Charity redundancy: your rights, pay and settlement agreements
Facing redundancy at a charity? Your statutory pay, the fair process when a grant or contract ends, and what to check before you sign. Free specialist review.
Charities and other third sector organisations often face redundancy driven by the loss of a grant, a funding contract ending, or a wider reduction in donations, rather than the commercial pressures seen in the private sector. Budgets in the sector are typically tight, so redundancy packages usually reflect the statutory minimum, with enhanced terms less common than in well-resourced private employers, though some larger charities do offer improved terms through internal policy. Despite tight budgets, charities remain fully bound by the same redundancy law as any other employer, including fair selection and proper consultation. Settlement agreements are used in the sector for individual exits and to resolve disputes, including grievances that sometimes arise during difficult restructures.
Redundancy pay in the charity sector
There is no charity sector scheme, and most charity employees rely on the statutory redundancy formula, since funding constraints mean enhanced contractual terms are less common than in the private or public sector. Some larger, better-resourced charities do offer improved redundancy terms through internal policy, but this should not be assumed. Charities are, however, held to the same legal standards on fair process and consultation as any other employer, regardless of their size or funding position.
Key points
- Charity redundancies are often driven by grant or contract funding ending rather than commercial pressure.
- Enhanced redundancy terms above the statutory minimum are less common in the sector due to tight budgets.
- Charities must follow the same fair process and consultation rules as any other employer.
- Settlement agreements are used to resolve grievances that sometimes arise during charity restructures.
Settlement agreements in the charity sector
Settlement agreements in the charity sector are used for individual exits during funding-led restructures and to resolve disputes, including grievances about how a restructure or selection process was handled. Even with limited funds, a charity must still follow a fair and lawful redundancy process, and a settlement agreement is sometimes offered to resolve a dispute quickly rather than risk a tribunal claim. Independent legal advice is required before the agreement is binding, and the charity usually covers this cost.
Been offered a settlement agreement?
If your employer in the charity sector has offered you a settlement agreement as part of a redundancy, we will review it the same working day and tell you honestly whether the offer is fair. Free to you when your employer pays our fee, which is the case in nearly every UK settlement agreement.
Charity redundancy: frequently asked questions
Do charities have to pay more than statutory redundancy?
Not usually. Most charities rely on the statutory redundancy formula because of funding constraints, though some larger or better-resourced organisations offer enhanced terms through internal policy. It is worth checking your contract and any staff handbook rather than assuming only the statutory minimum applies, since practice does vary between charities.
Does a charity have to follow the same redundancy process as a private company?
Yes. Charities are bound by the same employment law on fair selection, consultation and notice as any other employer, regardless of their size, funding position or charitable status. A funding shortfall can justify redundancy, but it does not excuse a charity from following a fair and lawful process.
Can I get a settlement agreement if I raise a grievance during a charity restructure?
It is possible. If a grievance arises during a restructure, for example about how the process or selection was handled, a charity may offer a settlement agreement to resolve the dispute and agree an exit on agreed terms rather than continue a formal grievance process. Each situation depends on its specific facts.
Redundancy in other sectors
Related