Employment and training obligations in a section 106

An employment and skills obligation in a section 106 agreement commits the developer to deliver local labour, apprenticeships, work placements or training during construction, and sometimes into the end use. Whether it is lawful depends on regulation 122 of the Community Infrastructure Levy Regulations 2010, which requires every obligation to be necessary to make the development acceptable in planning terms, directly related to the development and fairly and reasonably related to it in scale and kind. Whether it is deliverable depends on drafting that a contractor can actually perform. The two questions get confused, and the second one is where schemes come unstuck after permission.

What these obligations typically require

The commitments fall into three families, and a single agreement often contains all three.

Construction phase commitments are the most common: a stated number of apprenticeship starts or weeks, work placements, site visits for schools and colleges, notification of vacancies to a council-run brokerage before they are advertised elsewhere, and a target percentage of the workforce recruited from a defined area.

End use commitments apply where the development creates jobs on completion, typically retail, leisure, logistics or offices, and they mirror the construction commitments for the occupier rather than the contractor.

Financial contributions sit alongside or instead of both, funding a council training programme, a construction skills centre or a brokerage service. Formulas vary by authority and are usually set out in an adopted supplementary planning document, sometimes per job created, sometimes per unit, sometimes as a percentage of construction value.

Targets, monitoring and evidence

The obligation is only as good as the reporting it requires, and this is where the drafting earns its fee. An employment and skills plan is normally submitted for approval before development starts, then reported against.

• The definition of an apprenticeship, tied to a recognised framework or standard rather than to the word itself.
• What counts as a start and what counts as a completion, and whether an apprentice who leaves is replaced or counted.
• The geography, defined by a plan or a list of postcode districts rather than by the word local.
• The reporting period and format, with a named submission date.
• Who verifies the data, and what the developer has to keep.
• The point at which the obligation is discharged.

Monitoring fees are chargeable for section 106 obligations following the 2019 amendment to the Community Infrastructure Levy Regulations, so expect a sum attached to the reporting requirement. Check it is proportionate to the actual monitoring work rather than a round number applied to every agreement.

Whether they satisfy the regulation 122 tests

This is a real argument rather than a rhetorical one. The necessity test asks whether the development would be unacceptable in planning terms without the obligation, and for a training contribution the answer is not obvious.

Where the development plan contains a policy requiring employment and skills contributions, supported by evidence and applied consistently, the obligation is on solid ground. Where the request comes from an officer's list with no plan policy behind it, ask which policy makes the development unacceptable without it. The Planning Practice Guidance on planning obligations is clear that obligations should be based on up-to-date plan policies.

Scale and kind is the second line of argument. A training contribution calculated on gross development value can produce a figure with no relationship to the number of jobs the scheme creates, and a developer is entitled to ask for the arithmetic. The pooling restriction that once limited contributions to five obligations per infrastructure project was removed in September 2019, so the old argument about pooling no longer helps.

Practical delivery on a smaller site

The mismatch between policy and reality is sharpest on schemes of 10 to 50 units. An apprenticeship takes a year or more. A 15-unit scheme might have a groundworker on site for eight weeks and a bricklaying gang for six, subcontracted to firms with no capacity to take on an apprentice for the duration.

Three approaches work better than pretending otherwise. Pool the commitment across several of the developer's sites in the same authority, so an apprentice moves between them and completes. Take the apprentice into the main contractor's own employment rather than a subcontractor's. Or convert the commitment to a contribution and let the council fund training through a provider with the continuity to deliver it.

Say which of those you are doing at application stage. An obligation drafted as a number of apprenticeship starts, agreed without anyone checking the programme, becomes a default payment eighteen months later, and the developer pays twice: once for the failed effort and once for the default.

Financial contributions as the alternative

A contribution is cleaner to administer and easier to value in an appraisal, which is why many developers prefer it. It also has to pass the same regulation 122 tests, and a contribution unrelated to any identified training need is more vulnerable than a delivery obligation.

Ask three questions before agreeing one. What will the money be spent on, when, and what happens if it is not spent. Many agreements include a repayment provision if the sum is unspent after a stated period, and if yours does not, ask for one. Then check whether the contribution is indexed and from what base date, because the drafting of indexation clauses causes more disputes than the level of the sum, as set out in deferred contributions and indexation in section 106.

Where viability is tight, employment and skills contributions sit in the same pot as everything else and are assessed through the Viability Assessment. They are usually a small number relative to affordable housing, which makes them a poor place to look for savings but an easy one to concede, and review mechanisms can change the position later, as covered in viability review mechanisms.

Default provisions and their effect

Default clauses convert a missed target into money. They are common, they are enforceable in principle, and their drafting deserves attention.

Look at how the default sum is calculated. A figure tied to the cost of the authority procuring the same training outcome another way is defensible. A round sum per missed apprenticeship, unrelated to anything, invites argument about whether the obligation is a genuine planning requirement. Look also at whether reasonable endeavours or absolute obligations are used, whether force majeure and market conditions are recognised, and whether a shortfall in one reporting period can be made up in the next.

And check who the obligation binds. Section 106 obligations run with the land, so a successor in title inherits them. If you are buying a site with an implemented permission, the employment obligations and any accrued default liabilities come with it.

Drafting something deliverable

Offer a draft employment and skills plan with the application rather than waiting for the authority's template. Set the targets against the actual construction programme, name the trades and the weeks, and state the mechanism, whether that is direct employment, a pooled arrangement or a contribution.

Then flow the obligation down into the building contract. An obligation the developer has signed and the contractor has never seen is the most common cause of default, and it is a drafting problem rather than a planning one.

Where the scheme's job creation is part of the planning case, the Economic Impact Assessment is the document that quantifies it, and the numbers in it should be the numbers the obligation is calibrated against. PlanScope drafts one structured to the sections authorities expect and flags the figures it cannot verify rather than inventing them. For specialist technical reports, qualified professional input may be required.

Enter the site postcode on PlanScope to see which documents a major application is likely to need.

This is general guidance, not legal advice, so take advice from a planning solicitor on any section 106 drafting before you sign it. PlanScope provides AI-assisted draft reports for planning applications. Reports should be reviewed before submission. We do not guarantee planning approval.