Employment law for charities

All employers that we work with will face the same challenges when it comes to employment law.  They have the same concerns with their workforce regarding employee relations, disciplinary and grievance processes, challenges with performance management, management of sickness absence and holiday pay, flexible working and maternity rights.

For some sectors however, the ethos of the employer and the regulatory environment are such that the approach to employment issues can be more complicated.  Charities are one such sector for a variety of reasons, which we explain further here:

How the Charities Act impacts employee structure

If you are a registered charity then under the Charities Act 2011 you need to ensure that you act within your charitable purposes and for the public benefit.  Under the Charities Act, charitable purposes include the prevention or relief of poverty, the advancement of education or religion, the promotion of volunteering or equality and diversity, and the advancement of environmental protection.   Every charity which is registered under the Act will have one or more of these purposes as its charitable objective.  Your Trustees will have a duty to ensure that the charity’s funds and resources are used only in furtherance of these objects and not placed at undue risk or misused, and will have a duty to act in the best interests of the charity at all times.

These duties can influence the way in which the charity approaches employee relations issues, the numbers of employees that they have and the way in which they are managed.

How passionate charitable employees may prove tricky

The nature of a charitable organisation is such that you may attract employees who have a particular passion for the work that you do or the objective that you are pursuing; they may have a high degree of loyalty but equally they may have a strongly held view as to the purpose and practises of the charity which can lead to acrimonious disputes.

Managing these disputes effectively is an important step in avoiding grievances being raised amongst colleagues, or claims such as constructive unfair dismissal if an employee feels they have no choice but to resign if their views are disagreed with or not acted upon.  There are many ways we have worked with charities in the past to help them overcome these concerns:

  • A review of staff handbooks to ensure sound disciplinary and grievance policies are in place and can be relied upon
  • Advise and providing management training on how to handle difficult conversations
  • Advise and provide management training on how to handle disciplinary and grievance proceedings, including how to identify when an issue should be escalated to HR or your equivalent
  • Advising on the process when more complicated allegations that can arise through the disciplinary process, such as whistleblowing.

Empowering your managers to feel confident to handle situations such as these will not only help when issues arise, but will also set a precedent within the charity for what is and isn’t accepted and expected from fellow employees.  Adequate policies in staff handbooks will also introduce this culture when a new employee begins with your charity.

Additional staff handbook and employment contract policies

While having adequate policies surrounding disciplinary and grievance proceedings are important, charities are also likely to require additional policies to other businesses due to the nature of the working environment.

It may be necessary for example to have a safeguarding policy for those who will be lone working, or working with vulnerable children and adults.  A policy of this nature will not only protect those employees but also support you as an employer in the event of an incident.

The role and duties of Charity Trustees

We understand that the differing role and duties of your Trustees and the senior executive staff can cause challenges in managing an operation with care and community at its ethos.  We have experience of helping organisations to balance their respective roles for the furtherance of their objectives.  A clear understanding of your respective roles and responsibilities goes a long way towards establishing a healthy working relationship.

One area we have seen a rise in queries is with regard to loaning charitable funds to employees.  The requirement to use the charity’s funds only in the furtherance of its objectives means that the charity may not be able to make such loans to employees as this may be outside the scope of the charities’ purposes.  With the exception of payments that fall below the de-minimise level currently set at £1,000, the charity may not be able to make ex-gratia payments or enter into settlement agreements without the authority of the Charity Commission or the Courts or Attorney General.  Trustees may need to convince the Commission that there are reasonable grounds for them to believe that they would be acting immorally by refusing to make a payment.

Trustees and those with general control and management of the administration of the charity need to pass the fit and proper persons test to ensure that they are not disqualified from being a trustee or senior staff member and to ensure that their personal interests or loyalties are not in conflict with those of the charity.  It is important that charities have the appropriate documentation for their Trustees which clarify their responsibilities and the scope of their remit with the charity; something we are experienced in drafting.

Employer responsibilities for charities with an income of over £25,000 per annum

If your charity has an income of more than £25,000 per year you need to report to the Charity Commission if there is a “serious incident”.  This is defined as including the loss of a charity’s money or assets, damage to the charity’s property, or harm to the charity’s work, beneficiaries or reputation.  There is an obligation to take immediate action to prevent or minimise further harm, loss or damage and an obligation to make a declaration to the Charity Commission in the Annual Return.

These obligations could affect your approach to disciplinary or performance issues relating to your employees.  Where other employers have the freedom to turn a blind eye, to a certain extent, to behavioural issues on the part of their workforce and to choose which matters to take through a formal process and which to treat informally, as a charity you have to consider whether you are obliged to discipline in order to comply with these regulations.

Ensuring your managers and senior staff are aware of the difference between a serious incident and that they can identify the trigger points where an issue should be escalated is a vital part of meeting compliance obligations, and avoiding an Employment Tribunal claim.  We have experience in delivering such training to managers, as well as reviewing staff handbooks and employment contracts to ensure these are able to support any action taken by both the charity and an employee.   Several charities are members of our employment law support package, Peace of Mind, which offers a full review of employment documentation including staff handbooks and employment contracts.  To find out more about Peace of Mind email Martin Giles at martingiles@warnergoodman.co.uk.

Volunteer staff and employment status

Charities are often reliant on an army of volunteer staff who may act as fundraisers, work in their retail outlets or with their service users on a casual or ad hoc basis.  You need to keep in mind recent employment status cases such as Uber and Deliveroo when considering whether these people are employees, workers or self-employed.  Incorrect identification could lead to costly Employment Tribunal claims.

You also need to ensure that you are compliant with National Minimum Wage and National Living Wage where appropriate, and that rules regarding holiday pay are observed.  Voluntary workers under the National Minimum Wage Act 1998 need to receive no pay other than reasonable subsistence or accommodation and reimbursement of expenses.

A volunteers’ code or policy is an excellent way of clarifying these areas, for your benefit as well as your volunteers.  The policy can include the following clauses:

  • Confidentiality
  • Obligation to comply with IT and data protection policies
  • Clarification of their employment status, and therefore their entitlement to benefits such as holiday and sick pay


We have worked with many charitable employers to advise them on the correct status of their volunteers, as well as drafting the appropriate policies for their staff handbooks and employment contracts.  Other examples of our work with charities includes:

  • Sleep-in contracts and payment of the National Minimum Wage
  • Advice on TUPE implications relating to mergers and following competitive tendering
  • How far can you change your terms of employment following a merger of two organisations
  • Disciplinary and grievance processes and how they impact on the charitable purposes and ethos of the organisation
  • DBS checks and safeguarding issues
  • The role and status of volunteers particularly following the Aslam and others v Uber and Pimlico Plumbers cases
  • Training of Trustees and front line managers on disciplinary and grievance processes, how to conduct and investigation through to managing the appeal process, equality and diversity issues, managing sickness in the workplace and mental health awareness.

To discuss a particular employment law issue impacting your charity, contact the Employment team on 023 8071 7717 or email  employment@warnergoodman.co.uk.

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