Charities in crisis: key employment law considerations

Like most businesses, charities are under immense pressure during this Coronavirus pandemic. Many charities have had to cancel fundraising activities, which impacts on their financial security, and are having to make difficult decisions regarding their employees. Much of the fundraising taking place will be focusing on the present COVID-19 pandemic and that will impact on charities which do not have this focus. 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 is offering to subsidise the earnings of furloughed employees (up to 80% of earnings, capped at £2,500 per month per employee). This is due to finish at the end of October, although the government has indicated that after the end of July changes will be made to the scheme that mean employers will need to contribute towards the cost of furloughed employees’ salaries.

For more information, please see our CJRS FAQs:

 

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 less 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 done properly then charities, as with all employers, risk having employment tribunal claims brought against them. However, they also have 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 it is 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 with everyone taking a view. So there will be intense pressure at board level to balance the financial imperatives with the charitable aims and trustees’ legal duties. When board members don’t agree it can take a while to reach a consensus, during which time delays and disagreements may cost money and affect morale within the charity. As charities may need to act swiftly during the current crisis, they will want to ensure that their processes are set out clearly in the charity’s governing documents and that these 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 update is correct at the time of writing and 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-related issues in the workplace and acting in relation to (often hard-fought) whistleblowing claims.

Corinne has been a trustee of Kids’ City for 5 years and Governor of Hornsby House Educational Trust for 3 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 2 years.

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