Like most businesses, charities are under immense pressure during the Coronavirus pandemic. Many charities have had to cancel fundraising activities, impacting their financial security, and are having to make difficult decisions regarding their employees. Much of the fundraising taking place is focused on the COVID-19 pandemic, which will also affect charities whose work is unrelated to it. Unfortunately, financial survival will ultimately dictate the decisions charities have to make in relation to their employees.
Furlough (CJRS)
Many charities are furloughing their employees. Furlough essentially means a temporary leave of absence. The underlying purpose of the Government’s Coronavirus Job Retention Scheme (CJRS) is to incentivise employers to retain employees on paid temporary leave, rather than make them redundant, in order to protect the UK economy. Through HMRC, the government offered to subsidise the earnings of furloughed employees (up to 80% of earnings, capped at £2,500 per month per employee). This scheme was due to finish at the end of October 2020, with employers contributing towards furloughed employees’ salaries from August 2020.
Redundancies
Decisions regarding redundancy will ultimately be made at board level and will be based around the finances of the charity. We might see shrinkage, or potentially changes in the skills needed within the charity. For example, there may be fewer fundraising events and more digital campaigns.
If redundancies do need to be made, it is important to carry out a process using objective criteria which are applied consistently across all the employees who are at risk, taking into account any reasonable adjustments that may need to be made for some individuals. Charities should ensure that employees are consulted and that the process and any selection criteria are as transparent as possible. If the process is not carried out properly, charities, as with all employers, risk employment tribunal claims being brought against them. They also face the additional reputational risk of being seen to have behaved unethically. If in doubt, charities should seek advice at an early stage, as it is usually easier to get things right at the outset than to deal with problems further down the line.
For more information on redundancies, read our blogs below:
Board level disputes
At board level there is often complexity in the relationship between senior management and trustees, with the lines sometimes blurred and everyone taking a view. There will therefore be intense pressure to balance financial imperatives with charitable aims and trustees’ legal duties. When board members do not agree, it can take time to reach a consensus, during which delays and disagreements may cost money and affect morale within the charity. As charities may need to act swiftly during periods of crisis, they should ensure their processes are clearly set out in the charity’s governing documents and include a mechanism for resolving disputes. If needed, charities can also consider mediation or seek independent advice.
Please note that the information contained in this podcast and accompanying update was correct at the time of writing. It does not constitute legal advice and specialist advice should be sought in individual circumstances.
Further information
If your charity is in need of employment law advice, please contact Corinne, Catherine, or any member of our Employment Law team.
About the authors
Corinne is an immensely experienced and highly respected employment lawyer. She advises both employers and senior executives in relation to the full spectrum of employment-related issues. She particularly enjoys dealing with equal opportunities issues in the workplace and acting in relation to (often hard-fought) whistleblowing claims.
Corinne has been a trustee of Kids’ City for five years and a Governor of Hornsby House Educational Trust for three years.
Catherine often advises individual clients who are going through difficult circumstances at work, guiding them through disciplinary and grievance processes and, where appropriate, negotiating an exit. She also has experience assisting employer clients with complex cases, helping them to minimise the risk of litigation and reputational damage.
Catherine has been a trustee of Central London Samaritans for two years.
