Learning disabilities charity Break is to close its adult day care service in the north Norfolk town of Sheringham when its local authority contract ends in September because it cannot meet the requirements of the new personalised budgets system.
Fourteen staff at the charity, based in Sheringham, have been told they are at risk of being made redundant as a result of the decision.
The charity has opened a 30-day consultation with staff about the closure of the Daybreak service. It will end on 17 May.
Chris Hoddy, director of care at the charity, said: "The move towards individual payments and personalised budgets is enabling service users to choose from a range of services that are tailored to their individual requirements.
"Traditional day services such as Daybreak are not able to offer the flexibility required to meet that individual need. Added to that, the existing Daybreak building is no longer fit for purpose and would need considerable expenditure to rectify the problems."
Don Evans, director of corporate services at Break, said it was unlikely the decision would be reversed because it was not practical to run the service under the new funding rules that would come into effect once the existing contracts with Norfolk County Council ended.
He said the adult day care service represented less than 10 per cent of the charity's work. Its other services were not affected by the personalisation agenda in the same way, he said.
The service has been running for more than 25 years.