Employment and skills plans secured by planning obligation
An employment and skills plan is a delivery contract, not a statement of intent. The definitions of construction value and local area decide whether the targets are achievable.
An employment and skills plan secured by a section 106 obligation commits a developer to measurable training and recruitment outcomes during construction, and sometimes during the operational life of the scheme. The commitments are usually expressed in person weeks of employment for local residents, numbers of apprenticeships, numbers of work placements and school or college engagement activities, with quarterly reporting and a payment where targets are missed. An employment and skills plan section 106 obligation is therefore a delivery contract rather than a statement of intent, and it should be negotiated as one.
Most developers treat it as boilerplate until a quarterly report is late and the authority asks for the shortfall payment.
What the plan contains
A workable plan has six parts.
A baseline. The construction programme, the construction value, the trades involved, the procurement route and the expected peak workforce. Without this the targets are guesswork.
Construction phase targets. Person weeks of employment for residents of the defined area, apprenticeship starts, work placements, site visits and careers activities, and opportunities offered to local businesses in the supply chain.
End use targets, where the scheme has an operational employment element. These are usually softer, because the developer does not control who the occupier recruits.
Governance. A named person responsible, a reporting cycle, and the authority's nominated contact or employment brokerage service.
Evidence requirements. What counts as proof of a person week, an apprenticeship or a local resident.
Consequences. What happens if a target is missed.
Person weeks and where the targets come from
A person week is one person employed for one week. It is the standard unit because it accommodates short trade packages and part-time working in a way that headcount does not.
Targets are usually derived from the construction value or the floorspace, using a formula in the authority's supplementary planning document or employment and skills guidance. The formulas differ between authorities and are revised, so take the figures from the current document rather than from a previous agreement on another site.
Three technical points worth getting right before the numbers are fixed.
The definition of construction value. Whether it includes professional fees, land, abnormals and contingency changes the target substantially. Define it as the measured construction cost excluding fees and land, and say so in the agreement.
The definition of local. A ward-level definition is almost undeliverable on a specialist trade package. A travel-to-work area or the authority's own boundary is workable. Push for the wider definition and accept a slightly higher target in exchange.
The treatment of existing employees. A contractor's existing workforce who happen to live in the area should count, and some draft agreements only credit new recruits.
Construction employment and training costs belong in the appraisal alongside the other obligations, and the same discipline that applies to highway works costs in a development appraisal applies here.
Apprenticeships and work placements
Apprenticeship targets are the part most often missed, for a structural reason: an apprenticeship is a multi-year commitment and a trade package on site may last eleven weeks.
Deliverable approaches:
- Shared apprenticeship schemes, where the apprentice is employed by a training provider and rotates between contractors. These exist in most regions and solve the duration problem.
- Apprenticeships with the main contractor rather than subcontractors, counted against the site.
- Existing apprentices working on the site, counted as a proportion of their time.
- Work placements and T Level industry placements, which are shorter and easier to deliver in volume.
- Pre-employment training programmes run with the authority's brokerage, which produce candidates rather than requiring the developer to find them.
Agree in the obligation that apprenticeship targets can be met by any of these routes. A plan requiring a specific number of new apprenticeship starts with the principal contractor, and nothing else, will fail.
Monitoring and reporting
Quarterly reporting is standard, and the reports are the evidence base for whether a payment falls due. Three practical steps make this survivable.
Put the reporting duty into the building contract and the subcontract conditions, with a specific obligation on each subcontractor to supply workforce data. A duty that sits only with the developer and not with the people holding the payroll data cannot be met.
Collect the data continuously rather than at quarter end. Postcode, start date, hours, trade, apprenticeship registration where relevant.
Agree the report template with the authority before quarter one. Authorities usually have one, and using theirs removes an argument about format.
Expect a monitoring fee in the agreement as well, separate from the targets themselves.
Payments for underperformance
The usual mechanism is a payment per shortfall: a sum for each person week or each apprenticeship not delivered, payable to the authority to fund training it will arrange instead.
Negotiate four things.
The rate, which should be referable to what it would cost the authority to deliver the equivalent outcome rather than set at a level designed to deter.
An overall cap, so that a programme disruption does not generate an open-ended liability.
A reasonable endeavours qualification on the end use targets, where the developer does not control recruitment.
A carry-forward or substitution provision, allowing an over-delivery in one category to offset an under-delivery in another, and allowing a shortfall in one quarter to be made good in the next.
Resist a mechanism that treats every missed person week as a breach triggering immediate payment. A plan with annual reconciliation and a final account at practical completion is far easier to administer and no less enforceable.
Whether the obligation meets the statutory tests
Regulation 122 of the Community Infrastructure Levy Regulations 2010 requires a planning obligation to be necessary to make the development acceptable in planning terms, directly related to the development, and fairly and reasonably related in scale and kind.
Employment and skills obligations are more vulnerable on that opening test than most developers realise. Where the authority has an adopted local plan policy requiring them, supported by evidence of local need and a published methodology, the test is readily met. Where the demand rests on a strategy document that was never examined, or on a tariff with no policy basis, the obligation is open to challenge.
That is an argument to make carefully and early, at heads of terms stage, rather than at committee. In practice a developer who disputes the principle entirely spends more in delay than the obligation costs. A developer who accepts the principle and negotiates the definitions, the cap and the substitution provisions usually ends up with something deliverable.
Keep it separate in your mind from social value in public procurement, which is a different regime with different drivers and does not govern a section 106 obligation.
Negotiating targets you can actually hit
Bring the contractor in before the heads of terms are agreed. The contractor knows the trade packages, the duration of each, and whether the regional labour market can supply what is being promised.
Then do four things.
Offer a plan rather than waiting for the authority's template, because whoever drafts first sets the frame.
Phase the targets against the construction programme, so that the groundworks phase is not expected to deliver the same outcomes as the fit-out.
Quantify the economic benefit you are already delivering. An Economic Impact Assessment setting out gross and net job creation, construction expenditure and local supply chain effects gives the authority something to weigh against the targets it is asking for.
And where the obligation package as a whole affects viability, deal with it in the Viability Assessment rather than arguing about the employment plan in isolation. Councils expect a suitably qualified author for viability work, normally a chartered surveyor, and the format of the appraisal submission matters to how quickly it is accepted.
This is general guidance, not legal advice. Check the position with your local planning authority or a qualified professional before relying on it.
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Frequently asked questions
What is a person week in an employment and skills plan?
One person employed for one week. It is the standard unit because it accommodates short trade packages and part-time working in a way that headcount does not. Targets are usually derived from construction value or floorspace using a formula in the authority's own guidance, which is revised periodically.
Why are apprenticeship targets so hard to deliver?
Because an apprenticeship is a multi-year commitment and a trade package on site may last a few weeks. Shared apprenticeship schemes run by training providers solve the duration problem, as do apprenticeships held by the main contractor and counted against the site. Negotiate for multiple qualifying routes.
What happens if targets are missed?
The agreement usually requires a payment per shortfall, calculated per person week or per undelivered apprenticeship, for the authority to arrange equivalent training. Negotiate the rate against what delivery would actually cost, an overall cap, and a substitution provision allowing over-delivery in one category to offset another.
Do employment and skills obligations meet the statutory tests?
They do where the authority has an adopted local plan policy supported by evidence of local need and a published methodology. Where the demand rests on an unexamined strategy or a tariff with no policy basis, the obligation is open to challenge under regulation 122. Raise that at heads of terms, not at committee.
How should the end use phase be handled?
With reasonable endeavours rather than firm targets, because the developer does not control who the eventual occupier recruits. Keep firm, measurable commitments to the construction phase, where the developer and its contractor hold the contracts and the payroll data that evidence delivery.
Sources and further reading
This article is general guidance about the planning system in England and, where stated, the rest of the UK. It is not legal or professional advice. Check your local planning authority’s validation requirements and take professional advice for your specific site.