Half the staff at The Challenge will not receive statutory redundancy payments

Half of all staff made redundant at The Challenge last week after its collapse into administration will not automatically receive statutory redundancy payments, Third Sector understands.

The Challenge was thrown into financial disarray after losing a £60m contract with the National Citizen Service Trust in the summer.

The Challenge went into administration on 25 November, one day before redundancy payments were due to staff who had lost their jobs because of the loss of the contract.

A total of 157 people at The Challenge were made redundant and the majority of staff have now left the organisation, with those working notice periods also required to leave immediately.

But of those made redundant, 72 members had not been employed by the charity long enough to apply for statutory redundancy.

Employees need to work for two years or more at an organisation to be able to claim redundancy pay from the government.

In an internal email seen by Third Sector, staff were told by the charity that, although they would receive their pay up to 28 November, the day most remaining staff departed, it would be unable to pay redundancy packages because of the administration.

Those who are not entitled to statutory redundancy were told to make claims in the administration as creditors of The Challenge.

It is not yet known how much money will be available for creditors after the administration is completed.

The charity has launched a legal claim worth £22m against the NCS Trust and has accused it of withholding money and failing to prevent the collapse of the charity.

The NCS Trust has denied responsibility for the administration.

The Challenge has also accused the Department for Digital, Culture, Media and Sport of doing little to intervene in the situation.

Oliver Lee, chief executive of The Challenge, said in a statement that he was "devastated" by what had happened to staff this week.

"I shall always be deeply sad about this for our staff and our partners," he said. "I view it as dreadful for them and for the entire NCS programme."

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