High-risk contracts - what schools should know
When it comes to managing contracts, schools often ask us: "Which contracts are the riskiest?" While one way to answer this is to identify contracts with the greatest potential financial or reputational impact, in practice there are certain types of agreements that schools frequently encounter issues with.
These high-risk contracts are the ones we strongly recommend reviewing carefully. Doing so can help reduce the likelihood of problems and provide schools with better options if issues arise.
So, what are the contracts that often cause challenges, and what are the key risks to watch out for? Here’s our ‘top five’:
- Cleaning contracts
- Catering contracts
- IT contracts
- Supply Teacher agreements
- Photocopier contracts
Cleaning contracts
The most common complaint we hear is that the expected cleaning hours are not being provided, resulting in unacceptable levels of cleanliness. Having robust Key Performance Indicators setting out the expected service standard, with a suitable mechanism to incentivise the provider to remedy the problem if the standards aren't met, is helpful. Additionally, the charging structure should be tied to the hours actually provided to ensure accountability.
Catering contracts
Most schools structure catering contracts on a ‘concession’ basis, where the caterer employs staff, procures food, and generates income by selling meals to students. Schools should typically only pay for Free School Meals (covered by the Pupil Premium), staff meals, and ad-hoc catering for events. Any other scenarios where the school could be liable to make payments, such as temporary school closures, changes in legislation, food inflation etc, should be carefully reviewed.
IT contracts
IT contracts often include automatic-rollover clauses, which can lead to unintended extensions of the agreement if notice isn’t served correctly or on time. Where possible, schools should avoid these clauses. If they can’t be removed, the drafting should look to minimise the risk of forgetting to serve notice. If the contract does rollover and the term is extended then it can be very difficult to get out of, even if the school no longer uses the software. Additionally, the contract should include enforceable obligations to improve reliability and minimise downtime.
Supply teachers
These contracts involve paying an agreed rate for supply teachers provided by an agency. However, a contentious issue can arise from clauses requiring schools to pay a fee if they directly employ a teacher introduced by the agency (usually a percentage of the relevant salary). While this approach is understandable, as it prevents schools from bypassing the agency to avoid supply rates, it’s important to ensure the clauses are carefully drafted. This helps minimise the risk of unintentionally employing someone which then results in a substantial fee being payable.
Photocopier contracts
Photocopier contracts are widely regarded as some of the most challenging agreements to exit early. If the contract is for a fixed term, it’s unlikely schools would be able to terminate without financial consequences.
The charging mechanism should be transparent - whether it’s cost-per-copy, a minimum monthly fee, or how charges can be increased. If maintenance services are included, the contract should specify clear standards and deadlines for resolving issues. Importantly, failure to meet these standards should allow the school to terminate the contract without financial penalties.
Conclusion
By proactively reviewing these high-risk contracts, schools can reduce the likelihood of disputes and improve their ability to manage issues if they arise. Whether it’s ensuring cleaning providers meet KPIs, avoiding hidden costs in catering agreements, or preventing automatic IT contract rollovers, taking a cautious and informed approach to these agreements can save significant time, money, and stress in the long run.