Top tips for small and medium-sized charity employers facing an Employment Tribunal claim

Charity leaders’ unique obligations and circumstances pose specific challenges.

Facing an employment tribunal claim can feel overwhelming for an employer, but the challenge is arguably even greater for charities due to the additional obligations and  Charity Commission guidance that apply to them compared to non-charitable employers. As well as managing the legal process, charities must balance their duties as an employer with their responsibility to safeguard charitable funds, act in the best interests of beneficiaries and protect the charity’s reputation. 

Below are some top tips we recommend charity leaders bear in mind when faced with employment tribunal claims.

 1.          Act promptly, monitor communications and assign authority

Employers have just 28 calendar days to respond to the notification of a claim from the tribunal. For charities, where admin support may be stretched or staff work part-time, it’s vital to have reliable and responsive systems in place to pick up important correspondence and to ensure that someone with the right authority is available to act right away when notified of a claim. Missing the deadline for a response puts an employer immediately on the back foot and may result in a default judgment in favour of the employee.

Charity trustees are used to working collectively. This has its benefits, but when dealing with claims it is often more helpful to have one or two trustees authorised (within a certain remit) to deal with matters like claims on behalf of the trustees. There may be times as a tribunal claim progresses that quick instructions and decisions are needed from the charity and having to gather all trustees to make decisions can be an unnecessary obstacle.

2.          Notify insurers

Many charities will have access to legal expenses insurance (sometimes packaged along with employer liability insurance) which can cover some or all of the costs of defending or settling a claim. Employers seeking to rely on such insurance are best advised to notify their insurer as soon as they have reason to believe a claim will be brought and, in any event, no later than upon receiving a tribunal claim; otherwise, they may risk losing cover.

3.          Secure relevant evidence

Gathering and organising evidence is a crucial early step. Tribunal rules require both sides to disclose all relevant evidence, even if it doesn’t support their case.

Charities may face difficulties gathering evidence depending on the fragmentation and sophistication of their information management and storage systems. For example, (although not recommended) it is not uncommon for charity leaders to use personal email or IT systems to fulfil their role, meaning individuals may need to search for relevant information on their own systems. This is much less efficient than if all information is held centrally for search purposes. Especially where this is the case, it is best to start looking for relevant information early on. Legal advisers can help an employer focus searches, if needed.    

4.          Consider the use of charitable resources

Charity trustees are under a duty to act in the best interests of their charity and protect assets belonging to the charity, which is balanced against the risks and consequences that legal action could bring. This applies to decisions over whether or not to defend a tribunal claim and/ or settle with a claimant. 

The Charity Commission’s guidance document ‘Charities and litigation: a guide for trustees’ (the Guidance) provides a helpful overview of the issues that charity trustees must consider when facing a tribunal claim.

When deciding whether to defend or settle a claim, trustees and managers must weigh several factors: 

1. What are the prospects of defending the claim? How much will the claimant likely be awarded if they are successful?

2. What are the likely costs of continuing to defend the claim, including legal fees to the solicitors and barrister and the cost of your own organisation’s management time?

3. What is the potential reputational risk if the claim goes to a public hearing? What is the reputational risk if the claim is lost?

Settlement may be the most prudent and cost-efficient option, especially if it minimises costs and risk. However, it’s essential to ensure that any settlement is justified, properly authorised, and in line with a charity’s financial controls. Defending the claim may be in the long-term best interests of a charity, even when considering the costs and risks of doing so.

Trustees should keep a clear record of their decision-making process, showing how they balanced their legal duties with their responsibility to protect the charity’s resources in line with the Guidance. Legal advice addressed to the trustees on the merits and risks of a claim is one way for trustees to show that they have met their obligations on the use of resources.

5.          Manage reputational risk 

Reputational considerations are often more significant for charities. Tribunal hearings are public, and judgments are published online for all to see.

As well as factoring these risks into settlement considerations, charity leaders should think ahead about how they will manage communications, both internally and externally. Expect questions from staff, volunteers, and stakeholders, and consider how to respond if the press, public, commissioners or funders take an interest. A proactive, transparent approach can help protect a charity’s reputation, whatever the outcome. Specialist PR advisers may be able to help with this.

6.          Third-party witnesses

Charities that don’t have their own internal HR function or sufficient management structure to hear disciplinaries and grievances may turn to third-party HR support. If so, those individuals may be needed as witnesses. Employers are advised to ask those parties at an early stage whether they expect additional fees and costs to appear at a tribunal hearing, as this can mount up if they are needed for several days to give evidence.

7.          Learn and improve 

Every tribunal claim, and the events leading up to them, is a chance to learn. Policies and contracts are rarely perfect, and new, unforeseen, issues and circumstances can arise that circumvent the carefully drafted processes and mechanisms put in place to deal with disputes. 

When the dust has settled, review what happened and why and consider what, if any, changes to documents might have prevented a claim or helped defend it much more robustly. Consider also if staff require training or a refresher, and share lessons with trustees and senior leaders.

Taking a proactive approach to learning and improvement will strengthen employment practices and help prevent similar issues in the future.

Conclusion

Facing an employment tribunal claim is never easy, but with prompt action, sound governance, and a focus on your charity’s core values, you can navigate the process effectively. Don’t hesitate to seek specialist advice, and remember: protecting your charity’s resources and reputation is just as important as defending the claim itself.

If you would like to discuss any aspect of this article further, please contact our Employment team on 0113 244 6100. 

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The information in this article is necessarily of a general nature. The law stated is correct at the date (stated above) this article was first posted to our website.

Specific advice should be sought for specific situations. If you have any queries or need any legal advice please feel free to contact Wrigleys Solicitors.