Local labour and apprenticeship clauses in section 106

Local labour and apprenticeship clauses are secured through a section 106 agreement, usually as an obligation to submit and implement an employment and skills plan before works start. The drafting questions that decide whether the clause works are narrow: how the target is expressed, who owns it once the contractor is appointed, what counts as compliance, and what happens if the number is missed.

Developers tend to negotiate the quantum and accept the mechanics. That is the wrong way round. A modest target with a hard default payment and monthly reporting is far more onerous in practice than a large target measured on best endeavours.

What authorities ask for and why

Authorities justify these obligations on local plan policies about economic benefit, inclusive growth and access to employment. The ask usually has three parts.

A plan, submitted and approved before works start, setting out how the construction phase will recruit and train locally. Numeric commitments, expressed as apprenticeship starts, work placements, local jobs or person-weeks of employment. And a monitoring and default mechanism.

Some authorities also seek commitments for the end use rather than the construction phase, meaning jobs in the completed offices, hotel or retail units. Those are harder to deliver, because the developer rarely controls the occupier, and harder to justify on the statutory tests.

Be clear which phase is being discussed, because the two get conflated in negotiation and then conflict in the drafting.

Employment and skills plans as a conditioned document

The plan itself is better handled as an approved document than as a set of numbers in the agreement body.

That structure gives both sides room. The agreement requires a plan meeting stated objectives, submitted before works start and approved in writing. The plan carries the detail: recruitment routes, the authority's employment brokerage, advertising arrangements, site induction and progression, and the reporting format.

Two drafting points to insist on. First, approval should be deemed given if the authority has not responded within a stated period, because a plan awaiting approval can block the start on site. Second, the plan should be capable of variation by agreement in writing without a deed of variation, since the contractor will change the delivery arrangements at least once.

Where an obligation later becomes pointless, there is a statutory route to modify it, and we cover that in discharging a section 106 obligation that no longer serves.

Numeric targets against best endeavours

This is the central negotiation, and the options are not symmetrical.

Numeric targets are commonly derived by formula, expressed per million pounds of construction value or per unit of floorspace, with the figure set out in the authority's own guidance. Ask for the guidance and check how the formula treats demolition, enabling works and fit-out, because including them inflates the target for no additional labour.

Best endeavours wording is not the soft option it looks like. An obligation to use best endeavours is a real obligation, and the evidence needed to show compliance is sometimes more burdensome than counting apprentices.

The combination worth aiming for is a numeric target, a clear measurement definition, and a stated default payment that caps the exposure.

Whether the clause meets the statutory tests

Two hurdles. The obligation has to fall within the purposes in section 106 of the Town and Country Planning Act 1990. And it has to satisfy regulation 122 of the Community Infrastructure Levy Regulations 2010, meaning necessary to make the development acceptable in planning terms, directly related to the development, and fairly and reasonably related in scale and kind.

Construction phase training obligations generally clear the second and third limbs. The labour is employed on this site, so the link is direct, and a formula tied to construction value scales with the development.

Necessity is where the argument lives. An obligation is necessary to make the development acceptable only if the development would otherwise be unacceptable, and it is not always obvious that a scheme is unacceptable for want of apprenticeships. Authorities answer that with a local plan policy requiring the contribution, which is usually enough in practice.

End-use employment clauses are weaker on all three limbs. Clauses that seek to control who an unknown future occupier employs are the most vulnerable of all.

One further point. A requirement to employ people from a defined area has to be drafted so it does not discriminate unlawfully under the Equality Act 2010, which is why these clauses are framed around advertising, recruitment routes and travel-to-work areas rather than residence tests. The Public Services (Social Value) Act 2012 is sometimes cited in support, though it concerns public procurement rather than planning, so it carries no weight on the statutory tests.

Monitoring, reporting and default payments

The mechanics determine the burden.

• Reporting frequency. Quarterly is manageable. Monthly on a two year build is 24 returns, each needing data from the contractor.
• Who reports. Name the developer, with the contractor's obligations flowed down through the building contract, rather than naming the contractor in the agreement.
• What counts. Define an apprenticeship start, a work placement and a local resident, with the definitions in the agreement rather than left to the plan.
• The default payment. Expressed per unachieved apprenticeship or per person-week, payable on practical completion, with a cap.
• Bonds. Authorities occasionally ask for a bond or deposit for the maximum default. Resist it where the default payment is already capped and the developer is solvent.

Define the measurement period too. A target measured over the whole construction period is deliverable. The same target measured in each quarter is not, because recruitment does not follow a straight line.

Practical delivery through the contractor

The developer carries the obligation and the contractor does the work, so the building contract has to carry it across.

Include the employment and skills plan as a contract document. Put the reporting obligation in the contractor's scope with a named person responsible. Price it, because supervision, induction and placement coordination cost real money and a contractor who has not priced it will not do it. And put the default payment risk where it belongs, which is with whoever controls the recruitment.

Engage the authority's employment brokerage early if it has one. These teams exist to fill exactly these targets, and a developer who uses them has evidence of compliance even where the numbers fall short.

Construction logistics and the workforce arrangements overlap, so the Construction Management Plan and the employment plan should be written by people who have read each other's drafts.

Negotiating achievable wording

Four asks that authorities usually grant.

A target measured across the whole construction period rather than by quarter. A capped default payment in place of an open-ended obligation. Deemed approval of the plan after a stated period. And exclusion of demolition and enabling works from the construction value used in the formula.

Two asks that are harder. Removing end-use employment obligations, which depends on how firmly they sit in the local plan. And reducing the quantum, which is where a viability case may be needed, and where an inspector can revisit the position on appeal, as we discuss in when an inspector reopens viability at appeal.

Where the scheme's wider employment benefits are part of the planning case, set them out properly in an Economic Impact Assessment rather than asserting them. Councils expect a suitably qualified author for that work, and professional review is advisable. And on which instrument secures which obligation across a development, section 278, section 38 and section 106 sets out the distinctions.

PlanScope provides AI-assisted draft reports for planning applications. Reports should be reviewed before submission. We do not guarantee planning approval. This is general guidance rather than legal advice, so check the position with your local planning authority or a qualified professional before relying on it.