OTHER CHAPTERS
I. SETTING UP AN ORGANISATION
Ch.1: Trusts & unincorporated associations
Ch.2: Companies & other incorporated structures
Ch.3: Charitable status, charity law & regulation
Ch.4: The objects clause
Ch.5: The governing document
Ch.6: Setting up an organisation
Ch.7: Registering as a charity
Ch.8: The organisation's name
Ch.9: Branches, subsidiaries, partnerships & mergers
II. GOVERNANCE & MEMBERSHIP
Ch.10: Members of the organisation
Ch.11: Members of the governing body
Ch.12: Officers, committees & sub-committees
Ch.13: Duties & powers of the governing body
III. RUNNING AN ORGANISATION
Ch.15: The registered office and other premises
Ch.16: Paperwork requirements
Ch.17: Meetings & decision making
Ch.18: Legal agreements
Ch.19: Organisational & personal liability
Ch.20: Insurance
Ch.21: Financial difficulties & winding up
IV. EMPLOYEES, WORKERS, VOLUNTEERS & OTHER STAFF
Ch.22: Employees and other workers
Ch.23: Rights, duties & the contract of employment
Ch.24: Model contract of employment
Ch.25: Equal opportunities in employment
Ch.26: Taking on new employees
Ch.27: Pay & pensions
Ch.28: Working time & leave
Ch.29: Disciplinary matters, grievances & whistleblowing
Ch.30: Termination of employment
Ch.31: Redundancy
Ch.32: Employer-employee relations
Ch.33: Employment claims & settlement
Ch.34: Self-employed workers & other contractors
Ch.35: Volunteers
V. SERVICES & ACTIVITIES
Ch.36: Health & safety
Ch.37: Equal opportunities in provision of goods & services
Ch.38: Confidentiality, privacy, data protection & freedom of information
Ch.39: Intellectual property
Ch.40: Publications & publicity
Ch.41: Campaigning & political activities
Ch.42: Public gatherings & entertainment
Ch.43: Food & drink
VI. FUNDING & FUNDRAISING
Ch.44: Funding & fundraising: General rules
Ch.45: Fundraising activities
Ch.46: Tax-effective giving
Ch.47: Trading companies
Ch.48: Contracts & service agreements
VII. FINANCE
Ch.49: Financial procedures & records
Ch.50: Annual accounts, reports & returns
Ch.51: Auditors
Ch.52: Corporation tax, income tax & capital gains tax
Ch.53: Value added tax
Ch.54: Investment & reserves
Ch.55: Borrowing
VIII. PROPERTY
Ch.56: Land ownership & tenure
Ch.57: Acquiring & disposing of property
Ch.58: Business leases
Ch.59: Property management & the environment
IX. BACKGROUND TO THE LAW
Ch.60: How the law works
Ch.61: Dispute resolution & litigation
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UPDATED INFORMATION FOR CHAPTER 14:
VOLUNTARY SECTOR LEGAL HANDBOOK
This page contains information that has appeared on Sandy Adirondack's legal update website for voluntary organisations at www.sandy-a.co.uk/legal.htm. For current updates, including potential changes that are in the pipeline, see the legal update website.
These websites for each chapter update
the 2nd edition of The Voluntary Sector Legal Handbook by Sandy Adirondack and James Sinclair Taylor (Directory of Social Change, 2001). The websites are not intended as a comprehensive update and should not be treated as such.
To order a copy of The Voluntary Sector Legal Handbook, print out the order form at www.sandy-a.co.uk/bookserv.htm or send an email order by clicking
. It costs £50 for voluntary organisations or £80 for others, plus 10% p&p. We expect the third edition to be published in 2007.
The information here covers the law applicable to England and Wales. It may not apply in Northern Ireland and/or Scotland. These news items are not a full or definitive statement of the law and are not intended as a substitute for professional legal advice. No responsibility for loss occasioned as a result of any person acting or refraining from acting can be taken by the author.
Chapter 14
RESTRICTIONS ON EXPENSES, REMUNERATION AND BENEFITS
THE CHARITIES ACT 2006
Updated 8/12/06.
The Office of the Third Sector announced on 5 December 2006 the proposed timetable for implementation of the Charities Act 2006. The Act, which received royal assent on 8 November 2006, will come into effect in stages over the next two years, with the first commencement order expected in early 2007, the second in the second half of 2007, and the third in early 2008.
The Act (in pdf format) is at www.opsi.gov.uk/acts/acts2006/ukpga_20060050_en.pdf, and in html format at www.opsi.gov.uk/acts/acts2006/20060050.htm.
Explanatory notes to the Act are at www.opsi.gov.uk/acts/en2006/2006en50.htm.
The Charity Commission's guide to the main provisions is at www.charitycommission.gov.uk/spr/ca2006prov.asp.
For the Office of the Third Sector's implementation timetable click here (the address is too long to show on screen).
The summary below lists some of the changes that may affect small and medium charities, with the expected implementation dates. It is not full summary of the Act and does not cover all provisions.
Charities Act 2006
REMUNERATION OF TRUSTEES
Updated 22/3/08. This information updates ss.14.3.5 & 14.3.6 in The Voluntary Sector Legal Handbook 2nd edition.
From 18 March 2008 a trustee or person connected with a trustee (a "relevant person") can be remunerated for services provided to the charity (but not for services as a trustee or as an employee) provided:
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there is no express (explicit) provision in the governing document prohibiting the relevant person from receiving the remuneration;
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the trustees (excluding the trustee who would be paid or who is connected to the person who would be paid) decide it is in the interest of the charity for the services to be provided by that person, and agree the amount or a maximum amount to be paid;
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before entering into the agreement, the trustees consider Charity Commission guidance about such payments;
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the amount is not more than is reasonable for the provision of those services by that person;
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the amount or maximum amount is then set out in a written agreement between the charity and the person; and
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only a minority of the trustees are at any time entitled to remuneration under such agreements or other arrangements.
The Charity Commission has already been making it easier for such payments to be made (see payments to charity trustees).
The relevant trustees are disqualified from acting as a trustee in relation to decisions or other matters about the agreement. The Charity Commission can require the trustee or connected person to repay remuneration or the value of any benefit in kind where this disqualification rule has not been followed.
For these rules a connected person is
(a) a child, parent, grandchild, grandparent, brother or sister of the trustee;
(b) the spouse or civil partner of the trustee or of any person falling within (a);
(c) an institution which is controlled for a charity trustee or by any person falling within paragraph (a) or (b), or by two or more such persons; or
(d) a body corporate in which any connected person falling within any of paragraphs (a) to (c) has a substantial interest, or two or more such persons, when taken together, have a substantial interest.
Note that there are different definitions of connected person for land transactions by charities, and for company conflict of interest rules — see Connected persons for charity land transactions, and connected person under Companies Act - in effect 1 October 2007.
These provisions are in s.36-37 of the Charities Act 2006, which insert new ss.73A-73C to the Charities Act 1993. For links to the Acts and guidance, see The Charities Act 2006.
PAYMENTS TO CHARITY TRUSTEES
Updated 9/1/05, links updated 14/5/06. This information updates chapter 14 in The Voluntary Sector Legal Handbook 2nd edition.
Over the past couple of years the Charity Commission has been piloting new rules on making payment to charity trustees, former trustees and persons connected with trustees, and simplifying the procedure for getting Charity Commission authorisation when it is required. These rules have now been extended to all charities.
The new de minimis and fast track procedures can be used where the charity wants to remunerate a trustee, former trustee or connected person for services provided to the charity. Under the de minimis procedure, a charity will not generally have to seek Commission consent if its total payments to trustees in the financial year are less than £1,000 and the charity meets the other requirements for using this procedure. If the payments are more than this, there is a declaration form to request Commission consent under the fast track procedure. If the declaration is properly completed, the Commission can usually give authorisation without further correspondence.
The de minimis and fast track procedures cannot be used where the payments are for acting as a trustee (rather than, say, acting as a website designer), or where there is a sole trustee, or where payments would be made to a majority of the trustees. Nor can they be used for requests for authority to purchase trustee indemnity insurance, or where payment has already been made to a trustee, or where the trustee concerned is resigning in order to take up employment with the charity or to receive some other benefit.
The Commission's detailed operational guidance on the procedures is at www.charitycommission.gov.uk/supportingcharities/ogs/g092b003.asp.
The declaration is at http://www.charitycommission.gov.uk/library/supportingcharities/pdfs/red1377.pdf.
For an earlier update about senior staff who act as if they are trustees, see www.sandy-a.co.uk/vslh/14benefits.htm.
SENIOR STAFF ACTING AS IF THEY WERE TRUSTEES
Added 21/9/03; links updated 22/12/05. This information updates ss.13.3 and 14.3.7.1 in The Voluntary Sector Legal Handbook 2nd edition.
A couple of Charity Commission inquiries illustrate the importance of the trustees taking responsibility for overall control of their charity, and not delegating too much decision-making power to staff. At the King's Church (Ramsgate) Trust the Commission found that an employee exercised so much control over the Trust's administration that trustees were under the impression they were supposed to report to him. At the Alzheimer's Foundation for Research into Alzheimer's Disease, the Commission found that a senior employee had so much control over the day-to-day operation of the charity that he appeared to have taken on the responsibilities of a trustee. The trustees were minimally involved, with at least one who had never been invited to any meetings, never spoke to any other trustees and never received any financial information about the charity. The Commission's report says, "Having concluded that the senior employee was acting as if he were a trustee while receiving a salary from the charity, the Commission considered that the charity did not have express legal authority to do this and would not sanction the payment of his salary."
The Alzheimer's Foundation investigation is no longer on the Charity Commission website.
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