Frequently asked questions - liability and risk
Who would be responsible if there were financial/legal
improprieties and issues in the school?
All maintained schools, including Trust schools, have a
governing body which is responsible for all major decisions and
accountable for all aspects of the conduct of the school. Governing
bodies as a whole and not the Trust will be accountable for the
school’s performance while the headteacher remains responsible for
the day-to-day running of the school. Governors have a legal
responsibility to conduct the school with a view to promoting high
standards of educational achievement.
As well as Trust appointed governors, the governing body of a
Trust school will continue to include elected parents and staff
governors as well as local authority and community governors.
Governing bodies are corporate bodies. As such, a governing body
acts as a single legal person with an identity separate from its
members. Responsibility for the actions and decisions of a
governing body rests with the whole body rather than with
individuals.
There is no distinction between Trust appointed governors and
other governors on a Trust school governing body with respect to
financial or any other kind of liability. The governing body of
every maintained school has a duty to ensure that the school has
adequate levels of insurance to cover, for example, property,
employers’ liability and public liability. By virtue of section
50(7) of the Standards and Framework Act 1998, governors do not
incur any personal liability in respect of anything undertaken in
good faith in exercising their power to spend the school’s budget
share, or delegating power to the headteacher. An example of an act
not undertaken in good faith is fraud.
Who picks up any debts/overspends incurred by the
Trust?
Trust schools are funded like all other local authority
maintained schools – funding goes directly to the governing body
(not the Trust). Trusts are not required or expected to make any
financial contribution to the schools that they support. Any
liabilities (such as debt) incurred by the Trust will not transfer
to the school.
As an incorporated body, the financial liability of members of
the Trust is limited to the sum they guarantee when they join the
company. Members of a charitable company guarantee to pay a nominal
sum (for example £10) which is the amount which members undertake
to contribute to the assets of the company in the event of it being
wound up.
Would the business (or the Trust) be liable for any
debts incurred by the school?
No. Any deficit occurring in the delegated budget of a Trust
school is the responsibility of the local authority. The Trust
would not be liable.
What are the risks of trustee personal
liability?
Very few trustees who have acted honestly suffer financial loss
as a result of their trusteeship. There are risks, but they should
be kept in proportion.
The Charity Commission says: 'If trustees act prudently,
lawfully and in accordance with their governing document then any
liabilities they incur as trustees can be met out of the charity's
resources.' (from Responsibilities of Charity Trustees, The Charity
Commission). The courts also have the power to relieve trustees
from liability where they have acted honestly and reasonably.
It is unlikely that trustees will be held personally liable, if
they always:
- Act reasonably
- Comply with their governing document
- Take appropriate professional advice where they don't know
enough to make a decision
- Take appropriate professional advice where they are required to
by law