At Work: Law and Governance - Keep it legal - Faith groups

Shivaji Shiva, a partner in the charity team at Russell-Cooke Solicitors

The Charity Commission inquiry into the alleged abuse by terrorists of funds held by Crescent Relief highlights the level of scrutiny to which charities serving faith organisations and BME communities are currently exposed.

Faith groups contend with difficulties arising from their specific nature.

The role of the spiritual leader, employment law and membership are three areas where problems might arise.

Religious organisations are often led by a charismatic individual paid by the charity, for example an imam or rabbi. Because of the nature of the role, the spiritual leader might be reluctant to discuss the terms on which he or she is employed.

But the principles of employment law apply to spiritual leaders just as they do to anyone else. An organisation should therefore ensure that all parties understand the nature of the relationship. For example, will the individual be a volunteer, employed or genuinely self-employed?

Traditionally, Church of England vicars have not been subject to the usual rules of employment law because they were treated as office holders with a principal duty to God as opposed to working under contract. Recent developments challenge that position - see, for example, the decision of the Lords in the case of Percy (AP) (Apellant) v Church of Scotland Board of National Mission (Respondent) (Scotland).

The role and status of members is a regular source of difficulty for charities established as companies or unincorporated associations. The task of maintaining membership records is easily neglected in the face of more pressing deadlines. This may cause little difficulty in the usual course of events, but it can be critical if internal disputes arise. It may be impossible, for example, to determine whether trustees have been appointed correctly without first identifying the individuals who are entitled to vote.

The problem is often exacerbated in religious organisations, where the constitution may entitle any person in an ever-changing congregation to take part in the charity's governance. It is important to review the membership structure of the organisation regularly - it may, for instance, be appropriate to recognise a separate category of 'informal membership' that enables individuals to receive information on the affairs of the organisation but does not entitle them to take part in its legal affairs.

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