You do not need an ATPL. Most instructors don't have an ATPL. Remember that the minimum requirements for a JAR ATPL are 1500 hours, of which 500 hours are on a multi-pilot aircraft. Very few instructors meet these requirements!
Most instructors will have a CPL, though, and this is why they can get paid for instructing. It's not actually necessary to have a CPL. An instructor without a CPL can not get paid for instructing, though - and he must have passed either the CPL or the ATPL written exams, even if he hasn't actually done the CPL flying.
FFF
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