Supply and demand

Lawyer Oliver Pool looks at the issues schools should bear in mind when negotiating and running contracts with suppliers

You can’t do everything yourself. Often those running schools decide that it makes sense to concentrate on what they are good at, and to get specialists in to run specific services that the school needs.

An example is a school’s cleaning function. Schools may not want to employ and manage cleaners directly, in which case they can turn to specialist cleaning companies. Another function which is most commonly ‘outsourced’ in this way is the school shop. Many schools decide not to take on the workload of running and managing a shop, monitoring stock levels and dealing with suppliers. The alternative is to appoint someone else to do so, and to take a fee or a slice of the profit made. This is far easier – at least, it is when it works.

When entering into these sorts of agreement, though, it is important for both sides to be clear about the arrangements that are to be put in place. Often third-party suppliers will set out the terms on which they will act, and the path of least resistance for the school is simply to sign on the dotted line and to accept those terms as offered. This approach is fine as long as relations between school and supplier remain intact, and nothing ever goes wrong.

When things do start to go wrong, or when the relationship needs to come to an end, it often turns out that the agreement contained prejudicial terms which ought to have been considered at the start of the relationship. After all, a supplier’s terms are typically designed solely to put the supplier in the best possible position in its dealings with schools.

Sometimes suppliers will state that their standard terms are fixed and ‘cannot be negotiated’. This is not really true. All a statement like this means is that the supplier would prefer not to negotiate its terms – but in reality, every contract can be negotiated. In fact, when terms are presented as ‘not for negotiation’ it is all the more important for schools to check what they are signing up to. Just because a document is short, it does not mean that it doesn’t contain problematic provisions.

Of course, it will be important for the contract to ensure that the supplier does the required job properly. The more detail there is about what must be done, how it must be done, and to what timetable, the better position the school will be in if there is a dispute, and the less chance there is for misunderstanding. A simple specification of the services is not enough on its own – the contract may contain traps for the unwary which should be checked by a solicitor. 

Common ‘hidden nasties’

Although a key role for a school shop supplier is to manage their stock, their contracts will often provide that the ‘stock risk’ is taken by the school, i.e. the school must buy all unsold stock at the end of the agreement. If a contract contains such a provision, it is extremely important that it also allows the school some control over the level of stock that is accumulated.

Otherwise, a school can be left in a position where the supplier runs up very high levels of stock, or accumulates old or out-of-date stock, which the school is bound to take on termination of the contract. If this sort of clause features in an agreement, the school should be careful to monitor stock levels to ensure they do not creep up unnecessarily. It would be preferable for the contract to allocate this risk to the supplier, who is in a better position to manage this risk.

Many schools have a dedicated room which is used as the school shop, and which is fitted out accordingly. Some or all of the stock may be kept in that room. If so, the supplier arguably has ‘exclusive possession’ of that space. This is the case even if the shop isn’t always open. This can give the supplier the right to argue that it has the benefit of a lease over that room, and that it has a right to renew that lease. It is important to avoid this arising, because it may hamper the school’s ability to bring the contract to an end and eject the supplier if it needs to. What the contract with the supplier says about the nature of its occupation is therefore very important, and should be checked.

Unless the supplier is online only, the school shop will need to be staffed. The employee should be managed by the supplier rather than by the school, but of course the school will want to ensure that the employee coming onto the premises behaves correctly, and the usual safeguarding provisions should be included. The contract should also make clear what happens to that employee at the end of the relationship.

It may well be that if the school decides to end its relationship with the supplier, the person running the school shop will transfer to the school’s employment (or to a replacement supplier) by Transfer of Undertakings (Protection of Employment) Regulations (TUPE) – whether the school wants them or not. 

Problems with employees

It is particularly important to check the employment-related aspects of cleaning contracts.

First, what level of control does the contract allow you over individuals? Most contracts will limit the school to dealing with the service provider only and not with the individual, and there are good legal reasons for this. However, the school should be aware that it has limited scope to deal directly with the individual carrying out the service, and this can lead to inflexibility if ad hoc changes or amendments are needed.

Equally importantly, what happens to the staff at the end of the contract? In most cases, those staff will transfer to whoever is providing the service next – whether that be the school itself or another supplier. It is not unknown for schools to be unhappy with the performance of the individuals carrying out the cleaning, and to seek to terminate their relationship with the supplier as a result – only to find that those same unhelpful staff transfer to the new provider by TUPE. In such a situation, the school would be better to rely on its contractual right to ask the supplier to change the individuals it sends – as long as that right has been included in the contract!

Some or all of these pitfalls can prove expensive and time-consuming if schools find out about them the hard way. Best practice is to get all contracts reviewed by a solicitor before they are entered into. Veale Wasbrough Vizards is always happy to carry out such reviews for an agreed fixed fee.

Oliver Pool is a senior associate at leading education law firm Veale Wasbrough Vizards. Oliver can be contacted on 0117 314 5429 or at opool@vwv.co.uk

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