Average annual fees for independent schools rose 83% between 1992 and 2008. The provision of reduced school fees for staff is seen as a very effective aid to their recruitment and retention. However it does raise a number of complex legal issues.

There is a potential risk of claims of discrimination most notably on grounds of age and sexual orientation. More mature employees could contend that their age meant they were disadvantaged when compared with other younger employees. Similarly a homosexual employee may find it relatively easy to argue that he/ she is less likely than a heterosexual colleague to have children and therefore is proportionately disadvantaged.

It would be a successful defence against such claims to establish that the reduced fees scheme is a proportionate means of recruiting and retaining staff.

Part timers

A number of schools offer a reduced level of fee remission to part time staff. Working arrangements can mean that so called part time members of staff may perceive themselves as working full time hours and therefore entitled to unreduced fee remission.

Since 2000 the Part Time Workers (prevention of less favourable treatment) Regulations has provided specific protection to part timers not to be treated less favourably than comparable full time workers with regards to their terms of employment, or to be subject to a detriment unless the employer can prove the less favourable treatment is justified.

The first problem is that, rather unhelpfully, there is no specific legal definition of the meaning of 'part timer' in terms of specific hours. As such it is unfortunately a question of fact in every specific case.

A female part time worker could also bring a claim on the basis of indirect discrimination due to a protected characteristic, namely her gender. The answer to this claim would depend upon whether or not the statistical (and other evidence established) fee policy disadvantaged her as a woman. Justification would still be a defence to any gender imbalance.

The future

Staff discounts can amount up to, and over, 50% of all concessionary fees offered. The removal of the benefit from current staff seems likely to be open to legal challenge, including the risk of unfair dismissal claims. If new joiners receive a reduced level of fee remission then this is potentially discriminatory. Equal treatment for all staff is the only fair approach should financial circumstances dictate a change.

As an alternative schools may consider the use of a salary sacrifice scheme. This occurs when an employee gives up the right to pay part of his cash pay in exchange for a tax efficient benefit provided by the employer. This can achieve tax and national insurance savings for both parties. Salary sacrifice school fee remission schemes are accepted by HMRC and once established are relatively simple to administer. Subject to further tax changes their use seems likely to be widespread.

Regard should be had to a clear written staff fee discount policy. Any policy must be strictly discretionary. Other useful clauses include a definition of the groups of staff entitled to the discount, the treatment of part timers, the amount of discount given where both parents are employed and the number of children in respect of which the discount will apply.

Consideration should also be given to the inclusion of a clause to deal with a situation where a staff member leaves or the school wishes to exclude a particular staff member's child due to unacceptable progress of behaviour.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.