Unincorporated charity redundancy liability

onlytryingtohelp

Hi,
I've been searching the internet and found a number of cases where a preschool has had to close due to lack of funds and the staff have been intitled to redundancy that the charity cannot afford.
However, I have not been able to find out what the conclusion was.  Did the RPS pay or did the trustees have to pay?

We are in this situation now.  We can pay the staff their notice but can't pay the whole redundancy.

As we are a bunch of volunteers trying to do a good thing for the community, we are extremely distressed at the idea of being liable for the shortfall.

Has anyone had experience with this and what was the outcome?

Thanks

Distressed trustee.

Flugelhorn

I didn't think you could employ staff if the charity was unincorporated - or is it just not advisable ?

DullGreyGuy

onlytryingtohelp said:

Hi,
I've been searching the internet and found a number of cases where a preschool has had to close due to lack of funds and the staff have been intitled to redundancy that the charity cannot afford.
However, I have not been able to find out what the conclusion was.  Did the RPS pay or did the trustees have to pay?

We are in this situation now.  We can pay the staff their notice but can't pay the whole redundancy.

As we are a bunch of volunteers trying to do a good thing for the community, we are extremely distressed at the idea of being liable for the shortfall.

Has anyone had experience with this and what was the outcome?

Thanks

Distressed trustee.

If it's unincorporated who are listed as the employer on their contracts of employment? That entity would be the one that would need to pay them.

sheramber

This an earlier thread on the same subject which may help

https://forums.moneysavingexpert.com/discussion/3251866/charity-redundancy-payments

onlytryingtohelp

Thanks, I have seen the previous posts but no one ever said what the conclusion was.

The staff have kindly said that they don’t want us to pay but want to try anyway in case the RPS pay but were worried they won’t be able to stop the process.

There’s also massive questions hanging over the charity structure. Ie trustees weren’t made aware of liability when joining/ no governing documents have been shown. So no one knew they were liable until we were closing down.

cr1mson

There have definitely been cases whereby trustees of unincorporated organisations have been sucessfully sued. For example Chandra v Mayor. There was also a case where a rugby club committee member lost their house as a result of a public liability claim so it is definitely possible.

Do you have a local group that assists voluntary groups or are you a member of any group that deals with playgroups etc as you would benefit from specialist advice as I doubt that RPS would pay out unless the trustees were also insolvent.

In terms of not being aware of liability I was advised that there is no requirement for you to be told as you are expected to do your own due diligence.

onlytryingtohelp

In case anyone is in a similar situation, we have had clarification from the RPS that trustees are indeed liable and they will assess assets of the trustees when working out a repayment plan.

Flugelhorn

onlytryingtohelp said:

In case anyone is in a similar situation, we have had clarification from the RPS that trustees are indeed liable and they will assess assets of the trustees when working out a repayment plan.

I hope it works out ok in the end - what a difficult situation. note to self: do not let anyone in our charity employ anyone or buy property