It's all change at Waterloo Road as it has merged with local private school John Fosters, which was forced to close when wealthy parents could no longer afford the fees. As a result, around 100 new pupils are enrolled at Waterloo Road and neither the "posh" John Fosters pupils nor the "scuzzy" Waterloo Road kids are happy about it. The rivalry between the 2 schools triggers several fights and culminates in a mass brawl, which leaves Helen Hopewell unable to cope with the psychological pressure. The playground divisions are echoed in the staffroom as many of the old John Fosters team have been ushered in to ensure the smooth transition, much to the annoyance of the existing staff.

It's Open Day at Waterloo Road and the school is buzzing with preparations. Max and Rachel are determined to show that the merger with John Fosters is a success and set out to wow the parents and governors with a united school. Ruby Fry, meanwhile, has taken it upon herself to upgrade the school's buffet menu and puts caviar and other pricey sundries on her husband, John's, company credit card. When Ruby sneaks home to pick up some forgotten ingredients, however, she is confronted with bailiffs and John is forced to admit that his company is bankrupt. Steph tries new techniques to get her way with Jo and Josh's relatedness to Tom is made public.

New deputy head Christopher Mead becomes the focus of unwelcome romantic attention when his Year 10 fan club become increasingly brazen. Chris becomes concerned that one of his best students, Vicki MacDonald, is acting strangely, missing classes and handing work in late. When he discovers that Vicki has been sneaking off during school hours to work as an exotic dancer, he visits the club to talk her out of it, inadvertently putting himself in a vulnerable position. Vicki would not give up work and threatens to accuse Chris of sexual harassment if he tells anyone. Josh's attempts to push his mum and dad together results in an admission by his mum that he was conceived with a turkey baster and Tom's stolen sperm. Steph tries to piece together what took place the night before.

It's the day of Helen Hopewell's first official inspection and she is desperate to impress. Having just spent the night with Max, she now believes their romance might be reignited. Never one to miss an opportunity, Amy offers to keep the entire class under control – if Helen pays her for the favour. Terrified about losing her job, Helen agrees and cannot help but think it's £20 well spent when the inspector is obviously impressed with her "teaching ability". It's only when Helen refuses to give further bribes that Amy runs to Rachel and confesses all. Auditions take place for the school's end of term talent show and Tom takes Josh out for some father-son bonding.

Rachel accompanies Lindsay to court for her mother's trial, but Marion's case is not going well. In the observation gallery Michaela and Ros McCain are horrified to learn about Lindsay's sexual abuse. After a grilling from the prosecution, Lindsay breaks down in the witness box and finally confesses to Rachel the real events of that fateful day. Jo has been nominated for an award, but there is tension between her and Steph. Max tries to manipulate and bully both staff and students.

The governors have arrived at Waterloo Road to inspect the merger. Little does Rachel realise that Max intends to spend the day convincing them to fire her. Rachel and Max have a showdown in front of the governors, each blaming the other for the merger's failings; it's clear that they're not capable of working together. Sick of fighting a turf war with Max, a defeated Rachel hands in her resignation, believing her departure will at least provide some stability at Waterloo Road. However, Rachel's nephew, Phillip Ryan admits that Max has been abusive towards him and Kim reveals it all. Meanwhile Ruby runs an eventful talent show and Josh decides he wants to take a big step with Tom.

Rachel is determined to put the chaos caused by Max Tyler's dramatic departure firmly behind them. But for Kim it is not so easy to forget as she reveals that she is expecting Max's baby. It's year eight pupil Bianka Vale's birthday but the only present she wants is to spend time with her dad, Gary, who has separated from her mum. When Gary turns up at school Bianka is delighted to see him and persuades Grantly to allow her to leave with him. What Grantly doesn't realise is that there is a court order out against Gary, banning him from having unsupervised access to his children. Meanwhile, new pupil Finn Sharkey makes his presence felt, quickly making friends with Josh and Amy through his lack of respect for boundaries.

Kim and Chris come to blows over his introduction of an APU (Advanced Preparation for University) scheme for Ros, the school's brightest pupil. Kim believes the scheme should be open to everyone, but Chris thinks it's cruel to build up pupils' hopes of getting into a top university if their grades aren't strong enough. It's a battle of wills, won when Michaela stages a protest demanding to be allowed on the scheme and Rachel opens it up to everyone. Elsewhere, overweight pupil Aidan causes difficulties and Rachel searches for a new Healthy Eating Head, but gets a blast from the past.

When Finn's parents tell him they're moving to Los Angeles, his relationship with Amy looks doomed. Amy is later stunned when he proposes they make a suicide pact, rather than live without each other. A nervous Amy, who has become so dependent on him, agrees and they head off to an isolated beach. Rachel, Chris and Kim all come together to find the pair, but Rachel's determination to solve the issue at hand has an effect on Adam, who openly questions her commitment to him, putting their marriage in jeopardy. Meanwhile Steph, with the help of Oliver, organises the school prom.