of Appeal. For those of you familiar with this case, you will know that it concerns the statutory leave requirements for part-time and part-year workers. For schools and academies whose workforce consists of a variety of types of part-time and part-year workers, this case is one that must be understood before any changes are applied. Come and join Emma Hughes, Head of HR Services as she puts questions to Ian Deakin, Employment Partner, and Sarah Linden, Senior Associate.
