Introduction
Charities in England & Wales have the same obligations, responsibilities and duties to their employees, just like any other business when it comes to employment law, but they must also ensure that their workplace practices are constitutionally compliant, in line with charity law, and meet Charity Commission requirements.
Charities are under increasing pressure to get it right and, along with the challenges presented throughout 2020 and 2021 are often subject to additional scrutiny. Negative publicity can have a devastating impact on public confidence and funding, yet many charities are operating on slender budgets and with over-stretched resources.
There is also the problem that charities are, rightly or wrongly, often held to a higher standard than other employers and are expected to apply their stated values when acting as an employer in the same way that they would when dealing with beneficiaries. This problem will be particularly acute where the charity’s work is based on principles of fairness, social justice and the protection of people’s rights.
All these factors mean that an unhappy employee (or former employee) might be more inclined to pursue a claim against a charity than against any other sort of employer, knowing that their employer will be particularly keen to avoid reputational damage. Against this backdrop, it is more important than ever for the charity sector to understand relevant employment laws and practices which can be unique to the models charities operate within.
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. There are 13 listed charitable purposes, some of the more commonly seen ones are, the prevention or relief of poverty, the advancement of education or religion, the advancement of the arts, culture, heritage or science, the advancement of amateur sport, the promotion of equality and diversity, and the advancement of animal welfare. Every charity which is registered under the Act will have one or more of the 13 charitable purposes registered 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. The constraints of charity law can affect charities who want to reward loyal employees.
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.
Dealing with passionate charitable employees
We know that a charity’s employees will often feel a great loyalty towards, and ownership of, the charity or charitable trust for which they work or the objective that you are pursuing which can lead to greater scope for difficult employee relations which may lead to workplace disputes.
Managing employee relations and 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 because their passionate views are disagreed with or not acted upon.
When dealing with employee relations disputes and claims, our clients often face a dilemma: is it best to hush up a claimant and reach a settlement, or is it better to fight until the end? For our charity clients, all too often the first option seems more attractive, given how destructive bad publicity can be. However, settling too many claims too quickly could give off the impression that the employer is a light touch, and could encourage other employees to follow suit. It also runs the risk of the charity being seen to sweep problems under the carpet
What should charities do to manage this risk?
Prevention is better than cure with most things, not least employment issues. With any workforce, the starting point should always be an open and supportive workplace culture. Employees should be aware of what their role is, what is expected of them, and who they report to.
There may be a tendency among our clients in the charity sector to see the best in their staff and to trust them to behave honourably, however written documents are key. Having adequate policies in staff handbooks will introduce the charities culture when a new employee begins with your charity.
A review of staff handbooks will ensure disciplinary and grievance policies are in place that can be relied upon consistently and fairly.
Similarly, it is important to take notes of important meetings. Underperforming employees need to be performance managed, and there should always be a strong paper trail of conversations and meetings. The same goes for addressing conduct issues with employees. Written records of warnings and discussions will go a long way towards defending any Employment Tribunal claim. Just because a conversation may be difficult to have, does not mean that it should not take place. It almost always should.
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. A clear understanding of your respective roles and responsibilities goes a long way towards establishing a healthy working relationship.
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.
Employer responsibilities for charities with an income 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 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.
Employment Status
We have worked with many charitable employers to advise them on the correct legal status of their workforce, freelancers, workers, employees or volunteers. The status of staff is particularly important following the recent Supreme court case of Aslam and others v Uber in February 2021 found that purported self-employed drivers must be treated as workers rather than self-employed which entitles 1000’s of drivers to bring claims in the Employment Tribunal to claim to arrears of pay of minimum wage and holiday pay for up for a maximum period of two years.
Employment Tribunal Claims
Charities are not immune from tribunal claims, if anything, they may be more vulnerable than any other employer, in that they have a huge amount at stake when it comes to reputational damage. There is always the risk that a key funder may withdraw support on finding out that there is a claim under way, or that adverse publicity might lead to a drop in donations from members of the public.
What happens if, despite your best efforts, an employee brings an employment tribunal claim against you? Whatever you do, do not ignore it. The first step in the process is likely to be a call from ACAS about the proposed claim. This is your chance to find out more about the claim, and investigate whether there is anything to it. If possible, engage with ACAS, and use the time that they provide to consolidate your arguments. ACAS provide a great service, and the ACAS Early Conciliation process gives some time to address your minds to strategy.
Unfortunately, the reality is that sometimes you can do everything right, but still end up with your case in the Employment Tribunal. Our legal team has extensive experience providing employment advice in all aspects of employment law as it relates to charities and the wider not-for-profit sector.