Trustees have a general duty to act in the best interests of their charity. They have a duty to protect, and where necessary, to recover, assets belonging to the charity. The decision whether or not to initiate or defend a legal action must only be made in the best interests of the charity and be balanced against the risks and consequences that any legal action could bring.
The commission expects trustees to consider legal action only after they have explored and, where appropriate, ruled out any other ways of resolving the issue in dispute.
Trustees need to bear in mind that taking or defending legal action must be in their charity’s best interests. They must be able to demonstrate that their decisions were made accordingly. However, in some cases the commission’s consent is necessary
The legal structure of the charity means there are differences in how legal action may be taken or defended:
Incorporated charitiesIncorporated charities such as charitable companies, corporations or CIOs take or defend legal action in the name of the charity as a legal entity in its own right. If an action is brought by or against an incorporated charity, the incorporated charity will be named as a party to the action in its corporate name. In most situations, if the charity is incorporated, it is the charity itself, rather than the members or the trustees, which is responsible for the charity’s debts or for any other liabilities which might arise.However, if there has been any breach of duty or the decision to bring or defend the legal action has not been taken reasonably, the trustees may be personally liable for any costs arising from the proceedings.
Unincorporated charitiesUnincorporated charities such as associations and trusts usually take or defend legal action in the names of their charity trustees. If such a charity has insufficient funds to meet any claim, its trustees may be personally liable irrespective of whether there has been any fault or breach of duty on their part.
Some types of legal action, whatever the legal structure of the charity, need the consent of the commission. These are a specific category of legal action, concerning the constitution or administration of a charity and are called charity proceedings.
You can find further information on charity proceedings and how to apply for the commission’s consent here
Your charity structure is defined by its ‘governing document’ (the legal document that creates the charity and says how it should be run).
The type of structure you choose affects how your charity will operate, such as:
who will run it and whether it will have a wider membership
whether it can enter into contracts or employ staff in its own name
whether the trustees will be personally liable for what the charity does
About corporate structures
Some charity structures are corporate bodies. If you choose a structure that forms a corporate body, the law considers your charity to be a person in the same way as an individual.
About charities with a wider membership
Some charity structures have a wider membership. If you set up a charity with a wider membership, it can have members who vote on important decisions (usually at AGMs).
Charities without a corporate structure: which type to choose
With wider membership
Set up an unincorporated association if you want your charity to have a wider membership but it doesn’t need a corporate structure (for example, if it will be relatively small in terms of assets). Choose a constitution as your governing document.
Without wider membership
Set up a trust if your charity doesn’t need a corporate structure or a wider membership.
Choose a trust deed as your governing document. It must specify a sum of money, land or some other assets that your charity will start with (it doesn’t matter how much). Otherwise you won’t be able to register it with the commission.
More detailed information about charity structures can be found here
aged 21 to get the National Living Wage – the minimum wage will still apply for workers aged 20 and under
Current rates
These rates are for the National Living Wage (for those aged 21 and over) and the National Minimum Wage (for those of at least school leaving age). The rates change on 1 April every year.
21 and over
18 to 20
Under 18
Apprentice
April 2024
£11.44
£8.60
£6.40
£6.40
Who gets the apprentice rate
You’re entitled to be paid at least the apprentice rate if you’re an apprentice aged:
under 19
19 or over, and in the first year of your current apprenticeship agreement
If you’re 19 or over and have completed the first year of your current apprenticeship, you’re entitled to be paid at least the minimum wage for your age.
National Minimum Wage and Living Wage calculator for employers
Check if:
you’re paying a worker the National Minimum Wage
you’re paying a worker the National Living Wage
you owe your employee payments from the previous year because you underpaid them
Your employee must be at least 21 years old to get the National Living Wage.
report to HM Revenue and Customs (HMRC) on the previous tax year (which ends on 5 April) and give your employees a P60
prepare for the new tax year, which starts on 6 April
Send your final payroll report
Send your final Full Payment Submission (FPS) on or before your employees’ last payday of the tax year (which ends on 5 April).
Put ‘Yes’ in the ‘Final submission for year’ field (if available) in your payroll software.
If you run more than one payroll under the same PAYE scheme reference (for example for employees you pay weekly and monthly), include the end-of-year information in your last report.
Derby CAS is very sad to let you know that our trustee and great friend Ted Rasey, has died.
Ted served as a trustee at DCAS from the day we started in 2002.
Ted’s kindness and gentleness hid a steely resolve to help improve the lives of those less fortunate than himself. This Ted achieved through his work with people with learning disabilities and later being a trustee at numerous charities including Community Action Derby.
A merger of charities means two or more separate charities coming together to form one organisation. Either a new charity is formed to continue the work or take on the assets of the original charities, or one charity assumes control of another.
Trustees’ role
Trustees are responsible for deciding on the appropriate level of due diligence required when considering a merger with another charity/ies or a complex collaboration. They have a legal duty to act prudently. When planning a proposed merger or contractual collaborative arrangement, they should ensure they have identified any potential risks to their charity before entering into any agreement.
Depending on their initial assessment, trustees may require professional advice to ensure that there is an appropriate level of due diligence.
What is due diligence?
‘Due diligence’ is a phrase used to describe the steps organisations take to assure themselves that a merger or complex collaboration is in their best interests. The result of a due diligence exercise is that a charity has full knowledge of the organisation they seek to merge or work with (ie there are no surprises).
The costs of commissioning due diligence work are a proper use of charitable funds, but should be forecast at the outset and regularly reviewed to ensure they remain proportionate to the risks involved.
Due diligence checks fall into three main categories:
commercial
financial
legal
The nature of the checks should be proportionate to the:
size and nature of the proposal
amount of income and expenditure involved
nature of the existing and planned activities
A more rigorous exercise may be necessary where charities have one or more of the following:
Information you need to work out your employee’s Statutory Maternity Pay:
the date the baby’s due — from your employee’s MATB1 form
your employee’s intended start date for Statutory Maternity Pay, if they have given you one
your employee’s gross pay and the dates they were paid
confirmation that your employee’s gross earnings are liable to employer’s Class 1 National Insurance contributions or would be but for the employee’s age or level of earnings
Work out average weekly earnings
Average weekly earnings must include all earnings on which Class 1 National Insurance contributions are due, or would be due if they were high enough. Statutory Maternity Pay entitlement depends on your employee’s average weekly earnings in the ‘relevant period’. The average weekly earnings in the relevant period must not be less than the Lower Earnings Limit for National Insurance contributions which applies at the end of the qualifying week:
Lower Earnings Limit for 2023 to 2024 is £123
Divide all earnings paid in that relevant period by the number of days, weeks or months in that period.
The relevant period
This is usually the 8 week period before the qualifying week.
The end of the relevant period is the last normal payday on, or before the Saturday of the qualifying week.
For babies born before or during the qualifying week, the 8 week relevant period is the period between the last normal payday on or before the Saturday of the week before the baby is born, and the day after the last normal payday falling at least 8 weeks before.
The start of the relevant period is the day after the last normal payday falling at least 8 weeks before the end of the relevant period.
Example for an employee who is paid weekly
If an employee is paid weekly and the baby is due on 23 March 2024:
Qualifying week
Payday
Last payday at least 8 weeks before the end of the relevant period
Last payday on or before the Saturday of the qualifying week
3 December 2023 to 9 December 2023
Friday
13 October 2023
8 December 2023
The relevant period is 14 October 2023 to 8 December 2023.
Add up all the earnings paid between 14 October 2023 to 8 December 2023 and divide by 8 (the number of weeks in the relevant period).
Do not round the figure up or down to whole pence.
Example for an employee who is paid monthly
If an employee is paid monthly and the baby is due on 23 March 2024:
Qualifying week
Payday
Last payday at least 8 weeks before the end of the relevant period
Last payday on or before the Saturday of the qualifying week
3 December 2024 to 9 December 2023
Last working day of the month
29 September 2023
30 November 2023
The relevant period is 30 October 2023 to 30 November 2023.
Add up all the earnings paid between 30 October 2023 and 30 November 2023:
divide by 2 (number of months in the relevant period)
multiply by 12 (number of months in the year)
divide by 52 (number of weeks in the year)
Do not round the figure up or down to whole pence.
Weekly paid employees without a whole number of weeks in the relevant period
This may happen if you bring forward your employee’s normal payday because of bank holidays at Easter or Christmas. Divide the earnings by the number of weeks wages actually paid, not the number of weeks in the relevant period.
Employees paid multiples of a week
This may happen if you pay your employee fortnightly or 4 weekly. Divide the earnings by the number of whole weeks in the relevant period.
Monthly paid employees without a whole number of months in the relevant period
Work out the number of rounded months as follows:
count the number of whole months
count the numbers of odd days
Round up or down as follows:
February — 14 days or less round down, 15 days or more round up
any month except February — 15 days or less round down, 16 days or more round up
Divide the earnings by this number of rounded months.
Employees not paid in a regular pay pattern
Divide the earnings by the number of days in the relevant period and multiply by 7.
Mistimed payments
This only applies to regular payments of earnings paid other than on their normal date, such as due to a bank holiday.
A mistimed payment:
occurs when the date of the actual payment of earnings is made earlier or later than the normal contractual payday, such as an annual holiday
should not be confused with a payroll error, where a mistake is made in the payroll resulting in a shortfall of pay when working out the average weekly earnings
Divide the total earnings in the relevant period by the number of weeks wages actually paid.
Overpaid or underpaid earnings during the relevant period
Always calculate average weekly earnings based on all earnings actually paid to the employee within the relevant period, regardless of any over or underpaid wages in that period. Where over or under payments of wages occur within the relevant period, you must include the overpaid or underpaid amount in the average weekly earnings calculation for deciding if Statutory Maternity Pay is due.
Work out Statutory Maternity Pay
When you have worked out the average weekly earnings, work out how much Statutory Maternity Pay is due and pay it on the same day that you would normally pay wages and for the same period.
Statutory Maternity Pay is a weekly payment. Statutory Maternity Pay pay weeks start with the first day of the Statutory Maternity Pay pay period, so an Statutory Maternity Pay pay period that starts on a Wednesday will have pay weeks within the pay period which runs from Wednesday to Tuesday the following week.
Statutory Maternity Pay is payable:
90% of the employee’s average weekly earnings for the first 6 weeks
£172.48 or 90% of their average weekly earnings (whichever is lower) for the remaining weeks
Statutory Maternity Pay paid part weekly
You can pay Statutory Maternity Pay in part weeks if it helps to align the payments to your employees normal pay period. Divide the weekly rate by 7 and multiply by the number of days for which Statutory Maternity Pay is due in the week or month. For example, if the pay period covers the end of one month and the beginning of the next (2 days in April and 5 days at the beginning of May) then pay two-sevenths in one month and five-sevenths at the beginning of the next month.
Contractual benefits and Salary Sacrifice
The calculation of average weekly earnings for Statutory Maternity Pay is based on earnings which are subject to Class 1 National Insurance contributions. Some contractual benefits, such as childcare schemes provided by you, may be exempt from PAYE tax and National Insurance contributions. The value of childcare vouchers provided during the maternity pay period should not be deducted from the Statutory Maternity Pay. Statutory Maternity Pay must be paid in full.
From 1 April 2024, workers aged 21 and over will be entitled to the National Living Wage.
21 and over
18 to 20
Under 18
Apprentice
April 2024
£11.44
£8.60
£6.40
£6.40
It’s against the law for an employer to pay less than the National Minimum Wage or National Living Wage. They also must keep accurate pay records and make them available when requested. If an employer has not been paying the correct minimum wage, they should resolve the problem as soon as possible. The employer must also resolve any backdated non-payment of minimum wage. This is even if the employee or worker no longer works for them.
It’s against the law for an employer to pay less than the National Minimum Wage or National Living Wage. They also must keep accurate pay records and make them available when requested. If an employer has not been paying the correct minimum wage, they should resolve the problem as soon as possible. The employer must also resolve any backdated non-payment of minimum wage. This is even if the employee or worker no longer works for them.
It’s against the law for an employer to pay less than the National Minimum Wage or National Living Wage. They also must keep accurate pay records and make them available when requested. If an employer has not been paying the correct minimum wage, they should resolve the problem as soon as possible. The employer must also resolve any backdated non-payment of minimum wage. This is even if the employee or worker no longer works for them.
You might be an employee but also do self-employed work. In this case your employer will deduct your Class 1 National Insurance from your wages, and you may have to pay Class 2 and 4 National Insurance for your self-employed work.
How much you pay depends on your combined wages and your self-employed work. HMRC will let you know how much National Insurance is due after you’ve filed your Self Assessment tax return.
Directors, landlords and share fishermen
There are different National Insurance rules if you’re a:
Derby Community Accountancy Service 