Employment considerations for merging charities

Charity sector press is full of news of mergers between charities.

The government’s autumn budget placed extra burden on employment-related costs, including changes to national insurance, as well as the usual April increase to national minimum wage, followed by plans announced in the Employment Rights Bill to change statutory sick pay. These financial pressures faced by charities are leading many to explore pooling resources by way of strategic merger. 

From an employment perspective, if your charity is considering merging, there are a number of steps that can be taken to ensure a smooth transaction, as well as important considerations to bear in mind, such as the following:

• In anticipation of due diligence, ensure HR records are up to date. This will include ensuring the appropriate contractual documentation for employees and workers, as well as up to date regulatory checks such as right to work and safeguarding.
• Be confident in the merit of any merger. As with any organisational change, a robust business plan demonstrating the benefit of the merger is important. The strategic planning involved in preparing a business plan should also establish why alternatives, such as reorganisation or redundancy, are not the preferred option.
• Consider how any merger will impact upon staff, such as changes in place of work, changes to team structure, changes to terms and conditions, and possible redundancies.
• When looking at the timeline for merger, factor in TUPE consultation. This will often occur after exchange, but before completion, of any merger. Don’t forget that in many cases, employee representatives will need to be nominated and elected before consultation can start.
• Take time to consider communications with staff and other stakeholders. There is often a careful line to be walked in reassuring stakeholders and beneficiaries, whilst also being transparent with staff about the practical consequences of any merger. 

The Employment Team at Stone King are involved in supporting many charities in the merger process, from planning through to completion. If you would like advice on such matters, please do get in touch.