Academy bosses have been warned they could be hit by costly delays after government quietly changed rules over the use of confidentiality clauses when trusts sever ties with staff.
Trusts must now secure Department for Education approval before including confidentiality clauses in settlement agreements with outgoing employees, following tweaks to statutory guidance last week.
Polly O’Malley, of law firm Browne Jacobson, said leaders must be “aware” of the changes, or risk inadvertently breaching academy rules when signing off on severance payments.
Academy rules tweaked
The academy trust handbook states staff severance payments must be “in the trust’s interests” and “justified”, with decisions “based on legal assessment” of the chain’s “chances of successfully defending the case at employment tribunal”.
However, they “should not be made where they could be seen as a reward for failure, such as gross misconduct or poor performance”. O’Malley said confidentiality clauses are inserted into the agreements “the majority of the time”.
They usually stipulate parties won’t disclose the existence of the terms of the agreement or that they would not reveal the circumstances surrounding the termination of the staff member’s employment.
Previously, the trust handbook only instructed leaders to ensure confidentiality clauses “associated with staff severance payments do not prevent an individual’s right to make disclosures in the public interest”.
‘Novel, contentious or repercussive’
But on Wednesday, the rules were fleshed out. The updated document now describes the provisions as “novel, contentious or repercussive” and “must not be used unless the trust has received prior DfE approval”.
“Trusts that use such clauses without DfE consent risk being in breach of the handbook’s new provisions, which are immediately effective,” O’Malley added.
“We anticipate challenges in implementing the new wording over the coming days and weeks.”
Stone King senior associate James Barron said the provisions “do not differentiate between clauses which are requested by the employer and those which an employee may desire”.
He believes “a blanket approach … is likely to be problematic in the short term and may in fact fundamentally change the approach of the academy sector to entering into settlement agreements in the long term”.
Firms seek government clarification
Under the burgundy book – which outlines teachers’ conditions of service – teachers’ contracts can only end at the close of a school term, on December 31, April 30 or August 31. They must also be given “a minimum of two months’ notice”.
O’Malley believes the DfE “may find there are a large number of trusts seeking consent” this week, as they look to complete deals in time to part ways with employees at the end of the year.
This “could lead to delays”, she said. If they’re unable to secure the government greenlight this week, the employee would be “entitled to be paid until the end of easter, so it’s potentially quite significant”.
Stone King and Browne Jacobson said they were hoping to receive “further clarification” on the rule changes from government officials.
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