Employment Contracts in the Charity Sector: A Guide | LegalDocuments.co.uk
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Running a charity means wearing many hats, and one of the trickier ones is being an employer. When your organisation exists to serve a public benefit, every pound of salary and every employment decision carries extra weight, both legally and reputationally.
A well-drafted employment contract is the foundation that protects your charity, your trustees, and the people who actually do the work of delivering your mission. In this guide, I walk through what charity employers in England and Wales should think about when putting employment contracts together, from the baseline statutory requirements that apply to any employer through to the quirks that come with being a regulated charitable body.
Whether you're a trustee signing off on your first paid role or a charity CEO reviewing legacy paperwork, the aim here is to help you spot the gaps before they become problems.
What this document is
An employment contract in a charity context is the written agreement between the charity (as employer) and a member of staff that sets out the terms on which they work. Legally, it's no different from an employment contract in any other sector, the same statutory floor applies, including the requirement under the Employment Rights Act 1996 to provide a written statement of particulars on or before day one of employment.
What makes charity contracts distinctive isn't the legal form but the context they sit within. Charities are accountable to the Charity Commission, to their donors, and to the public. That means decisions about pay, benefits, notice periods, restrictive covenants, and dismissal procedures all get viewed through a sharper lens.
Trustees have a duty to act in the charity's best interests and to manage resources responsibly, which shapes how generous or how protective the contract can reasonably be. A good charity employment contract balances fair treatment of staff with the prudent stewardship that regulators and funders expect.
How to use this document
- Confirm the employment status. Before drafting anything, work out whether the individual is genuinely an employee, a worker, or a self-employed contractor. Charities often engage people flexibly, but getting the status wrong can trigger tax liabilities with HMRC and lose the person rights they should have had. The label you use matters less than the reality of the working relationship.
- Set out the core statutory particulars. The contract must include the essentials required by law: names of both parties, start date, job title and duties, place of work, hours, pay, holiday entitlement, notice periods, and details of any probationary period. These are the minimum particulars every employer must provide in writing, and missing items can lead to tribunal claims and penalties.
- Address charity-specific clauses. Think carefully about clauses that reflect the nature of charitable work: conflicts of interest, confidentiality around beneficiary data, safeguarding obligations if staff work with vulnerable people, and expectations around behaviour that could bring the charity into disrepute. These are often where generic templates fall short and where tailored drafting pays off.
- Build in policies by reference. Rather than cramming every rule into the contract itself, refer to separate policies on matters like disciplinary procedures, grievances, equality, health and safety, and data protection. This keeps the contract cleaner and lets you update policies without reissuing contracts, provided you make clear which policies are contractually binding and which are not.
- Get sign-off and keep records. Once the contract is finalised, both parties should sign and date it, with each keeping a copy. For charities, it's also worth noting any trustee approvals required for senior appointments or unusual terms. Keep the signed contract securely with the rest of your employment records and review it whenever a role changes materially.
Common questions
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Common questions
Q Do small charities need written employment contracts?
Yes. Size doesn't change the legal position. Any employee in England and Wales is entitled to a written statement of employment particulars from day one, regardless of whether the employer is a tiny local charity or a large national one. Even if you only have one part-time member of staff, you need to give them the core written terms, and a proper contract is the simplest way to do that while also protecting the charity.
Q Can charity trustees also be employees?
Generally, trustees act in a voluntary, unpaid capacity, and paying a trustee for their trustee role is restricted under charity law. In some circumstances a trustee can be paid for a separate employment role with the charity, but this usually requires express authority in the governing document or permission from the Charity Commission. This is a sensitive area, so check the current Commission guidance before agreeing any such arrangement.
Q Are charity employees entitled to the National Minimum Wage?
Yes. Charitable status does not exempt an employer from paying at least the National Minimum Wage or National Living Wage for employees and workers. The only notable exception tends to be genuine volunteers, who are not engaged under a contract of employment. Rates change regularly, so check the current figures on gov.uk before setting or reviewing salaries to make sure your contracts remain compliant.
Q How should restrictive covenants work in a charity contract?
Restrictive covenants, things like non-compete or non-solicitation clauses, can be used in charity contracts, but they must be reasonable in scope, duration, and geography, or a court won't enforce them. For most charity roles, tight restrictions are hard to justify. They tend to make more sense for senior fundraising, commercial, or trading subsidiary roles where there's a genuine business interest to protect.
Q What happens if our charity contracts are out of date?
Out-of-date contracts create risk. Employment law moves regularly, and clauses that were fine a few years ago may now be unenforceable or missing required particulars. At a minimum, review contracts when you promote or change a role, when legislation changes, or every couple of years. Updating contracts is much cheaper than dealing with a tribunal claim that turns on an ambiguous or outdated clause.
Q Do volunteers need employment contracts?
Genuine volunteers should not be given employment contracts, because doing so can accidentally create employment rights and tax obligations you didn't intend. Instead, use a volunteer agreement that sets out expectations without creating legal obligations of work or payment. Be careful with expenses, perks, and rotas, though, if the arrangement starts looking like paid work, a tribunal may decide the volunteer is actually a worker or employee.
Q Who signs the employment contract on behalf of the charity?
That depends on the charity's governing document and internal delegation. In many charities, the CEO or a senior manager signs standard contracts under delegated authority from the trustees. For senior appointments, unusual packages, or contracts with anyone connected to a trustee, the trustee board itself usually needs to approve and sign. Check your scheme of delegation before assuming who has authority.
If you're dealing with this kind of situation, speak to an experienced legal adviser who can walk you through it — from £149.
Sources
This guide is based on primary UK law and official guidance.
- Guidance · UK GovCharity Commission for England and Walesgov.uk
- Official SourceACAS, Employment Contractsacas.org.uk
- LegislationEmployment Rights Act 1996legislation.gov.uk
- Guidance · UK Govgov.uk, National Minimum Wagegov.uk
- LegislationEquality Act 2010legislation.gov.uk
Legal helpline
Unsure what belongs in your charity's contracts?
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Legal disclaimer
This article is for general information only. It is a tool to help you find your way — not legal advice, and not a substitute for speaking to a qualified adviser about your situation.