Academy Trust Handbook 2026: employment changes

The Department for Education (DfE) has published the Academy Trust Handbook 2026 (the Handbook), which will take effect from 1 October 2026, rather than the traditional September implementation date. The DfE, in a letter to CEOs, explained the later implementation date, acknowledging that “publication shortly before the end of the academic year may present challenges for some trusts in implementing changes.” While many changes relate to financial governance and procurement, there are several significant developments affecting pay, pensions, recruitment and the handling of staff exits, which will be relevant to HR teams and senior leaders.

Key employment changes include:

Increasing scrutiny of exit payments

The new Handbook indicates tighter controls over staff exit payments, reflecting the DfE's increasing focus on value for money and accountability. 

Special staff severance payments are paid to employees outside statutory or contractual requirements when leaving public employment.

The Handbook repeatedly emphasises that trusts should not offer settlement payments where there is a 50% or greater prospect of successfully defending the claim. This is a more precise threshold than the previous wording and is likely to require trusts to take a more structured and evidence-based approach when assessing litigation risk. In circumstances where legal advice is that the employer is  likely to be able to successfully defend a  tribunal claim, making a payment is likely to constitute a novel, contentious or repercussive transaction for which prior DfE approval is needed. Further, where a settlement is justified, the level of payment must be less than the legal assessment of what the relevant body (such as an employment tribunal) is likely to award. 

Importantly, trusts should not assume that lower-value payments are automatically low risk or outside the scope of scrutiny. Even where the financial triggers for DfE approval set out within the Handbook are not met, trusts will still need to consider whether the payment is justified, whether it represents value for money and whether DfE approval is required on the basis of the payment being novel, contentious or repercussive (NCR).

The Handbook also expressly requires trusts to follow the DfE's Special Severance Payments Guidance, which we understand will be updated, and HM Treasury's guidance on Public Sector Exit Payments: Use of Special Severance Payments. The HM Treasury guidance (at paragraph 3.4) sets out examples of examples of transactions that will be NCR, which includes (but is not limited to) situations where there is 50% or more chance of successfully defending the case, where the payment is likely to attract public attention or involves a senior member of staff, where there is a confidentiality clause, where the payment could be seen to be rewarding poor performance or where a payment is made to an employee who is dismissed or has their contract terminated outside of any formal conduct, capability, retirement, redundancy or voluntary exit scheme procedures. This guidance is not new, however, the express reference to the HM Treasury guidance in full indicates the need for academy trusts to pay particular attention to its provisions.

Trusts should therefore ensure that HR, finance and governance colleagues are aligned on whether the proposed payment is justified and whether approval is required, before settlement discussions progress. 

Trusts should also take particular care where settlement agreements include confidentiality provisions, as in respect of special severance payments, confidentiality clauses are always novel, contentious or repercussive and therefore must not be used without prior DfE approval.  Interestingly, the new handbook appears to distinguish special severance payments from other severance payments when it comes to confidentiality clauses. This change will require further consideration and again, trusts are encouraged to seek early legal advice on this point. 

The Handbook stresses the requirement to record and retain evidence of the management and approval processes, including legal advice on the likelihood of successfully defending the claim, the reasons for the decision, the supporting evidence and how value for money was ensured. In practice, this means trusts should build in enough time to obtain advice and document the rationale.

The direction of travel continues to be towards a position where settlement agreements which include payments in excess of statutory or contractual entitlements are the exception rather than the norm. Whilst academy trusts are not prohibited from entering into such settlements, they will need to be able to show that any decision is justified, properly approved where necessary and supported by a clear assessment of risk and value for money. Seeking early legal advice will be critical to managing risk, identifying whether DfE approval is needed and ensuring the decision-making process is properly evidenced.

CFO qualification requirements

The DfE has strengthened its expectations regarding the qualifications of Chief Financial Officers in larger trusts. For trusts with more than 3,000 pupils, recruitment exercises commencing on or after 1 October 2026 should specify that CFO candidates should:

• be qualified accountants and members of an appropriate professional body; and/or
• hold the CIPFA Level 7 qualification.

From 1 September 2027, the requirements become more stringent and the ‘should’ becomes a ‘must’. Where a trust intends to appoint a CFO who does not hold one of the specified qualifications, it must notify the DfE in advance and explain why it is proposing to appoint a non-qualified candidate. 

This is likely to affect recruitment processes and candidate specifications for larger trusts.

Mandatory use of the government supply teacher framework

Under the new Handbook, trusts must use the Government Commercial Agency Supply Teachers and Education Recruitment framework for their supply staffing requirements unless they have an alternative compliant arrangement with rates that do not exceed those available through the framework. 

This change is likely to affect procurement practices, relationships with existing recruitment agencies and workforce planning arrangements.

New senior pay controls

The DfE has also strengthened oversight of senior executive pay.

From 1 October 2026, trusts must obtain DfE approval before advertising any new post where:

• remuneration exceeds £174,000 (or the pro rata equivalent for part-time staff); or
• performance-related pay exceeds £25,000.

This represents a notable increase in central oversight of senior executive recruitment and reward arrangements.

Electric vehicle salary sacrifice schemes now permitted

Trusts may now operate electric vehicle (EV) salary sacrifice arrangements without obtaining prior DfE approval provided:

• the trust has comprehensive mitigations to ensure no costs or liabilities fall on the trust if an employee defaults on their contractual obligations;
• the trust is not subject to a Notice to Improve; and
• the trust complies with the DfE's EV salary sacrifice guidance.

Trusts must also document the mitigation measures they have put in place. This change may make EV benefits a more attractive and administratively straightforward option for academy trust employers.

Inclusion and community

The Handbook places a stronger emphasis on inclusion as a trust-wide responsibility. Trusts are expected to ensure that pupils, particularly those with SEND, disadvantaged pupils and those known to social care, are identified early, can access appropriate support and are able to participate fully in school life. The Handbook also encourages trusts to adopt a consistent approach to inclusion across all schools, monitor outcomes and ensure board-level oversight of inclusive practice, including SEND.  While these provisions do not create new employment rights or obligations directly, they are likely to have workforce implications as trust boards will need assurance that staff are implementing inclusion policies consistently and effectively across the trust. This may lead to greater scrutiny of staff responsibilities, enhanced training requirements, clearer expectations within job descriptions and performance management processes, and more robust monitoring of how staff support inclusion, SEND and vulnerable pupils in practice. Trusts may also wish to review governance, reporting and line management arrangements to ensure they can provide the board with evidence that these expectations are being met. 

New pension scheme requirements

The 2026 Handbook introduces important new provisions regarding pensions. Trusts are reminded that they must comply with Teachers' Pension Scheme (TPS) and Local Government Pension Scheme (LGPS) requirements, and must also comply with HM Treasury's Fair Deal for staff pensions guidance. 

Importantly, from 1 October 2026, any trust wishing to offer an alternative to TPS or LGPS must engage with the DfE at an early stage and obtain approval before any proposals are communicated to employees. The alternative arrangement must be approved by the DfE before implementation. 

What should trusts do now?

Academy trusts should use the period before 1 October 2026 to review their existing employment, governance and approval practices to ensure they remain compliant and sufficiently robust.

While many of the changes reflect a continued focus on value for money and public accountability, the new Handbook also introduces several practical workforce-related requirements which HR, legal and finance teams should ensure are embedded before the Handbook comes into force on 1 October 2026.