Charities are employers in the same way as any other organisation, but the pressures they operate under are rarely the same. Funding cycles dictate contract lengths. Management structures are often lean, with HR handled alongside a dozen other responsibilities rather than as a dedicated function. And the day-to-day work frequently involves vulnerable beneficiaries, safeguarding duties and emotionally demanding casework, where getting people’s decisions wrong carries a cost that goes well beyond the tribunal.
Recent and upcoming changes to employment law apply to charities exactly as they do to any employer. What’s different is how much less room charities have to get them wrong. Here’s what’s changing, why it matters more in this sector, and what good HR support looks like in response.
Fixed-Term Contracts and Funding Cycles
Few sectors lean on fixed-term contracts the way charities do. Roles are tied directly to grants, funding rounds and project timelines, and letting a contract lapse when the money runs out has traditionally felt like the simplest, cleanest option.
That’s about to get more complicated. From 1 January 2027, the qualifying period for ordinary unfair dismissal protection will reduce to six months. This means that where an employee has the necessary qualifying service, ending a fixed-term contract will need to be treated as a dismissal and the employer will need to consider a fair reason and fair process.
For charities, this means reviewing how fixed-term contracts are used and worded now, well before the change lands, rather than scrambling to catch up once it’s already in force.
Redundancy Risk When Funding Ends
Charities often need to consider redundancy to manage the ups and downs of funding. As qualifying periods shorten and the rules around fair process tighten, that flexibility is narrowing.
The end of a grant or funding round isn’t, on its own, a green light for redundancy. A genuine redundancy still needs a fair, properly documented process behind it. Get it wrong, and the exposure isn’t just an unfair dismissal claim; it’s reputational damage in a sector where public trust is the whole business model.
Unfair Dismissal, Sick Pay and the Compliance Gap
Broader employment law changes, including changes to Statutory Sick Pay introduced in April 2026 and the shortened unfair dismissal qualifying period coming in January 2027, apply to charities exactly as they do to any other employer. There’s no sector exemption.
What makes charities more exposed is capacity, not intent. With less formal management structure and fewer in-house HR specialists to build these processes properly, the risk isn’t deliberate non-compliance; it’s accidental non-compliance, which still lands on the same desk when it goes wrong.
Since 6 April 2026, eligible employees can receive Statutory Sick Pay from the first full day of sickness absence, and entitlement is no longer dependent on meeting the previous lower earnings limit.
High-Risk Territory: Safeguarding, Harassment and Pressure
Charity work often sits in emotionally demanding, high-pressure environments: vulnerable beneficiaries, safeguarding responsibilities, sensitive casework, and the burnout risk that comes with all of it.
That context raises the stakes on getting HR right. Charities need to support employees working in these conditions while also protecting those employees, the people they serve, and the organisation itself, all at the same time, and often with the same small team.
This can also create particularly sensitive HR situations, where safeguarding concerns, complaints, sickness absence, employee relations issues and allegations of inappropriate behaviour can overlap. Having clear processes and knowing when to seek specialist HR advice can help managers deal with these situations consistently and fairly.
The duty on employers to take all reasonable steps to prevent sexual harassment also remains an important part of this picture, particularly where employees interact with beneficiaries, volunteers, members of the public or other third parties.
Charities are navigating the same legal changes as every other employer, just with less margin for error and higher stakes when things don’t go to plan. Properly resourced HR support isn’t a luxury here; it’s what lets a charity meet its obligations to staff and funders without pulling time and attention away from the mission itself.
If you’d like to talk through what the right level of HR support looks like for your charity, get in touch.
FAQ
How does employment law affect charities?
Charities are subject to the same employment law as any other UK employer, covering contracts, dismissal, redundancy, and statutory rights like sick pay. There’s no special exemption for the charity sector.
Can a charity make staff redundant when funding ends?
Only if it follows a genuine, fair redundancy process. The end of funding doesn’t automatically justify redundancy; charities still need to document the reasoning and follow a fair process or risk an unfair dismissal claim.
Do charities need to follow the same employment law as businesses?
Yes. Employment status, not organisational type, determines which laws apply. Charities have the same legal obligations to their staff as any commercial employer.
What HR support do charities need?
Given lean management structures and exposure to high-risk situations like safeguarding, charities benefit from HR support that covers both day-to-day compliance and the judgement calls that come with sensitive, high-stakes casework.
How do fixed-term contracts work in charities?
Fixed-term contracts are common in charities due to funding cycles, from 1 January 2027, the unfair dismissal qualifying period will reduce to six months. This means charities will need to take greater care when deciding not to renew or extend a fixed-term contract where the employee has the necessary qualifying service.
What happens if charity funding ends?
If funding for a role ends, the charity should consider whether there is a genuine redundancy situation and, where appropriate, follow a fair redundancy process. The end of funding does not automatically remove the employer’s obligations.
What are the recent changes to Statutory Sick Pay?
From 6 April 2026, eligible employees can receive Statutory Sick Pay from the first full day of sickness absence, and the previous lower earnings limit no longer applies.
