Charities throughout the West Midlands have been placed on red alert as the economic climate worsens with the onset of public sector cutbacks.
Voluntary organisations across the region are being urged by a local employment expert to improve their understanding of regulations amid fears of new headaches ahead for the sector.
New research compiled by the National Council for Voluntary Organisations (NCVO) has revealed that 64 per cent of charities feel their financial situation is set to decline over the next 12 months.
A number also stated that this would lead them to reduce their level of service and cut staff numbers in order to deal with the current climate.
Chris Piggott, an employment partner at Irwin Mitchell in Birmingham, said charities had to carefully consider regulations when thinking about letting workers go or seeking to impose changes to terms and conditions on staff such as pay cuts or reductions in hours.
“These findings are not surprising and it’s important that charities are aware of the dangers of simply shedding staff and imposing changes to conditions.
“Although charities are used to relying on short term funding, many are less familiar with the legal pitfalls of dismissing staff or making contractual changes when this funding is cut – pitfalls that can ultimately lead to Employment Tribunals and costly claims for unfair or constructive dismissal amongst other potential problems.
“This, combined with falling income for the charities themselves, can quite quickly create a costly and stressful and is some cases, even an insolvency scenario.
“There are also issues in relation to those staff that are able to keep their jobs when others are losing theirs.
“Morale is undoubtedly affected and coupled with heavy workloads caused by sharing out the work amongst fewer members of staff, this can lead to stress claims and increased absences levels for those that remain.
“Charitable organisations can often find this vicious cycle very difficult to manage and this could undoubtedly be the case over the next few months.
“One potential concept which bodies reliant on council contracts may benefit from is putting pay protection measures in place before being forced to accept less funding for their services.”