Coronavirus shutdown: can my child's nursery charge 100% fees?

The Government announced on 19 March 2020 that schools, nurseries and other registered childcare providers (such as childminders) would close their doors to the majority of children from 20 March 2020, in an effort to delay/curb the spread of COVID-19.

Many nurseries are commercial businesses. The reaction of those nurseries to the Government ordered shutdown has been extremely varied, with some nurseries asking parents to continue paying 100% of nursery fees for the period of closure. The precise duration of enforced closure is not known to anyone. Many parents are themselves facing a significant (or even total) reduction in income as a result of COVID-19 and/or school and nursery closures, depending on their industry and circumstances, and will be asking whether nurseries are legally entitled to do this.

Much will depend on the terms of the contract entered into between the parents and their nursery. The key terms of that contract will be that, in exchange for payment of fees by the parents, the nursery will provide childcare services. If the contract is silent on how the parties will deal with fees during a period of unexpected closure, the nursery will not be entitled to charge fees for that period. This is because it will not be providing the services that are the subject of the contract, and for which fees are paid.

However, many nursery contracts do contain provisions which purport to deal with enforced closure for a reason beyond the nursery’s control. Whether or not it will apply to the current situation will depend on the precise wording used in each contract. However, it is arguable that a clause that states that parents are liable for 100% of fees for an unspecified period during which no services are provided would be deemed unfair under the Consumer Rights Act 2015 (“the CRA”). Terms in a contract between a consumer and a trader must be fair. If they are unfair, they are not binding on the consumer. The CRA has a list of terms known as the “grey list”. Terms that are grey listed will usually be considered unfair.  Within the grey list are terms that have the object or effect of inappropriately excluding or limiting the legal rights of the consumer in relation to the trader in the event of total or partial non-performance by the trader of any of its contractual obligations.

These are difficult times, and many parents will want to support their nurseries in any way that they can. However, parents faced with a request to pay 100% of fees may wish to discuss this further with their nurseries. The Government has announced significant measures that are being put in place to help businesses (including nurseries) that are affected by COVID-19. These include help with paying up to 80% of staff wages, business rates holidays and a promise that the local authorities will continue to pay early years funding during closures. In addition to the Government initiatives, nurseries may have insurance policies that will cover income lost. Once all the potential help has been taken into account, if nurseries consider that payments from (willing and able) parents are still required in order to keep the business afloat and ensure that nurseries will be able to reopen and take in children when the time comes, they should discuss this with their parents. Payment of full fees during the period of closure may well not be necessary.

This guide is for general information and interest only and should not be relied upon as providing specific legal advice. If you require any further information about the issues raised in this article please contact the author or call 0207 404 0606 and ask to speak to your usual Goodman Derrick contact.