Academies

Academy checklist

As the number of schools converting to academy status grows, Chris Cook provides these FAQs for governors

Q. What is an academy?
An academy is a publicly funded independent school which is outside local authority control. It is a school that is providing a high standard of education to its pupils, as (among other criteria), only those schools assessed by Ofsted as performing well or better are at liberty to apply to convert to academy status.

Conversion is governed by The Academies Act 2010, which is recently introduced legislation enabling the Secretary of State for Education to approve applications from schools wishing to become academies, via a new streamlined process.

Q. Why would our school convert to become an academy and who decides?
The decision to convert lies with you as governors. However, there is a necessity for you to consult with relevant people before the decision is made, which is addressed further on in this document.

There are a number of advantages to be gained from your school’s conversion, but your decision to convert should be ultimately based on the knowledge that conversion will increase and improve the learning and experience your students receive.

Advantages to conversion include:
• freedom of vision. Academies are able to choose and promote their own purpose, giving them the ability to decide how to conduct themselves, thereby becoming freed from the restraint of local authority target-driven practice and policy;
• freedom of curriculum delivery. This benefit goes hand-in-hand with freedom of vision. Academies can implement a curriculum tailored towards their own educational preferences, whether sport or science or music or mathematics. This enables them to remove the parts of the National Curriculum they consider inappropriate for their students, or if preferred, moving away from it completely; 
• freedom to employ staff on the academy’s own terms and conditions. Academies are able to set their own pay structure and conditions for staff, rather than adhering to national terms and conditions; and 
• direct funding from central government. Academies receive more money as the local authority no longer retains a slice for provision of central services.

Q. How will our role as governors change following conversion?
The principles remain the same as they are now for maintained schools but with added autonomy for the governing body. On converting to an academy, the current governing body must set up an academy trust, which is a charitable company limited by guarantee responsible for the academy and controls school land and other assets. By forming a company limited by guarantee, the members of the academy trust undertake to contribute a predetermined nominal sum to the liabilities of the company which become due in the event of the company becoming wound up. As noted, an academy has charitable status, but since 1 August 2011, academies are now exempt from registration with and outside regulation by the Charity Commission.

The academy trust will formally be incorporated by Companies House, following completion of the memorandum of association, and the articles of association will also need to be drawn up (which prescribe for the internal management and decision-making of the company along with the maintenance of the trust) and agreed with the Secretary of State, enabling the trust to become its own legal entity.

The members of the trust are responsible for appointing the governors to the governing body of the academy. These governors are also known as directors or trustees and may comprise some of the governors of the predecessor school, but note that the DfE expects “the make-up of [the governing body] to mirror the existing arrangements’’, so in all likelihood the membership of the trust and the governing body will be identical.

The academy directors will then manage the academy on behalf of the academy trust members, in their separate corporate entity. They will have core duties such as finance and property management, employment of staff and ensuring the quality of the provision of education.

Q. Who do we need to consult about becoming an academy?
There are two types of consultation which need to take place during the conversion process:
1. Consultation on whether or not your school should become an academy. The Academies Act 2010 states that when deciding whether or not your school should become an academy, governors should consult “such persons as they think appropriate” before signing the funding agreement. It is recommended by the government that you talk to local bodies or groups with strong links to the school. There is a duty of consultation which must be adhered to and which we will advise you about.

2. Statutory consultation under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) between the employer and staff, once the decision to convert has been made. There is a legal requirement for the employer to consult employee representatives about the proposed transfer. These representatives will normally be the trade unions which the employer recognises. It is important that you as the school governors take specialist advice which we can provide on the TUPE process, as failure to comply may result in compensation being awarded.

Q. What happens to our staff if we become an academy?
The rules relating to staff employment after conversion to academy status are covered by TUPE, which protect staff’s employment rights. As a result, all current employees will transfer their existing terms and conditions of employment to the academy trust. New employees may be taken on under different terms and conditions as required. Continuity of service of employees for the purposes of redundancy entitlements is also preserved.

The TUPE regulations bring other requirements too. As well as the need to consult employee representatives on the proposed changes, there is also the need to undertake HR due diligence.

As part of the due diligence process, the TUPE regulations require the transferor to provide limited employee liability information not less than 14 days prior to the transfer. This will include liaising with the local authority as soon as possible to establish who the employees at the existing school are, their employment terms and conditions and other details. There is also a statutory obligation on academies to carry out enhanced CRB checks on all members of staff prior to their appointment or as soon as practical thereafter. This may include all governors/directors, including those of the academy trust. Further advice can be provided on the due diligence process as a whole and specific advice is available on the particular components of the process.

Q. What happens to our funding if we become an academy?
As stated by the DfE, the principle of academies’ funding is that they should receive the same level of funding per pupil that they would receive from the local authority as well as supplemental funding for other services that will no longer be provided by the local authority.

Academies will receive a General Annual Grant (GAG), which is paid by the Young People’s Learning Agency (YPLA). The GAG comprises core funding and a local authority central spend equivalent grant (LACSEG).

Core funding is also known as the delegated budget share and will be equivalent to the current budget share the school receives from the local authority. The LACSEG is the supplemental payment made to the academy to cover the cost of central services which the school will no longer receive from the local authority. Detailed advice will be given on the particulars of your funding agreement.

Q. What effect will conversion have on staff pensions?
The standard transfer agreement acknowledges that an academy is a “scheme employer” for the purposes of the Local Government Pension Scheme (LGPS) and an “employer” for the purposes of the Teachers’ Pension Scheme (TPS). This essentially means that the academy will be responsible for the pension arrangements of staff employed by the academy.

In both the LGPS and TPS schemes, there are administrative complexities that will need to be considered. These may include the issue that the employer contribution rate relating to the LGPS is likely to be higher than the rate applied to maintained schools, as well as the fact that the employer contribution rate will also have to take into account the amount required to pay any past service deficit, for which it will become accountable once conversion to academy status has taken place.

Q. What happens to school land if we convert?
As conversion to an academy means the school is to be run by a publicly funded independent body, the Government has decided that the property interest should be sought to be transferred to the independent body so that the school can effectively be managed by them. This means that in most cases the interest in land will be transferred to the academy trust.

Chris Cook is a senior associate at SA Law. Chris can be contacted through www.salaw.com.

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