To provide greater protection for charities, the Charity Commission has released new automatic disqualification rules which came into force on 1 August 2018.
The new rules build on the existing regulations, whereby automatic disqualification only applies to trustee positions. There are now more restrictions on who can run a charity, with disqualification also applying to certain senior positions, including chief executives, finance directors and those in equivalent roles. Disqualification does not solely depend on a job title though, but also on responsibility and accountability.
The Commission has introduced new reasons for disqualification including criminal records for sex offences, terrorism and money laundering.
While it is not anticipated that many individuals and charities will be directly affected by these changes, appropriate ongoing monitoring processes will be required to remain compliant.
Disqualified individuals can apply for a waiver if this is in the best interests of the charity. The charity’s trustees will need to specify if they support the waiver application.
If it is expected that the new restrictions will apply to an individual, the situation should be discussed with a charity’s trustees in the first instance.
Together, the individual and trustees will want to agree the best way to proceed:
- Resign from the role; or
- Apply for a waiver from the Commission.
It is recommended that charities:
- Update their recruitment practices;
- Review employment contract terms for relevant senior management positions to ensure protection if disqualification occurs
- Ask trustees and senior management to complete a new declaration process as soon as possible to allow enough time for decisions to be made
- If there is concern that disqualification will apply, decide whether a waiver or resignation is the most appropriate route. If resignation is chosen, consider succession planning to ensure a smooth handover.
Going forward, charities should ensure they have a process in place to update personal declarations by trustees and senior management on at least an annual basis, with an expectation set that individuals will self-declare any change to their situation when it arises.