The British Deaf Association has imposed a pay freeze on staff because of a £500,000 drop in the value of its investments.
The charity has severed its link with local government or NJC rates and withdrawn a 3.5 per cent pay increase for its 51 staff.
Instead, because of the 1 per cent increase in National Insurance in April, staff have in effect suffered a pay cut. Employees were told about the pay freeze just three weeks before the expected rise. Budgets for 2003/4 were only due to be finalised last weekend.
Staff have been told by the board of trustees that the association has seen its investments fall by around £500,000 and that the value of its reserves has been eroded. The board has said that there will not be any redundancies but has not indicated for how long this commitment holds.
However, staff are understood to be unhappy with the pay freeze and some are questioning its legality since a commitment to follow designated pay scales is included in employment contracts.
Chris Ball, voluntary sector secretary at trade union Amicus, said: "A court of law could possibly imply into contracts an obligation to meet NJC terms. We will take on any breach of contract cases if requested to by staff."
The pay freeze was imposed by the charity's new board of trustees, who were elected in January. Chairman Doug Alker, formerly chief executive of RNID, was unavailable for comment.
The charity, which campaigns for equality of treatment for deaf people who use sign language, is still planning to expand its services with the creation of a British Sign Language Academy. Plans for the Academy are scheduled to be announced at a members' conference in June.