Charity Commission takes a new direction with Official Warnings

In August, the Charity Commission issued an Official Warning to the RSPCA in connection with a large settlement paid to the charity's former interim CEO. The Commission took the view that the trustees involved in agreeing the settlement committed a breach of duty, by (a) failing to ensure they were sufficiently informed before making the decision about the settlement, and (b) failing to act with reasonable care and skill in the negotiation.

The Official Warning stated that the trustees should take the following actions:

• adhere to the charity's code of conduct
• receive formal training on their duties, and
• implement the recommendations of an independent report on CEO recruitment procedures.

Slightly more information is available in the press release the Commission published alongside the Official Warning.

One interesting point about this is that, whilst the recommended actions are addressed to the RSPCA's entire board, the breach of duty identified in the warning was committed by particular members of the board. Previous warnings (of which we have, admittedly, seen only a few since they were first introduced) have not singled out a charity's officers in this way. The legislation allows the Commission to issue warnings to individual trustees, but this is the first time we have seen this in a published warning.

The warning also serves as a reminder to charity trustees that they must remain mindful of their duties when dealing with employment matters and that, where relevant, they should consult the Commission's guidance on trustees' powers to compromise claims and to make ex gratia payments before agreeing settlements with staff.

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

© Farrer & Co LLP, December 2018