What Employment Laws Apply to Non-Profit Organisations?

In Short

• Non-profits must follow the same employment laws as for-profit businesses, including wage, leave, and safety obligations.

• Volunteers and interns should not be treated as employees, except for reimbursing genuine expenses.

• Misclassification can lead to tribunal claims, financial penalties, and reputational damage.

Tips for Businesses
Clearly distinguish between employees, workers, and volunteers. Put written contracts in place for paid staff and clear agreements for volunteers and interns. Regularly review arrangements, keep accurate records, and provide training for managers to avoid misclassification risks and ensure your organisation stays compliant with employment law.

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Table of Contents

• Basic Employment Rights and Obligations
• Managing Volunteers and Interns
• Misclassification of Workers 
• Potential Legal Consequences
• Key Takeaways
• Frequently Asked Questions 

Non-profit organisations must comply with the same employment laws as for-profit businesses. However, many non-profit organisations often utilise volunteers and interns to further advance their good causes. These unique arrangements are treated differently under employment. You must be aware of your obligations when engaging volunteers and interns for your organisation. This article explains the key employment laws that apply when you are hiring volunteers. 

Basic Employment Rights and Obligations

Where you engage employees, all NPOs are still subject to fundamental employment rights and obligations, such as:

• paying the National Minimum Wage or National Living Wage;
• adhering to Working Time Regulations;
• providing statutory benefits such as holiday pay and sick leave; and
• annual and family leave entitlements.  

The Equality Act 2010 applies fully to non-profit organisations and prohibits discrimination based on protected characteristics, including:

• age;
• disability;
• gender;
• race;
• religion; and 
• sexual orientation. 

You must implement clear policies and procedures to prevent discrimination and handle complaints effectively.  

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Managing Volunteers and Interns

Their participation in the activities of your organisation is purely voluntary, and in the case of interns, the objective is usually to obtain work experience. 

On this basis, you must be careful to avoid creating an impression that they are engaged as employees or even workers by ensuring that you pay only reasonable expenses incurred, such as for travel to and from your organisation and or for your projects.

Misclassification of Workers 

Non-profit organisations typically engage individuals under three main categories: employees, workers, and volunteers (including interns). Employees have the most comprehensive rights, including protection against unfair dismissal and statutory redundancy pay. Workers have fewer rights but are still entitled to minimum wage and working time protections.

Non-profit organisations often encounter problems with:

• misclassifying volunteers and interns and workers;
• providing regular payments to volunteers and interns beyond genuine expense reimbursement; and 
• creating obligations for volunteers and interns that suggest employment.

Potential Legal Consequences

Failure to successfully manage your employment arrangements and classify them appropriately could ultimately result in:

• employment tribunal claims;
• back payment of wages and benefits;
• financial penalties; and
• reputational damage.

Non-profit organisations should implement robust risk management strategies and maintain clear documentation, including:

• ensuring written employment contracts for employees and workers are in place;
• ensuring volunteer and intern agreements outline the voluntary nature of the relationship;
• disseminating clear policies on expenses and benefits;
• regular reviews of employment arrangements;
• clear distinction between paid and voluntary roles; and
• proper record-keeping of hours worked and payments made.

Key Takeaways

To maintain legal compliance while effectively managing your workforce, you should:

• maintain clear policies distinguishing between different types of workers;
• regularly review working arrangements to ensure proper classification;
• provide appropriate training for managers and supervisors; and
• keep accurate records of all working relationships.

If you need legal assistance in understanding your employment law obligations as an owner of a non-profit organisation, our experienced employment lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page. 

Frequently Asked Questions