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Charities preparing for redundancies

The coronavirus pandemic has affected many charities very significantly and, in some cases, threatened their viability. Charities have had to manage their resources and staffing levels from a perspective of ensuring financial stability and survival.

Unfortunately, this has led to some charities having to reduce the size of their workforce and, given the planned closure of the Coronavirus Job Retention Scheme (CJRS) on 30 September 2021, it seems that more redundancies will follow.

In order to ensure they treat their employees fairly, avoid redundancies wherever possible and stay on the right side of the law, charities should think ahead and start planning for life after the end of the scheme.

The end of furlough

When lockdown measures were introduced in March 2020, organisations nationwide were forced to make immediate changes to their ways of working. The CJRS was set up as part of a package of measures designed to safeguard jobs and alleviate the impact of the coronavirus pandemic on employers across the country.

Many charities have had to furlough employees under the CJRS, and it has provided a lifeline to them when they might otherwise have had to cut staff numbers drastically. Now is the time, however, for charities with employees on furlough to look ahead, consider what staffing levels they will need once the CJRS closes and decide whether redundancies might be necessary.

What is redundancy?

Under section 139 of the Employment Rights Act 1996, a redundancy situation is one where an employer closes down its business altogether, closes one particular workplace or has a reduced requirement for employees to undertake work of a particular kind.

Legal requirements

While redundancy is a potentially fair reason for an employer to dismiss an employee, in the context of an unfair dismissal claim (which employees with two years’ or more continuous service have the right bring), an employment tribunal will decide whether the employer’s decision to dismiss for that reason fell within the “band of reasonable responses” of a reasonable employer in those circumstances. Failure to follow a fair process will normally make a dismissal unfair.

In the context of redundancy, a fair dismissal will usually involve:

  • Warning and consulting employees.
  • Adopting a fair basis for selecting employees for redundancy.
  • Considering alternative employment.
  • Giving employees the opportunity to appeal.

It is vital for a charity employer to ascertain at any early stage how many employees it may need to make redundant. The number of employees is crucial because of the strict statutory duty to inform and consult collectively, which arises when an employer is proposing to dismiss for redundancy 20 or more employees at one establishment within a period of 90 days or less.

Considering the alternatives

Charity employers should consider ways of avoiding the need to make employees redundant altogether, for example:

  • Restricting new recruitment.
  • Voluntary redundancy – this can be a good option for charities as it offers them the chance to help protect staff who are more dependent on their job. Employers should, however, balance this with the risk that seeking volunteers could mean losing their top performers (unless they make it clear that applications for voluntary redundancy will be considered but are not guaranteed).
  • Retraining and/or transferring affected employees to other work.
  • Moving affected employees to another workplace.
  • Cost-saving measures such as: short-time working and job sharing; reducing overtime; wage/salary cuts; limiting/removing discretionary benefits; unpaid leave/sabbaticals.

The consultation process

Charities should consult properly with those at risk of redundancy (and “appropriate representatives” where the collective consultation obligations mentioned above apply) before reaching a final decision.

What amounts to a reasonable and appropriate consultation process will vary somewhat according to the situation. In general, however, consultations should involve:

  • Holding meetings with employees to discuss the situation in detail.
  • Speaking to employees when redundancy proposals are still at a formative stage.
  • Giving employees adequate information on which to respond.
  • Giving employees adequate time in which to respond to the information.
  • Conscientious consideration of proposals/ideas put forward by employees.

Following a careful and well planned redundancy consultation process should help to minimise the risk of legal claims against the charity (e.g. for unfair dismissal, breach of contract or discrimination) and maintain good relations with all staff whether they are selected for redundancy or not, hopefully minimising any adverse impact on the charity.

At the end of the consultation period, the charity will need to confirm who (if anyone) it is making redundant and whether an alternative to redundancy for certain roles has been found.

In cases involving collective consultation obligations, redundancy dismissals cannot take effect under after set statutory time periods have elapsed (30 days where the employer is proposing to dismiss 20 or more, but fewer than 100, employees).

Once a particular role has been confirmed as redundant, the charity should consider whether there are any other vacant roles within the organisation that the employee could be considered for. It is important that employers do not make any assumptions about what roles an employee faced with redundancy might be interested in and should provide details of all vacancies for the employee to consider.

Communication is key

Throughout any redundancy process, it is absolutely crucial for charities to keep in regular contact with all members of staff; both those who are at risk of redundancy and those who are not (but who may, nevertheless, be unsettled by the situation). This can be as simple as regular meetings (virtual meetings are fine in the current climate) or telephone calls.

Redundancy pay

In order for an employee to be entitled to a statutory redundancy payment, they will need to have been continuously employed for a period of two years or more.

A statutory redundancy payment is calculated as follows:

  • 1½ weeks' pay for each complete year of employment in which the employee was not below the age of 41.
  • 1 week's pay for each complete year of employment between the ages of 22 and 40 inclusive.
  • ½ a week's pay for each complete year of employment in which the employee was under the age of 22.

A week's pay is capped by statute at £544 and a maximum of 20 years of employment are taken into account for each employee.

Employees who are redundant will also be entitled to notice pay (whether they work their notice periods or receive payment in lieu of notice) and payment in lieu of any accrued but untaken holiday when their employment ends.

Employee rights

Any employee on maternity leave or shared parental leave whose job is made redundant has the right to be offered any suitable alternative vacancy first. Otherwise, if an employer has more than one other potentially redundant employee interested in an alternative role, it can undertake a competitive interview process to decide to whom to offer the role.

Employees who do not feel that they are being treated fairly or legally should be given the opportunity to raise any objections or counter arguments during the consultation process or at any meetings. They should also be allowed a right of appeal against any decision to make them redundant.

Where an employee wants to bring an employment tribunal claim against their employer (or former employer) arising out of a redundancy process (e.g. an unfair dismissal claim where the employee has two years’ or more continuous employment), they will need to make an early conciliation notification to ACAS, the independent government body that deals with employment disputes.

Looking ahead

Sadly, it is likely that the next few months will see an increase in charities being forced to make redundancies, particularly as the CJRS comes to a close. By preparing early, however, charities across the country will be able to do the best they can - not just for their own futures but for those of their employees too.

Ensuring enough funding through coronavirus

For many charities across the UK, fundraising efforts have been profoundly impacted by Covid-19. Some may have been affected in a positive way – benefiting from the abundance of new government loans and grants now on offer. However, for many, securing funds in the current climate is a struggle that has engulfed the sector.

The contrast between having access to limited resources and still needing to provide all-important services – some of which have experienced increased demand since the start of the pandemic – is a challenge that’s pushing many charities to the brink of dissolution.

Some charities will be lucky enough to have built up reserves over recent years that has allowed them to financially fight the impact of Covid-19. But for those that rely heavily on a steady stream of fundraising events and initiatives to keep them afloat, lockdown has had an undeniable impact on their financial stability.

While the criteria for accessing grants is widening, the government provision of funding remains an extremely competitive process.

Although charities cannot rely solely on this source of income, there are measures charities can take to secure support to ensure they make it out the other side of the pandemic and remain operational.

Exploring all options

As a direct response to Covid-19, the Government has provided £750 million worth of financial support for voluntary, community and social enterprise organisations. This includes £150 million sourced from dormant bank accounts and building societies, as well as £85 million from the Community Match Challenge, where donations from philanthropists, foundations and grant-making organisations are matched by the Government on a pound for pound basis.

While applications to the National Lottery £200 million Coronavirus Community Support Fund are now closed, the National Lottery Community Fund continues to offer grant opportunities for charities in emergency situations. Charities with shops can also apply for retail grants and funding under the furlough scheme, which will help them to keep staff employed and shop fronts open long term.

At a regional level, many local authorities will also allow charities to apply for discretionary grants, with several funds having widened their remit to provide additional funding to organisations. Councils can also cover the costs or provide grants for personal protective equipment (PPE) when requested to ensure charities can continue to operate in a safe manner.

It’s important charities remain proactive in recognising when new funds become available and the deadlines when they need to apply. Most of the windows for application are incredibly short so it’s easy to miss out on opportunities to secure funding if you don’t stay up to date with the changes in government initiatives.

Applying for funding

Due to the severity of the pressures faced by charities as a result of the pandemic, funders are being inundated with requests for support. As they only have a finite amount of resource to help charities, the selection process has become a lot harder and many funders have tightened their requirements.

To increase their chances of success, charities should include lots of examples and pictures in their applications to really showcase the good work they do. Questions should be answered fully, and charities should clearly demonstrate how the funds will be used in a concise cash flow forecast. This also shows good financial practice and makes it easy for funders to see what they’ll be supporting.

Charities should put themselves in the funder’s position and ask – why should we get funding over everyone else? Is our need and requirement more than others? How do we meet the brief? All these factors need to be considered by the charity if they stand any chance of securing funding.

Another way to increase their chances is to not send the same application to everyone. It’s important that charities tailor their pitches and ensure their examples meet the funder’s objectives.

Assessing a deal

Before applying for funding, charities should look at the application’s terms and conditions very carefully as there may be reporting requirements, as well as outputs, they need to achieve if successful – failure of which could be very serious.

Charities’ management teams should go through these carefully and assess exactly how they will adhere to the terms and if they’re achievable. Reasonable terms would be those that are within the charity’s reach and abilities and not overly costly to achieve. Unreasonable ones are those that are more geared towards the larger charities where they may have the expertise in-house that small charities may have to pay for, which can defeat the objective.

Implementing a strategy

The situation that charities currently find themselves in means cash can run out very quickly. Donations are not coming in as much as they’d like and the need for quick decisions is vital so charities can decide what their next move should be.

Funders often have a rigid structure in place as to when board meetings are conducted, when decisions are made and how quickly they can release funds. This means a quick decision often isn’t possible, so charities should implement a funding strategy to ensure they’re not overly reliant on any one source of income. They should have a plan B and C to fall upon should they not be successful in receiving funding.

There are practical things a charity should do to cope, including: conducting a detailed cash flow on a week-by-week basis so they can forecast as far as possible whether there’s going to be a cash emergency; having a cost cutting strategy in place to ensure only critical expenses are incurred; approaching other funders at the same time to spread the risk; and establishing how much reserves are to be used to get them through the tough periods.

Looking to local businesses

While many companies continue to operate remotely – which means many of their fundraising efforts for charities have been placed on the backburner – there are still ways for them to raise donations while remaining socially distant.

Virtual coffee mornings and raffles are a great way to not only fundraise for struggling charities, but also to get teams that are working remotely to engage and come together for a common cause.

If there’s one thing the pandemic has taught us, it’s the importance of community spirit. People are looking for ways to help others through this difficult time, so you’d be surprised by how many businesses would be happy to help with fundraising efforts if approached.

Charities can’t be afraid of asking local businesses to get involved – whether they be regular donors or those which are new to the charity. Especially if you provide them with fun, Covid-safe ideas to raise money, this can be launched as a way to encourage communication and collaboration among staff members, while working to support a worthy cause.

Creating a community

Charities should not only look for support within their community of local businesses, but also engage with other charitable organisations which are operating in the area for advice and guidance on how to navigate these difficult times.

Forming a strategic alliance between charities can be mutually beneficial – both in terms of knowledge sharing and attracting funds. By forming a partnership, charities can work together to increase or combine their public interest and ensure that charitable benefits continue to be applied at a local level.

A report by the Office for Civil Society stated that economic hardship and a growing sense of local identity was fuelling demand for “place-based” giving in the UK. With this in mind, local charities should work together to boost awareness of the services they provide across the region. This, in turn, should help them to secure funds.

Merging for money

Charities with similar aims should consider working together and creating a strategic alliance. Even if it’s only a one-off project, this can help charities to save costs while still delivering the same level of output, gaining efficiency from working together.

Alternatively, charities seeking more drastic measures may considering formally merging with another charity completely. They could also pass their reserves over to another charity with similar aims which might be able to make better use of them while being in a stronger financial position.

These options may seem drastic, but sentiment, perhaps, needs to be set aside and consideration for maximising the delivery of charitable aims brought to the centre.

Merging charities should be a serious consideration. It’s important that charities should be prepared to acknowledge that in the long term, a merger could better achieve their aims and, ultimately, serve the best interests of the community they serve.

A multi-faceted approach

There are a number of options available to charities which are in need of additional funding and, although these may not always be the most desirable ways to secure support, they can, ultimately, lead to the continued provision of important services.

While this is an incredibly difficult time for charities, there are a variety of resources available to help them mitigate the impact of Covid-19. Now, more than ever, charities need to be tapping into every pocket of potential resource and encouraging communities to come together – and collaborating among themselves – to unite for the greater good.

Insurance for charity homeworkers

Covid-19 has had devastating impacts on the charities sector and individual charities’ finances. Many are operating on a working from home basis. Others have furloughed their staff but continue to deliver services with the support of volunteers. Rent and other overheads are still being paid on premises often standing empty.

One constant backdrop to this story is insurance and whether and how various scenarios within the “new normal” for charities are covered. Does insurance have to be increased, or could it be scaled down and are the insurance policies a charity needed pre-Covid the same as those required now?

Homeworker safety

Under the terms of the Health and Safety at Work Regulations 1999, employer responsibilities for homeworker safety do not differ from the duty of care required for office workers. A charity’s legal responsibilities for their workers’ health, safety and wellbeing are identical.

A charity’s employers’ liability insurance will protect homeworkers and may have covered some charity staff who worked from home before the pandemic. A typical proposal form will have asked for details of clerical and manual staff, so cover should be in place, if all employees were included and roles have not changed. It is advisable to double check.

From here, a charity must do more than merely allow staff to work from home. A proactive approach is essential, making sure homeworkers have a suitable working environment, in terms of lighting, heating and seating. Insisting on regular breaks, of at least five minutes per hour, to move, stretch and take a screen break, is important.

Whilst charities cannot visit homes to carry out staff risk assessments, they should ask employees to complete their own risk assessments, according to a provided checklist.

Mental health and homeworkers

Awareness of mental health impacts has been heightened during the pandemic. Charities must monitor their employees’ mental health, whether homeworking or furloughed. Watching for signals is essential, with key areas being mood, unusual mistakes and acting out of character. Homeworkers should be frequently contacted and engaged in day-to-day operations and not allowed to feel isolated.

Homeworkers’ own insurance policies

Employees should tell their home insurer if they are working from home. Typically, that notification should suffice, particularly if the work handled is clerical. Many insurers have taken a sympathetic attitude during Covid-19 and agreed not to increase premiums for those working from home or using cars for work reasons. Some might say “quite so”, because homeworking is doing insurers a favour. Properties that might have been targets for burglary during working hours are now occupied all day.

But not all homeworkers are sitting at desks. A charity may have maintenance staff working from an outbuilding or shed at home and, if that is the case, extra care should be exercised. Any hot work, for instance, would need to be mentioned to the home insurance provider and checks also made as to whether any outbuildings are sufficiently covered on the property’s insurance policy.

Charity equipment

If a charity has provided equipment for those working from home, it should ensure it has all-risks cover in place and that the individual addresses of its employees are noted on the insurance schedule. Many policies will refuse to cover equipment, unless the address at which it is being used has been specified. Others may have an extension that allows for a certain sum insured to kept at employees’ homes. It is important to check.

If equipment is being supplied to home workers, it must be safe and fit for purpose. Any defects that cause harm to the employee could result in a liability claim.

Third party interactions

Any interaction that a home worker has with a third party, as a result of handling a work related task, should be covered by the charity’s insurance policy. For instance, if a homeworker drops a five-pack of printer paper needed for work and breaks the delivery person’s foot, the charity’s policy would need to pick up any liability claim.

A charity’s public liability policy will have no geographical limits, so regardless of where the incident occurs, the claim should be covered, if the incident is work related. If it is not, the claim would have to be settled by the worker’s own property owners’ liability protection - part of their home insurance policy.

Data protection

One thing charities need to be especially vigilant about, in an era of homeworking, is data protection and the way sensitive data – often held by charities dealing with the vulnerable – is safeguarded.

Charities must be clear about their data protection policies. Regardless of how safe homeworkers believe their property to be, laptops should be locked whenever left unattended. Documents must be shredded, if that is how they would have been handled in the office. Strong password protection should be used and passwords used for virtual meeting log-ons.

Phishing and hacking have increased during the pandemic, due to cyber criminals recognising that many workers are no longer operating behind strong firewalls. It is vital for charity employees to take every precaution to keep data safe and avoid GDPR repercussions. Check virus protection is the latest version available, and that staff only use charity laptops.

Also, if staff are still able to work in the field and use public hotspots, it is worth investing in a VPN service, to prevent hackers entering your systems, by diverting signals between their computer and the public hotspot’s server.

Cyber insurance was becoming a priority for many businesses pre-pandemic and is highly relevant now. Such insurance can provide compensation should websites be seriously interfered with or data lost, but also provide valuable IT expertise, to restore operations quickly.

Charity premises

Whilst, under normal circumstances, leaving premises unoccupied on a long term basis would invalidate insurance cover, insurers are currently regarding business premises as being “temporarily closed”. In return, they expect property owners to try to inspect the building at least weekly and to put security measures in place.

Alarms, fire alarms and any sprinkler systems should all be in working order and heating should be left running to prevent freezing pipes. Mail should be picked up and waste removed - and moved some distance from the property.

Although insurers are taking this approach during Covid-19, charities should check their mortgage or lease agreements to make sure they are abiding by their terms. This is essential, if a charity is hiring out premises. In that scenario, it may also require property owners’ liability insurance.

Liability and professional indemnity

Tempting though it may be to stop paying for public liability protection or a professional indemnity premium, charities must remember such covers pick up the costs of claims not just from current actions but past ones too. If you cancel your policy, such retrospective claims would not be considered. Only claims made after the start date of your next policy would be covered. The message here is, “mind the gap” and do not create one, by cancelling cover.

Remember that even if all staff are furloughed, employers’ liability protection still needs to be in place.

Diversification of activities

If a charity has diversified or “pivoted”, it is essential it advises its insurer of any changes. Even what may seem like an innocent switch in operations or activities undertaken, could fundamentally alter the risk and would be deemed a “material fact”, which should have been notified. An insurer could easily turn down a claim, if it discovered any undeclared changes to the charity’s operations.

Trustees’ insurance

Trustees may find themselves more exposed during these trying times, with decisions relating to the charity’s direction resulting in actions being taken against them personally. Having charity trustees’ indemnity protection in place will protect a trustee’s personal finances, in cases of financial and administrative liability. With redundancies being a hotbed for potential litigation, such insurance makes great sense.

Volunteers and insurance

Charities can take on volunteers and furloughed staff from one charity are legally able to volunteer for another, as long as this is not a “swap” of staff and thus against HMRC rules. If charities take on new volunteers, there are things to consider.

Firstly, if there is an insurance policy covering volunteers, does it have any upper or lower age limits? Secondly, are these volunteers driving charity vehicles? If they are, the charity needs to arrange their insurance cover. If they drive their own vehicle, insurance is their responsibility.

All volunteer activities should be reviewed through a risk assessment and volunteers regarded with the same duty of care as employees.

Volunteers insurance?

Finally, at a time when volunteers are doing so much to assist our communities, some food for thought. Volunteers insurance is not a requirement in UK law and volunteers are often grouped with employees under a general employee liability policy or covered under a public liability policy (but charities should check). However, given the input and valuable work done by volunteers during the pandemic, perhaps it is time that specific insurance became mandatory to protect such selfless citizens?