Research Warns Of Economy's Impact On Third Sector

Third sector organisations across the UK have been urged by an expert at Irwin Mitchell to improve their understanding of employment regulations as the economic climate starts to take a real toll on their services.

New research compiled by the National Council for Voluntary Organisations (NCVO) has revealed that 64 per cent of charities feel their financial situation is set to decline over the next 12 months.

A number also stated that this would lead them to reduce their level of service and cut staff numbers in order to deal with the current climate.

Glenn Hayes, an employment partner at Irwin Mitchell and specialist in the charitable sector, said that whilst such problems may seem inevitable, it is vital that such bodies carefully consider regulations when thinking about letting workers go or seeking to impose changes to terms and conditions on staff such as pay cuts or reductions in hours to ensure their long-term viability.

He explained: “These findings are not surprising and it’s important that charities are aware of the dangers of simply ‘shedding staff and imposing changes to conditions’.

“Although charities are used to relying on short term funding, many are less familiar with the legal pitfalls of dismissing staff or making contractual changes when this funding is cut – pitfalls that can ultimately lead to Employment Tribunals and costly claims for unfair or constructive dismissal amongst other potential problems.

“This combined with falling income for the charities themselves can quite quickly create a costly and stressful and is some cases, even an insolvency scenario.”

Leeds-based expert Glenn added that there is also the wider impact that staff cuts have on other workers for charities to carefully consider.

He outlined: “There are also issues in relation to those staff that are able to keep their jobs when others are losing theirs. Morale is undoubtedly affected and coupled with heavy workloads caused by sharing out the work amongst fewer members of staff, this can lead to stress claims and increased absences levels for those that remain.

“Further to this, there is always the threat that disgruntled employees unhappy with developments seen at the firm may choose to consider a form of industrial action or bring claims in the Employment  Tribunal  in respect of the changes to their terms and conditions in the form of wages claims.

“Charitable organisations can often find this vicious cycle very difficult to manage and this could undoubtedly be the case over the next few months.”