Can I charge parents if I can't provide childcare?
The Competition and Markets Authority have announced that they are investigating nurseries and childcare providers in relation to contracts with customers for services that they cannot currently provide due to Covid-19.
Why are the CMA doing this?
The CMA have received a significant number of complaints from consumers about issues they are having with a range of organisations during the Coronavirus pandemic. The investigation does not solely relate to nurseries and childcare providers but also includes organisations in the travel, wedding, events and other industries.
Most of the complaints relate to cancellation policies. Many of these organisations can no longer provide services at this time and consumers have been seeking refunds which have not always been forthcoming.
All contracts between businesses and consumers must be fair and reasonable and if the CMA believe businesses have not been acting fairly then they have powers to investigate.
Why are they investigating nurseries and childcare providers?
Some nurseries and childcare providers have told parents that they have to continue to pay fees to retain their child’s place during lockdown but they are not open to provide childcare services. In some cases parents have asked to cancel their contracts with childcare providers and the childcare providers have made cancellation charges in relation to contractual notice periods.
What does this mean to you as a nursery or childminder?
Generally speaking, if you are currently unable to provide the services specified in your contract with your parents then you cannot legally charge them.
If the parent has given notice to cancel their contract with you during the pandemic then you are also unlikely to be able to charge them a 'cancellation fee' for any notice period specified in the contract.
What if my parents want to continue to pay me all or some of the fees?
There isn't anything preventing parents continuing to make voluntary payments to you for the services that you would usually provide.
Some parents may not be in a financial position to make any voluntary payments. Others may not wish to pay during a period of closure in any event.
You should speak parents and ask them if they are happy to make voluntary payments to help your business stay sustainable.
Some parents may be willing to pay you a proportion of your normal fees as a gesture of goodwill for you continuing to hold their places. If a parent chooses to make voluntary payments then you should retain evidence that they understand the payments being made to you are voluntary and not compulsory.
My contracts say I can charge even if I am closed, so I will continue to charge parents
Be careful. Contracts have to be fair and reasonable and just because you have clauses in your contract stating that parents have to pay when you are closed does not necessarily mean the parent is obligated to pay.
The Coronavirus pandemic is a force majeure - unforeseeable circumstances that no one could have envisaged when the contract was signed. Therefore certain aspects of the contract cannot be fulfilled due to no fault of either party.
If the parent refuses to pay then you are unlikely to be able to enforce the contract through the Courts and the Courts, CMA and other authorities will take a dim view of any contract clauses or behaviour that is deemed unreasonable. You could be ordered to refund any payments made by parents that are deemed to be unreasonable and you may have to pay court fees and other costs if the parent successfully wins a Court action against you. In some circumstances you could even face a fine but these are likely to be reserved for serious breaches by larger organisations rather than individual childminders.
Are my contracts now completely null and void?
No, probably not. Certain aspects of them might be in relation to how you may currently charge and notice periods but many parts of the contract are likely to be still binding. You may find it easier to issue parents with new, updated contracts when things return to normal, subject to their agreement.
What can I do in the future?
We have updated our FREE sample childminder Contract and Fees Policy which provides further information and can help you formulate future contracts.
Where can I find more help?
At Childcare.co.uk we provide lots of valuable help and resources to help all childcare providers. We are updating our Childcare Providers and Coronavirus FAQ regularly and have a wealth of free childminder paperwork, childminder guides, training courses and lots more on our website.
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