Out-Law / Your Daily Need-To-Know

Strikes put universities at risk of student claims

Out-Law Analysis | 30 Nov 2021 | 11:02 am | 5 min. read

Ongoing strike action relating to staff pension disputes could put universities at risk of compensation claims from students, unless they put measures in place to minimise this risk.

Members of the Universities and Colleges Union (UCU) at 58 institutions have announced three further days of strikes in response to changes made to the Universities Superannuation Pension Scheme (USS) and pay and conditions respectively.

At another six universities, staff have announced other forms of industrial action such as strictly working to contracted hours and refusing to undertake additional duties for an indefinite period. The strikes will start on 1 December.

These announcements are likely to cause continued disruption to almost 50,000 students whose experience has already been impacted by strike disruption between 2018 and 2020, in addition to 18 months of restrictions imposed during the Covid-19 pandemic.

When strike action related to USS began in 2018, student groups across the UK were petitioning their institutions with demands for monetary compensation for perceived loss of tuition fees. Meanwhile, specialist claims firms were promoting the threat of a £10 million class action across the UK university sector if demands for loss and damage were not met. While the threat of group litigation did not become a reality, there was renewed pressure from those promoting the case for group legal action during the Covid-19 pandemic, and a renewed attempt to initiate a test case against one large institution rather than a wider ‘sector’ claim. The latest strike announcements come at a time when the dust has not yet settled on the last round of student complaints, and it is inevitable that group legal action will be threatened again.

It is also likely that there will be greater interference from the Office for Students (OfS), the Competition and Markets Authority (CMA) and sector ombudsman the Office of the Independent Adjudicator for Higher Education (OIA) than in 2018 and 2019.

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Julian Sladdin

Partner

The OIA is likely to place significant focus on a university’s actions in ensuring that students have the chance to make up any educational opportunities and outcomes

Managing students’ rights

While it could be argued that the new rules avoid students being forced to sign up to group litigation, the combined effect is to place an increased emphasis on students’ rights under contract, and to place additional pressure on universities to actively manage and mitigate any disruption to their students or consider offering compensation where this is not practicable.

Underlying legal issues highlighted in 2018 have not changed. What has become clearer is that the OIA is likely to place significant focus on a university’s actions in ensuring that students have the chance to make up any educational opportunities and outcomes. It will also consider the wider question of loss of value and expectation in cases where an institution has been unable to provide elements of a course or skills which, it could be argued, were seen by students as material to their decision to enrol.

There is still an open debate about the contract between a university and student being simply for the delivery of a set number of lectures, tutorials or seminars, or a participatory contract for the delivery of an educational experience. However, it is clear both in respect of industrial action and Covid-19 that a university is likely to be at risk of paying compensation if an element of teaching is entirely disrupted and cannot be addressed by alternative solutions or the skills covered cannot be replicated.

The strength of a university's position in the face of claims will very much depend on the terms of its contract with its students, and whether the OIA or a court would accept that it had taken all steps that would be regarded as fair and reasonable in all the circumstances, including ensuring that it has used all reasonable endeavours to deliver the material requirements of any contractual ‘promise’.

As the relationship between a university and its students is based in contract, an initial step in managing risk is to put in place terms which are intended to provide for flexibility in delivery in the event of unforeseen events, including industrial action and protection from claims for breach of contract should the ability to deliver be frustrated.

Force majeure clauses

The usual approach to protect against legal challenges is to insert a competent 'force majeure' provision into the contract. Force majeure is a form of disclaimer that refers to an event or series of events outside the control of the contracting parties, usually including epidemics and pandemics and industrial action, and protects the delivering party if it is prevented from performing its contractual obligations.

However, like any contractual term, a force majeure provision must be successfully incorporated into the contract when it is entered into. Attempts to vary or amend terms in circumstances where industrial action is imminent will be unlikely to succeed.

While force majeure provisions are an important protective measure, they are not by themselves a cast iron defence to claims for breach of contract. Reliance on force majeure provisions can be challenged in the courts, or indeed by the CMA.

Force majeure in a student contract will operate as an exclusion of liability, and will be subject to consumer protection legislation. It is clear from the management of consumer issues during the Covid-19 pandemic, both within the education sector and elsewhere, that regulators and courts will set a high bar before enforcing force majeure clauses.

A university must be able to demonstrate that any force majeure provisions are fair and reasonable in all the circumstances. As part of this assessment, the court is likely to require the university to demonstrate that it has taken all reasonable steps to avoid the operation of the event, and to mitigate its effects on the other party.

A challenge is likely to be made on the basis that, where strikes are concerned, a university could have negotiated a compromise or agreed to the demands of the strikers to avoid the risk of widespread industrial action.

The present guidance from OfS and OIA on industrial action, and the Covid-19 case outcomes published by the OIA, are instructive on these points. The message to the university sector is that although force majeure clauses are not unlawful in themselves, they are at risk of being held unenforceable in a consumer context due to the significant imbalance in the rights of the parties to the student contract.

Therefore, OfS and OIA will be quick to challenge universities where they place heavy reliance on such terms to the expense of taking reasonable endeavours to minimise disruption and mitigate any loss of educational opportunities and outcomes. This will involve providing satisfactory evidence of alternative delivery of learning opportunities and outcomes.

Effective communication with students around disruption, support and signposting students to meaningful complaints procedures including the OIA will also be key to any assessment of compliance by the OfS. Regardless of whether a university has a force majeure provision in its contracts or not, it must also carefully plan and document the practical steps it will take to avoid disruption and limit its effects. A university may be able to avoid or at least limit the scope for a successful breach of contract claim being made by students by demonstrating the steps it took to minimise disruption and that expectations around learning opportunities and outcomes were met.

Universities should also consider whether they have adequate insurance coverage in place to fund the risk of large group complaints or claims for compensation from students as a result of strike disruption through both the OIA and the courts. They also need to be mindful of their reporting requirements to OfS if industrial action materially affects any ability to comply with conditions of registration.