Expert guidance for charity trustees: staff restructuring and redundancies

Charities in the UK are facing a year of financial and operational challenges.  These include declining donations, as people have less disposable income, high inflation and increasing energy and wage costs.  Many charities are dipping into reserves to stay solvent.

These challenges are prompting trustees to review what their charity will look like in the future.  Many senior management teams within charities are currently making and reviewing business plans to see how costs can be cut, processes digitised and whether mergers need to be explored.

For charities seeking to restructure in 2026 and beyond, it is crucial that this is approached in a way that balances operational needs alongside legal obligations and employee wellbeing. In this article, we highlight the key factors charities considering restructuring need to consider in respect of obligations owed to staff.

What are the reasons for a restructure?

There has to be a reason for a restructure. What does this mean? Usually, it means that the same people remain employed but carry out different jobs for different pay. Importantly, this may stray into a redundancy situation if the requirement for people to do a particular job is eliminated and there are not alternate roles for those individuals at the company.

You may be looking at:

• adapting the business model with less management and less administration; or
• people could be taking on more duties for the same or less money.

The role of charity trustees is to ensure that there is oversight and that the proposals put forward are justifiable.  Trustees must challenge any assumptions made with rigor.

What trustees need to know about redundancy

Redundancy is not about the person; it is about the job that they are doing.  There has to be a cessation or a diminution, i.e. reduction, in the requirements for them to carry out work of a certain kind.

If you are talking about the cessation of the whole business because it is insolvent or the place where it operates closes, then this is cessation of business or place of work redundancy.  Alternatively, if there is a need to employ fewer people to do certain jobs, then this is job redundancy.

Trustees will need to ensure that the case for redundancy is justified with sufficient factual and evidence detail because of the requirement to meaningfully consult.

How to correctly conduct consultation

Consultation must be done correctly, and it is important that any line manager involved knows how to conduct it appropriately.

To ensure that consultation is meaningful, it is vital to be receptive to alternatives to redundancy including considering alternate roles for the individual.

Further, during the consultation process, it is important to always use the words “potential” or “may”, not “will” and “must”, as those words can denote that you have made up your mind and this will detract from a fair process for redundancy.

It is not just the reason, but what you are trying to achieve that needs to be consulted about.

You will need to consider whether there should be a voluntary scheme and a window of opportunity to accept applications for voluntary redundancy or perhaps early retirement. You will need to set out your store as far as any enhancements are concerned over the statutory entitlements.

Employees who are made redundant are entitled to a statutory redundancy payment.  How this is calculated depends upon a number of factors such as date of birth, date of commencement, complete years’ service at the likely end of employment date and weekly pay, which is currently capped £751 per week.

If you do not receive enough volunteers, or you turn down some who you wish to retain, you will then need to move onto compulsory redundancy.

Here, you will consult on pools, selection, the application of the selection criteria, alternatives and the time frame.  You must also have an audit trail. The ACAS website is a useful resource that allows you to download a number of redundancy letter templates.

It may be the case that some employees are on maternity leave. It is important to remember that these individuals are protected from redundancy during this period and that they should also be kept up-to-date with any restructuring decisions.  Further, these individuals are entitled to return to their previous role and must be prioritised for suitable alternative positions over other employees. As a result of this, you should plan appropriately for their return, rather than assuming that they will be made redundant at the end of their maternity leave.

If more than 20 employees may be made redundant over a 90-day period, you will have to satisfy the requirements of collective consultation.

What are pools for selection?

There is such a thing as a pool of one. This usually means that the singular employee doing their job is redundant and their skills are not interchangeable with another’s. If they do have interchangeable skills and experience, you will need to place the lesser suitable candidate into the pool for selection along with others who have similar skills and experience, even if that means upsetting the other people and putting them at risk.

You will have to distinguish between what they can do under their contract and what they are currently doing functionally.  As the contract’s job description is not the be all and end all when identifying whether they are in a pool of one, you must conduct a consultation and you may have to be flexible with your pooling.

What is selection criteria?

The criteria used has to be objective and you will need to formulate a matrix to use. This can depend upon number of factors from output or quality of work to skills, attendance, disciplinary record and even length of service.

You should avoid creating any criteria which amounts to a provision criterion or practice (“PCP”) which has an indirect, detrimental effect on people of a certain protected characteristic such as disabled or older people or people of one gender or another.

You will also need to consult and decide on the weighting afforded to each criterion.

Application of selection criteria

The application of those scores will be a matter of judgment. You must also determine the benchmark score to avoid being at risk of redundancy.  You should also consider a tiebreaker in the event two people or more have the same scores.

Avoid the trap of giving the task of scoring to those who do not know the individuals concerned and who have never conducted an appraisal with them or performance review on an annual basis.

Certainly, when scoring, you will need to provide evidence of doing so and a fair selection matrix should not only contain the selection criteria, but the scores and the evidence of why each score was given.

What about offering suitable alternative employment?

Having scored and consulted over the scoring, you will need to consider suitable alternative employment for each individual at risk of redundancy. Here, you should consider both current vacancies and future vacancies. This is important as any Employment Tribunal asked to assess the fairness of the steps taken will consider this evidence.

You will also need to ensure that the suitable alternative is suitable by skills and terms. Interestingly, that is not to say that you cannot offer a lower position on a lower salary if that is the only position that is available.

You will also need to consider bumping or transfer redundancy, which is to bump a candidate who is selected for redundancy into another position occupied by another employee with perhaps less skills or less service and bumping that second employee out, to retain the first employee’s skills.

How can you handle challenges of dismissal?

You will need set out in your final dismissal letter for redundancy the reasons why the employee was selected for redundancy. You should also set out the details of their notice period including when their employment will come to an end. The letter should contain, where applicable, their statutory redundancy entitlement, their holiday pay entitlement and whether any benefits will continue after their employment has come to an end, such as private medical insurance.

Finally, you will need to explain that they have the right to appeal the decision which means that you will need to ensure that one of the trustees (often the chair) will need to be reserved for the appeal process.

If you have any questions about this topic, please get in touch with Nick Hobden, Head of Employment and part of our Charity and Not For Profit sector team.