Charities Act 2011 (c. 25)

Part 9 E+W Charity trustees, trustees and auditors etc.

Remuneration of charity trustees and trustees etc. E+W

185 Remuneration of charity trustees or trustees etc. providing [F1 goods or] services to charity E+W

(1) This section applies to remuneration for [F2 goods or] services provided by a person (“P”) to or on behalf of a charity where—

(a) P is a charity trustee or trustee for the charity, or

(b) P is connected with a charity trustee or trustee for the charity and the remuneration might result in that trustee obtaining any benefit.

This is subject to subsection (3).

(2) If Conditions A to D are met in relation to remuneration within subsection (1), P is entitled to receive the remuneration out of the funds of the charity.

• Condition A

  Condition A is that the amount or maximum amount of the remuneration—

  (a)

  is set out in an agreement in writing between the charity or its charity trustees (as the case may be) and P under which P is to provide the [F3 goods or services, or goods and services,] in question to or on behalf of the charity, and

  (b)

  does not exceed what is reasonable in the circumstances for the provision by P of the [F4 goods or services, or goods and services,] in question.

• Condition B

  Condition B is that, before entering into that agreement, the charity trustees decided that they were satisfied that it would be in the best interests of the charity for the [F5 goods or services, or goods and services,] to be provided by P to or on behalf of the charity for the amount or maximum amount of remuneration set out in the agreement.

• Condition C

  Condition C is that if immediately after the agreement is entered into there is, in the case of the charity, more than one person who is a charity trustee and is—

  (a)

  a person in respect of whom an agreement within Condition A is in force,

  (b)

  a person who is entitled to receive remuneration out of the funds of the charity otherwise than by virtue of such an agreement, or

  (c)

  a person connected with a person falling within paragraph (a) or (b),

  the total number of them constitute a minority of the persons for the time being holding office as charity trustees of the charity.

• Condition D

  Condition D is that the trusts of the charity do not contain any express provision that prohibits P from receiving the remuneration.

[F6 (3) This section does not apply to any remuneration for services provided by a person in the person’s capacity as a charity trustee or trustee for a charity or under a contract of employment.

(3A) Any entitlement to receive remuneration under subsection (2) is in addition to and does not affect any entitlement to receive the remuneration by virtue of—

(a) any provision contained in the trusts of the charity;

(b) any order of the court or the Commission;

(c) any other statutory provision contained in or having effect under any Act.]

(4) Before entering into an agreement within Condition A the charity trustees must have regard to any guidance given by the Commission concerning the making of such agreements.

(5) The duty of care in section 1(1) of the Trustee Act 2000 applies to a charity trustee when making such a decision as is mentioned in Condition B.

(6) For the purposes of Condition C an agreement within Condition A is in force so long as any obligations under the agreement have not been fully discharged by a party to it.

(7) Sections 187 and 188 (interpretation) apply for the purposes of this section.

Textual Amendments

F1 Words in s. 185 heading inserted (31.10.2022) by Charities Act 2022 (c. 6), ss. 30(a), 41(4); S.I. 2022/1109, Sch. para. 6

F2 Words in s. 185(1) inserted (31.10.2022) by Charities Act 2022 (c. 6), ss. 30(b), 41(4); S.I. 2022/1109, Sch. para. 6

F3 Words in s. 185(2) substituted (31.10.2022) by Charities Act 2022 (c. 6), ss. 30(c)(i), 41(4); S.I. 2022/1109, Sch. para. 6

F4 Words in s. 185(2) substituted (31.10.2022) by Charities Act 2022 (c. 6), ss. 30(c)(ii), 41(4); S.I. 2022/1109, Sch. para. 6

F5 Words in s. 185(2) substituted (31.10.2022) by Charities Act 2022 (c. 6), ss. 30(c)(iii), 41(4); S.I. 2022/1109, Sch. para. 6

F6 S. 185(3)(3A) substituted for s. 185(3) (31.10.2022) by Charities Act 2022 (c. 6), ss. 30(d), 41(4); S.I. 2022/1109, Sch. para. 6

Modifications etc. (not altering text)

C1 S. 185 modified by 1956 No. 3, s. 7A (as inserted) (E.) (1.3.2019) by Church of England (Miscellaneous Provisions) Measure 2018 (No. 7), ss. 14(1), 17(3); S.I. 2019/67, art. 2(1)(m))

C2 S. 185 excluded (coming into force in accordance with s. 53(6)(7) of the amending Measure) by Cathedrals Measure 2021 (No. 2), Sch. 1 para. 4(6) (with ss. 42(4), 48, 52(1))

186 Disqualification of charity trustee or trustee receiving remuneration under s.185 E+W

(1) This section applies to any charity trustee or trustee for a charity—

(a) who is or would be entitled to remuneration under an agreement or proposed agreement within Condition A, or

(b) who is connected with a person who is or would be so entitled.

(2) The charity trustee or trustee for a charity is disqualified from acting as such in relation to any decision or other matter connected with the agreement.

(3) But if an act is done by a person who is disqualified from doing it by virtue of subsection (2), the act is not invalid merely because of that disqualification.

(4) If the Commission is satisfied—

(a) that a person (“P”) has done any act which P was disqualified from doing by virtue of subsection (2), and

(b) that P or a person connected with P has received or is to receive from the charity any remuneration under the agreement in question,

it may make an order under subsection (5) or (6) (as appropriate).

(5) An order under this subsection is one requiring P—

(a) to reimburse to the charity the whole or part of the remuneration received as mentioned in subsection (4)(b);

(b) to the extent that the remuneration consists of a benefit in kind, to reimburse to the charity the whole or part of the monetary value (as determined by the Commission) of the benefit in kind.

(6) An order under this subsection is one directing that P or (as the case may be) the connected person is not to be paid the whole or part of the remuneration mentioned in subsection (4)(b).

(7) If the Commission makes an order under subsection (5) or (6), P or (as the case may be) the connected person accordingly ceases to have any entitlement under the agreement to so much of the remuneration (or its monetary value) as the order requires P to reimburse to the charity or (as the case may be) as it directs is not to be paid to P.

(8) Sections 187 and 188 (interpretation) apply for the purposes of this section.

[F7 186A Remuneration etc for work already carried out E+W

(1) This section applies to a person who—

(a) has carried out work for or on behalf of a charity, and

(b) is a charity trustee or trustee for the charity (or was one when the work was carried out).

(2) If the condition in subsection (3) is met, the Commission may by order—

(a) require the charity trustees of the charity to pay the person such remuneration for the work as must be specified in the order;

(b) authorise, to such extent as must be specified in the order, any benefit already received in connection with the work to be retained.

(3) The condition in this subsection is that the Commission considers that it would be inequitable for the person not to be paid the remuneration or not to retain the benefit.

(4) In determining whether to make an order under this section, the Commission must in particular have regard to—

(a) whether, if the person had not carried out the work, the charity would have paid someone else to carry it out,

(b) the level of skill with which the work was carried out,

(c) any express provision in the trusts of the charity prohibiting the person from receiving the remuneration or retaining the benefit, and

(d) whether remunerating the person or allowing the person to retain the benefit would encourage breaches of trust or breaches of duty by persons in their capacity as charity trustees or trustees for charities.]

Textual Amendments

F7 S. 186A inserted (7.3.2024) by Charities Act 2022 (c. 6), ss. 31, 41(4); S.I. 2024/265, reg. 3, Sch. 1 para. 7

187 Meaning of “benefit”, “remuneration”F8 ...etc. E+W

In sections 185 [F9 to 186A] —

• “benefit” means a direct or indirect benefit of any nature;

• “maximum amount”, in relation to remuneration, means the maximum amount of the remuneration whether specified in or ascertainable under the terms of the agreement in question;

• “remuneration” includes any benefit in kind (and “amount” accordingly includes monetary value);

• F10 ...

Textual Amendments

F8 Words in s. 187 heading omitted (31.10.2022) by virtue of Charities Act 2022 (c. 6), s. 41(4), Sch. 2 para. 39(a); S.I. 2022/1109, Sch. para. 11(h)

F9 Words in s. 187 substituted (7.3.2024) by Charities Act 2022 (c. 6), s. 41(4), Sch. 2 para. 42; S.I. 2024/265, reg. 3, Sch. 1 para. 13(m)

F10 Word in s. 187 omitted (31.10.2022) by virtue of Charities Act 2022 (c. 6), s. 41(4), Sch. 2 para. 39(b); S.I. 2022/1109, Sch. para. 11(h)

188 Meaning of “connected person” E+W

(1) For the purposes of sections 185 and 186, the following persons are connected with a charity trustee or trustee for a charity—

(a) a child, parent, grandchild, grandparent, brother or sister of the trustee;

(b) the spouse or civil partner of the trustee or of any person falling within paragraph (a);

(c) a person carrying on business in partnership with the trustee or with any person falling within paragraph (a) or (b);

(d) an institution which is controlled—

(i) by the trustee or by any person falling within paragraph (a), (b) or (c), or

(ii) by two or more persons falling within sub-paragraph (i), when taken together.

(e) a body corporate in which—

(i) the trustee or any connected person falling within any of paragraphs (a) to (c) has a substantial interest, or

(ii) two or more persons falling within sub-paragraph (i), when taken together, have a substantial interest.

(2) Sections 350 to 352 (meaning of child, spouse and civil partner, controlled institution and substantial interest) apply for the purposes of subsection (1).