Childcare Contract

LouMH91

I was wondering what peoples take might be on the following issue a few parents are having with our private nursery. Fees are all paid in advance, so at the time the nursery closed on 23rd March and staff were all furloughed, they already had full fees paid up until 30th April and contractually we are not entitled to any refund. We have been asked to continue to pay 30% of our fees monthly for the remainder of the lockdown. Contractually we are required to give 2 months notice to terminate, or payment in lieu of notice.

My questions are as follows:

1. Could their claim for CJRS for furloughed staff since 23rd March be considered profiteering when they've received April's fees in full from all parents in advance?

2. If parents gave notice to terminate their contract shortly BEFORE the closure was announced, are they obliged to pay full fees for 2 months despite the closure or should they be entitled to pay the reduced rate of 30% like everyone else is?

3. If keyworkers had to enrol their children elsewhere in April to continue to be able to work, is there any legal argument that as the nursery was closed and staff furloughed since 23rd March, their fees for April should be refunded? (The contract does say no refunds in its force majeure clause but could this be argued as an exceptional situation? We have one parent who has essentially had to fork out double fees for April and this is financially crippling).

Many thanks for any feedback.

unholyangel

The legal position is that they can't charge you if they're not providing the service (so can't ask for money and should refund monies paid in advance). But as its for circumstances genuinely outwith their control (the contract shouldn't use the actual phrase force majeure as its legal jargon), they wouldn't be liable for additional losses (like finding alternative childcare). 

However, as parents you'll also want to keep in mind whether you want your child/ren to continue attending once business resumes. Some other parents who have posted on these forums successfully negotiated with their nursery/childminder, so always prudent to approach them to try. 

Mrsn

Firstly the CJRS scheme hasn’t covered nurseries in the way that was first thought. There is a real chance they may not be able to access the scheme at all... I have a few friends working in nurseries that right now are terrified about their finances. Also they have had to pay their staff in good faith in advance before the scheme opened and this became apparent, I wouldn’t class this as profiteering.

If notice was given by parents before the announced closures I would expect that the normal terms and conditions of their contract still stands, they willingly have their notice at that point the current situation does not change that fact.

This is a new situation which evolves every day. Legal arguments and precedence will not be available yet for these situations, signed contracts state what can and can’t happen during the terms of service. They have already added a clause on regarding force majure it’s up to the nursery whether they choose to enforce that or not.... 

I’m not saying they are right or wrong with the way they handling things but the contract is a legal document and some places have been asking for 100% retainer fees during this period. 

You can choose not to pay it but I absolutely would expect that the place would be terminated for the child for non payment. 

unholyangel

Mrsn said:

This is a new situation which evolves every day. Legal arguments and precedence will not be available yet for these situations, signed contracts state what can and can’t happen during the terms of service. They have already added a clause on regarding force majure it’s up to the nursery whether they choose to enforce that or not.... 

I’m not saying they are right or wrong with the way they handling things but the contract is a legal document and some places have been asking for 100% retainer fees during this period. 

That type of exclusion clause can only be enforced where it is limiting liability for losses. It cannot be relied upon for payment of services not actually provided. Consumers are protected from unfair terms, they are not legally enforceable. 

To put it bluntly, if the business isn't liable to provide the services because it's outwith their control....then why on earth should the other party be liable to provide their consideration when it's also outwith their control? If the OP lost their job/was victim of theft and couldnt afford the childcare....could they just tell the nursery "it's outwith my control so I can't pay you but you still need to provide the service"? Of course not! 

Plenty of precedent on it. Maybe not covid specifically but plenty on breach or frustration of contract during exceptional events outwith the control of one/both parties. 

Mrsn

Thanks for the insight in your response it’s definitely got me thinking. To be clear I don’t believe people should pay for something they aren’t receiving I think it’s more the way people are approaching it. This particular post used the word profiteering which to me doesn’t sit well when I know 3 people who work for nurseries who right now have no idea where they stand with monies they may or may not eligible for. 

Nursery workers and childminders have been thrown in the deep end here and if people don’t pay which absolutely their right they may find themselves in a position where once childcare can return unable to do so because businesses have gone under.... that though is a completely different discussion.

unforeseen

Notwithstanding the argument about whether they can or can't legally the main question for the OP is whether they want somewhere for their child after lockdown or whether they are willing to find somewhere else. 
Non-payment of the 30% is virtually guaranteed to mean that you have no place at the end of this. 

Semple

Mrsn said:

This particular post used the word profiteering which to me doesn’t sit well when I know 3 people who work for nurseries who right now have no idea where they stand with monies they may or may not eligible for. 

I believe the argument the OP used about profiteering was for claiming the 80% pay for staff via the CJRS as well as taking in 30% payment from parents. Yes the nursery might have overheads to continue paying during lockdown, but those aren't of the concern of the parents, that's just unfortunately business.

The tricky part with nurseries is that if you have a good/popular nursery that has a waiting list, and you refuse to pay even the retainer during these times, the nursery could decide to cancel your contract and offer your childs place to the next child on the list.
Individually you're not in a very strong position, but if you're able to round up support with the other parents who all agree the same thing, then you could all apply pressure on the nursery regarding fees. 

LouMH91

Hi all, thank you for your responses.

To clarify:
There is no objection to paying the 30% from anyone wishing to maintain their place. We all want the staff to be paid and the nursery to open again!

My question was specifically about 2 parents who are leaving the nursery before it will re-open and being asked for 100% of the fees for 2 months instead of the 30% everyone else is now paying, the owner maintaining the "offer" isnt being extended to anyone who leaves. She believes the original contract is fully enforceable. Judging by your responses I'm guessing the answer is that legally they don't have to pay anything during the closure as they arent returning to the nursery so retaining a space isnt an issue.

My question about profiteering relates to April only, where 100% of normal fees were paid but the CJRS is being claimed from 23rd March - 30th April despite this. Any reduction in CJRS due to funded hours doesn't change the fact they'll be receiving money above and beyond their normal monthly income, hence why I wondered whether it's considered profiteering and they should only be claiming CJRS for the month of May onwards as this is when their income will be lower than normal for the first time.

I guess you've answered my question about the keyworkers who have had to enrol and pay elsewhere, theres no precedent. We will continue to support them as best we can.

Thanks again everyone. We've already been negotiating with the nursery as a group to get to the current place, but the original questions are just the last few sticking points we don't really know what to do about which only affects a couple of parents, so I wanted to reach out for some opinions on their behalf.

unholyangel

LouMH91 said:

Hi all, thank you for your responses.

To clarify:
There is no objection to paying the 30% from anyone wishing to maintain their place. We all want the staff to be paid and the nursery to open again!

My question was specifically about 2 parents who are leaving the nursery before it will re-open and being asked for 100% of the fees for 2 months instead of the 30% everyone else is now paying, the owner maintaining the "offer" isnt being extended to anyone who leaves. She believes the original contract is fully enforceable. Judging by your responses I'm guessing the answer is that legally they don't have to pay anything during the closure as they arent returning to the nursery so retaining a space isnt an issue.

Well the flip side to their argument is: if they are going to enforce the termination clause/payment as per the contract, that leaves them open to the parent seeking provision of the service as per the contract. 

In contracts, each party offers consideration - in this instance their consideration is the provision of childcare services and yours is the money you pay them. They give the service in exchange for the money, you give the money in exchange for the service. 

They can't then vary that to your disadvantage - even if beyond their control & even if they say they can in the terms. Because if you are not receiving any of the consideration they agreed to provide, you are being deprived of the whole contract value.

The parents affected should have a look at CMA's unfair term guidance.