Employment Rights Act for Charities: What Boards Must Know

The Employment Rights Act is not a distant compliance exercise for charities. Peter Reeves, Chief Executive Officer of the Charities HR Network, joined Charity Recruit’s virtual boardroom to explain what is changing and what leaders should do about it. 

“This is actually going to have an impact on how managers manage, how organisations recruit, and the number of people that an organisation can actually employ”

What the Employment Rights Act Means for Charities 

Peter opened by calling this the biggest overhaul of employment law in a generation, covering everything from a two year to a six month qualifying period for unfair dismissal claims, statutory sick pay from day one, paternity and flexible maternity rights from day one and new protection from third party harassment covering customers, clients and anyone staff come into contact with at work.  

National insurance and the national minimum wage have already risen and Peter noted this has quietly compressed pay structures across the sector, with staff who once sat comfortably above minimum wage now sitting right on it. He also pointed out that most of what the Act requires is simply what a good employer would already be doing, but the pace of change across such a short window is what makes this hard to absorb. 

Rising Costs Charities Cannot Ignore 

On costs for directly employed staff, once closer to 15% once pension contributions were factored in, now need to be modelled at over 20%. Peter pointed to the removal of the cap on tribunal compensatory awards as a change that has gone largely unnoticed but could prove costly, particularly when senior staff exits end in a settlement negotiation that can no longer be capped at a year’s salary. 

“It is the biggest change to the employment relationship in a generation and is going to have an impact well beyond your HR team.” 

Practical Steps to Prepare for the Employment Rights Act 

Peter’s advice centred on a handful of concrete actions charities can take now: 

• Shorten probation periods to three months: A six month probation will not survive the new six month qualifying period for unfair dismissal claims 

• Build a real workforce plan: Peter’s own research found 70% of charities have nothing resembling one, despite the scale of change ahead 

• Increase budget provision for on costs: Aim for roughly a 5% uplift to reflect sick pay, family leave and other new obligations 

• Review legal and HR support: Keep external advisers close rather than calling them only when something goes wrong 

• Diversify workforce models: Consider short term contracts, consultants or shared roles with other charities for project work rather than defaulting to permanent hires 

Trade Unions Are Actively Targeting the Sector 

Any employer with more than 21 staff can now face a recognition request from a trade union and Peter said Unison and Unite are treating the charity sector as a genuine growth opportunity, aiming to move representation from around 14% towards 50%. Many HR professionals in the sector have never negotiated with a union before, which Peter flagged as a real skills gap heading into the next 18 months.  

His practical tip for anyone facing a difficult shop steward was simple. Every shop steward answers to a full-time officer, and those officers have no interest in unnecessary disputes that could undermine the case they are making to government, which is that these reforms will not cause a flood of tribunal claims. 

Turning the Employment Rights Act into a Board Priority 

Peter’s closing message was straightforward. Boards do not need to understand every clause of the legislation, but they do need reassurance that someone is managing the risk, tracking the timetable and preparing the organisation’s approach to hiring, retention and workforce planning before the next milestone date arrives.