Charities: legal and regulatory update – hot topics and key takeaways

Insight

10.07.2025

Earlier this year, lawyers from our Charity & Community Team and Employment Team delivered an update for charities on current and forthcoming legal and regulatory developments. This popular webinar was attended by over 250 representatives from a wide range of charities.

This article provides an overview of the hot topics covered and the key takeaways. If you missed the session, you can see a recording here.

Charity Commission

Demand on the Charity Commission’s resources continues to grow, with over 170,000 charities now on the register. Despite 75% of these charities having an income below £10,000, the total income across the sector is nearly £90 billion, highlighting the scale and diversity within the sector – from small volunteer-led organisations to large charities with incomes exceeding £100 million. The Commission faces the challenge of regulating both small and large organisations fairly, proportionately and effectively.

Leadership

The Charity Commission has recently undergone changes in leadership and direction, with the release of a new five-year strategy under the outgoing chair, Orlando Fraser, and the appointment of a new CEO, David Holdsworth. Mark Simms, previously a board member, has taken up the position of interim chair. Recruitment of a new permanent chair is underway.

Trustee Guidance improvement programme

The Charity Commission has pivoted to a comprehensive programme of reviewing and “refreshing” its existing guidance for charity trustees. Its aim is to make its publicly accessible guidance shorter, clearer and more accessible.

While the desire to produce more practical and user-friendly guidance is commendable and has obvious advantages, there remain concerns that a lack of formal consultation on the revised guidance, coupled with a trend towards simplification, risks losing valuable nuance and detail. Legal inaccuracies or ambiguities have also been identified in some of the refreshed guidance.

The Charity Commission is also gradually withdrawing the entirety of its operational guidance from public access. This is the guidance that the Commission gives to its own case workers and other staff – it provides valuable insight into the regulator’s policy and decision-making processes.

This may well mean that larger charities and those dealing with issues that fall outside the norm may find it more difficult to find answers without specialist legal advice.

Guidance "refreshed" by the Commission recently includes:

The Charity Commission is expected to release refreshed versions of its guidance on Charity fundraising: a guide to trustee duties (CC20) and Conflicts of interest: a guide for charity trustees (CC29) over the next few months.

Lessons from high-profile investigations

The Charity Commission has reported on the outcome of its investigations into mismanagement and maladministration at three high-profile charities: Mermaids, Fashion for Relief and the Captain Tom Foundation.

These inquiries raised a variety of concerns ranging from failing to manage conflicts of interest, providing unauthorised direct and indirect private benefits to charity trustees and those connected to them, failing to manage fundraising partnerships appropriately, incurring unreasonable levels of fundraising expenditure and paying excessive charity trustee expenses, and misleading the public.

Lessons to be learnt from these cases include ensuring that:

Infrastructure, governance and resources keep pace with growth and that policies and processes align with legal and regulatory changes specific to the charity’s activities.
The board does not become dominated by a single charity trustee but has charity trustees who are active, willing and able to robustly scrutinise and challenge decisions and speak up should mismanagement occur.
The strict rules on private benefits, payments and remuneration to charity trustees (and those connected to them) are followed and that all conflicts of interest or loyalty are identified, disclosed and appropriately managed.
The charity’s resources are managed prudently, including by acting to protect its name and other intellectual property.
Fundraising relationships with commercial partners comply with fundraising rules, are in the charity’s best interest and properly managed.

Charity trustees’ personal views

There were also lessons for the Charity Commission itself. In the case of Mond v Charity Commission, the Charity Tribunal overturned, for the first time ever, an order made by the Commission disqualifying an individual from acting as a charity trustee.

A charity trustee disqualification order was made against Mr Mond because of his activity on social media that the Commission saw as Islamophobic. In overturning the order, the Tribunal found that, while Mond’s conduct was capable of damaging trust and confidence in charities it was not sufficient to deem him "unfit" to act as a charity trustee. The activity in question was limited, low profile and not obviously connected to the relevant charity or charities generally. Any restrictions placed on an individual’s right to freedom of speech had to be proportionate and those with strong and passionate views should not be excluded from charity trusteeship.

We may see the Commission being more cautious about the use of its disqualification, powers following this decision. However, charity trustees should:

Ensure that their charity has a social media policy in place that includes guidelines for them, staff and volunteers on posting and sharing content on personal accounts.
Take care when expressing opinions in public that may not align with their charity’s purposes and message.
Ensure that any social media accounts where controversial views are aired are, as far as possible, private rather than public.

You can read the case in full here.

Hot topics in employment law

Employment Rights Bill

The Employment Rights Bill published in October 2024 has been described as “the biggest update to workers’ rights in a generation”. It presents a landmark shift in law for all employers. Once they become law, most of the reforms are likely to take effect no earlier than 2026.

Charities that employ staff will need to prepare for a wide range of new measures, including:

Employees will be able to claim unfair dismissal from day one. The time limit for bringing a claim in the Employment Tribunal will double from three to six months. Employees will therefore have more time and flexibility to bring a claim.
The duty to prevent sexual harassment will be expanded to place an obligation on employers to take all reasonable steps to prevent sexual harassment, and to make employers liable for one-off third-party harassment during employment, whether known about by the employer or not.
Larger charities, who employ 250 or more people, will be required to produce equality action plans addressing gender inequality, gender pay gaps, menopause support and menstrual disorders.
Non-disclosure agreements, including in settlement agreements, will be void if they seek to prevent a worker from making a disclosure about discrimination or harassment.
Employees will gain stronger rights to request flexible working, and workers on zero-hours contract will gain a new right to a guaranteed-hours contract in certain circumstances.
Trade union reforms that will give workers greater access to unions, make union membership and recognition easier, and streamline the process for industrial action.
The framework for collective redundancies will also be strengthened, with serious penalties for failing to properly consult workers.

Also, while not included in the Employment Rights Bill itself, the government has indicated that it will reform "worker" status by combining "employees" and "workers" into a single category.

For a more detailed analysis on what employers need to know about the Employment Rights Bill, you can read the most recent briefings by our Employment team here and here.

Managing protected beliefs in the workplace

The last year has seen a spike in Employment Tribunal claims centred on balancing conflicting beliefs, particularly in the areas of gender identity and sexual orientation. In many of these cases, the tribunal has found that the employer’s action in response to those beliefs has been disproportionate, amounting to unlawful discrimination on the grounds of a belief protected under the Equality Act 2010.

Navigating expressions of protected beliefs in the workplace, particularly where the belief conflicts with other protected characteristics under the Equality Act 2010 can be particularly challenging for employees.

As the case law continues to develop, we encourage charities to adopt a practical, case-by-case approach. It is important to ensure a balanced understanding of the situation by gathering all the relevant information, avoiding hasty actions, and ensuring that responses are consistent and proportionate.

Managing how employees engage in controversial topics requires careful consideration, particularly where online discussion is involved, which tends to escalate tensions. Charities should work with staff and have policies and training in place to clarify what is expected of them and what is acceptable.

New Code of Fundraising Practice

Early this year, the Fundraising Regulator (FR) launched its new Code of Fundraising Practice to reflect changes in technology, legislation, and fundraising behaviour. The new code is intended to be shorter, more accessible, and takes a principles-based approach to rule setting. It has been reorganised to be more user-friendly and now includes examples of key expectations and prohibited practices. For further information see here.

The FR has also published new guidance on the use of sub-contractors in face-to-face fundraising. This emphasises that charities are responsible for the actions of all third-party fundraisers in a supply chain. Robust monitoring and oversight of fundraising partners is key to maintaining high standards of fundraising practice.

New tool to strengthen charity investment governance

The Charity Investment Governance Principles were launched in January 2025 to help charities strengthen governance in managing their investments, providing charity leaders with greater clarity and confidence when making decisions about investments.

This is a new tool to support charity trustees in evaluating and improving their charity’s governance around financial investment and social investment activity. For further information, see here.

Martyn’s Law: a new duty to protect against terrorist attack

The Terrorism (Protection of Premises) Act 2025, also known as Martyn's Law, places a new duty on those responsible for certain premises and events to have in place appropriate procedures to protect the public from terrorist attack.

Although the Act is now law, its provisions are not yet in force and there will be at least a two-year implementation period, giving those responsible for premises and events time to prepare, and for statutory guidance on the new requirements to be published.

In the meantime, charities should consider now how the new law will affect them.

What’s on the horizon?

We concluded our webinar with a round-up of some of the key future developments that charities should be aware of and keep up to date with, including:

Marketing soft op-in for charities – that will make it easier for charities to contact existing supporters by email and text message and should become available soon. Charities wishing to use the "soft opt-in" should be preparing for it now. For further detail, see here and information from the FR.
Charity tax compliance reforms – we are awaiting further details of proposed reforms to charity tax compliance rules, announced in the Autumn 2024 budget. These include changes, due to come into force in April 2026, to tighten up the tainted donations rules, to prevent abuse of the charity investment rules and to close a loophole in the non-charitable expenditure rules.
New Charities SORP – this sets out the recommended accounting and reporting practice for charities that will apply from financial years commencing 1 January 2026 onwards. A final version of the SORP is due to be published in autumn 2025.

Charities should consider discussing with their auditors the impact changes in the new SORP may have on accounting and reporting practices.

This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.