Being a Non-Executive Director or Charity Trustee: What You Need to Know About Legal Exposure (And Why It Shouldn’t Put You Off)

Under the Companies Act 2006 (CA 2006), there is no legal distinction between executive and non-executive directors when it comes to statutory duties. Both owe the same duties to the company. Those duties are:

1. Duty to act within powers (section 171 CA 2006): you must act in accordance with the company’s constitution and use your powers for the purposes for which they are given.
2. Duty to promote the success of the company (section 172 CA 2006): you must act in good faith in a way you consider most likely to promote the company’s success for the benefit of its members, having regard to factors such as long-term consequences, employee interests, supplier and customer relationships, community and environmental impact, and the company’s reputation.
3. Duty to exercise independent judgment (section 173 CA 2006): you must form your own view on matters and not simply defer to others, even though you can take advice.
4. Duty to exercise reasonable care, skill and diligence (section 174 CA 2006): you are held to the standard of a reasonably diligent person with both the general knowledge and experience expected of someone in your role and your own specific knowledge and experience. If you join a board because of particular expertise – financial, scientific, operational – the standard applied to you in that area will reflect that.
5. Duty to avoid conflicts of interest (section 175 CA 2006): you must avoid situations in which your personal interests conflict, or could conflict, with those of the company. This duty continues after you leave.
6. Duty not to accept benefits from third parties (section 176 CA 2006): you must not accept benefits given to you by reason of being a director.
7. Duty to declare interests in proposed transactions (section 177 CA 2006): you must disclose to the board any personal interest in a proposed transaction or arrangement. There is a parallel duty to declare interests in existing transactions under section 182, and failure to comply is a criminal offence.

These duties are owed to the company, not to individual shareholders or third parties. Only the company (or, in limited circumstances, shareholders through a derivative action) can enforce them.

Where personal liability can arise

Understanding the categories of risk is the first step to managing them.

Breach of statutory duties

If a breach of any of the above duties causes loss to the company, the company may seek compensation from the director personally. In practice, liability for genuine, good-faith errors is rare: courts are reluctant to second-guess commercial decisions made honestly and on reasonable information. The greater risk lies in conflicts of interest that are not disclosed and managed, or decisions taken without adequate engagement.

Wrongful trading

Under section 214 of the Insolvency Act 1986, a director (including a NED) can be ordered to contribute personally to a company’s assets if they allowed the company to continue trading when they knew, or ought to have concluded, that there was no reasonable prospect of avoiding insolvent liquidation – and failed to take every step to minimise the loss to creditors. The defence is that you did take every step to minimise creditor losses: in practice, this means acting swiftly when warning signs appear, taking professional advice, and not sitting on your hands.

Director disqualification

Under the Company Directors Disqualification Act 1986, directors can be disqualified for up to fifteen years for conduct that makes them unfit to be concerned in the management of a company. Wrongful trading, persistent breaches of filing obligations, and participation in fraudulent conduct are all grounds. Disqualification prevents you from acting as a director (or indirectly being involved in company management) without court permission. Breach of a disqualification order is a criminal offence.

What does not constitute liability for NEDs

It is worth being equally clear about what the law does not do:

1. It does not hold NEDs liable simply because a company fails or makes a poor commercial decision.
2. It does not require NEDs to be involved in day-to-day management or to second-guess every executive action.
3. It does not impose strict liability for a company’s compliance failures in areas where a NED had no involvement, authority, or reason to be aware of a problem.

The standard under section 174 CA 2006 is one of reasonableness, not perfection. Courts apply an objective baseline (what a reasonably diligent person in that role would do) combined with a subjective element reflecting your own knowledge and expertise. This dual test means a NED with specialist skills is expected to apply them – but is not expected to know everything.

How to discharge your duties and protect yourself

The following practical steps significantly reduce your exposure.

Before you start

1. Read the articles of association, any shareholders’ agreement, and any board charter or terms of reference.
2. Understand the company’s financial position, governance structure, and any existing disputes or regulatory issues.
3. Check whether there are any conflicts between your existing commitments (other directorships, advisory roles, investments) and your duties to this company.
4. Understand what the real time commitment is likely to be – see the section Due diligence before accepting any role.
5. Ensure you have a written letter of appointment that clearly sets out your role, expected time commitment, committee responsibilities, and fee arrangements (if any). Best practice is for the letter of appointment to record expressly that you are entitled to take independent professional advice at the company’s expense where you judge it necessary to discharge your responsibilities.

During your tenure

1. Attend board meetings regularly and engage meaningfully – absence does not insulate you from liability for decisions made in your name.
2. Ask for the information you need to make informed decisions. If information provided to the board is inadequate, say so and record it.
3. Ensure board minutes accurately reflect the discussions and decisions taken. If you dissent from a decision, ensure your dissent is recorded.
4. Disclose conflicts of interest promptly and fully. When in doubt, disclose.
5. Monitor the company’s financial health. Be alert to warning signs of financial distress – cash flow difficulties, creditor pressure, qualified audit opinions – and take independent advice if you have concerns.
6. Keep records of your engagement and the basis for decisions you supported.

Taking independent advice

Many NED appointment letters provide that directors may obtain independent professional advice at the company’s expense where necessary to discharge their responsibilities, and the UK Corporate Governance Code expects this to be available in companies with a listing of equity shares in the equity shares (commercial companies) category, or a listing in the closed-end investment funds category, of the UK Listing Rules. In practice, advice of this kind is usually commissioned by the board collectively: the board identifies the need and asks the executive to obtain it, with the company secretary facilitating the process. However, there may be circumstances in which an individual NED considers that independent advice is necessary to enable them properly to discharge their duties – for example, where they have concerns that cannot otherwise be resolved. In that situation, raise the matter with the chair or company secretary and seek to ensure that appropriate advice is obtained. If the letter of appointment does not already address access to independent professional advice, consider asking for this to be included.

Collective decision-making, dissent, and escalation

Boards act collectively. A majority decision binds the whole board, which means a dissenting director remains associated with that decision unless they take active steps. Recording your dissent in the minutes is the first and most important step – it demonstrates that you did not assent to the decision and provides a contemporaneous record of your position. However, minuting dissent is not always enough.

When is minuting dissent insufficient? Where the decision is unlawful, dishonest, or exposes the company to liability that you have a positive duty to prevent – most importantly, wrongful trading – passive dissent does not discharge your duty. Section 214 of the Insolvency Act 1986 requires you to take every step to minimise creditor losses once insolvency becomes foreseeable. Noting your objection and doing nothing more will not satisfy that test.

The escalation ladder, in order of seriousness, is:

1. Ensure your dissent is accurately recorded in the board minutes;
2. Circulate a written note to the board setting out your concerns in more detail;
3. Insist that the company obtains independent legal advice on the matter;
4. Escalate to the chair, or – if the chair is the source of the problem – to the senior independent director or the full board;
5. Resign from the board, with a written resignation letter that records your reasons – resignation is appropriate where you cannot in good conscience continue to serve and your continued presence would associate you with conduct you consider unlawful or seriously harmful; and
6. Report to the relevant external authority – the Insolvency Service (where the company is insolvent or approaching insolvency), the Financial Conduct Authority (where the company is FCA-regulated and the decision involves a regulatory breach), or another relevant regulator.

Resignation and external reporting are serious steps and should not be taken without legal advice. But they are available, and in some circumstances they are the only way to protect yourself from ongoing liability.

Relief available if things go wrong

Section 1157 CA 2006 gives courts the power to relieve a director, wholly or in part, from liability for negligence, default, breach of duty, or breach of trust if the court is satisfied that the director acted honestly and reasonably and, having regard to all the circumstances, ought fairly to be excused. This is a discretionary relief and not a guarantee, but it provides meaningful protection for directors who have genuinely engaged in good faith.

Company indemnities and what they cover

Companies can provide directors with indemnities against certain liabilities under sections 232–234 CA 2006 – but these are more limited than many people assume.

An indemnity provision in a company’s articles or a separate deed of indemnity is void to the extent it purports to exempt a director from liability to the company itself (section 232 CA 2006). However, a qualifying third party indemnity provision (QTPIP) under section 234 CA 2006 is permitted: this covers liabilities incurred to third parties (not the company or an associated company), and legal defence costs, subject to important exclusions. A QTPIP cannot cover:

1. Criminal fines or regulatory financial penalties;
2. Defence costs in criminal proceedings where the director is ultimately convicted;
3. Defence costs in civil proceedings brought by the company in which judgment is given against the director; or
4. Costs of an unsuccessful application for court relief under section 1157.

In short: a well-drafted indemnity from the company is a useful layer of protection for third-party claims and defence costs in proceedings you ultimately win, but it is not a complete safety net.

If you are considering a trustee role with a UK charity, the framework is different from company law – but the core message is the same: the duties are real, the risks are manageable, and being unpaid does not reduce your obligations.

The legal framework

The role of charity trustees in England and Wales is regulated primarily by the Charities Act 2011 (CA 2011) and the common law of trusts, with the Charity Commission providing authoritative guidance (its publication The Essential Trustee (CC3) is the key reference). The Charity Commission is the regulator for most charities in England and Wales.

The six core duties of charity trustees, as set out in Charity Commission guidance, are:

1. Ensure the charity carries out its purposes for the public benefit;
2. Comply with the charity’s governing document and the law;
3. Act in the charity’s best interests – make balanced, informed decisions, act in good faith, and avoid conflicts of interest;
4. Manage the charity’s resources responsibly – protect assets, avoid undue risk, and ensure sound financial management;
5. Act with reasonable care and skill – apply your knowledge and experience and dedicate sufficient time to your duties; and
6. Ensure the charity is accountable – maintain transparency and good governance.

These duties are owed to the charity and its beneficiaries, not to individual donors or third parties.

Exempt charities and principal regulators

Not all charities are registered with or directly regulated by the Charity Commission. Exempt charities are charitable in status but have a principal regulator instead. The most significant category is higher education institutions in England: most universities and many further education colleges are exempt charities whose principal regulator is the Office for Students (OfS). Other exempt charities include certain national museums and academies.

If you are a governor or trustee of an exempt charity, your trustee duties under charity law apply in full – but the regulatory touchpoints differ. The OfS (or other principal regulator) is responsible for promoting compliance with charity law obligations, and it works alongside the Charity Commission rather than replacing it entirely. Serious incident reporting obligations may run to both bodies. Before accepting a role with an exempt charity, check who the principal regulator is and familiarise yourself with its specific requirements and reporting expectations.

Dual duties for trustees of charitable companies

Many charities are structured as companies limited by guarantee. If you are a trustee of a charitable company, you are also a director of that company and owe both the seven statutory duties under CA 2006 (described in Part 1 above) and the charity law duties described here. In practice the two sets of duties are largely aligned – the duty to promote the success of the company under section 172 CA 2006 is generally understood, in the context of charitable companies, as requiring directors to promote the success of the company in achieving its charitable objects. You must, however, comply with both legal frameworks and report to both Companies House and the Charity Commission (or your principal regulator).

Where personal liability can arise for trustees

The extent of personal liability depends significantly on the legal structure of the charity.

Incorporated charities (charitable companies limited by guarantee and Charitable Incorporated Organisations (CIOs)) are separate legal entities. Claims are generally met from the charity’s assets, and trustees have limited personal liability – except in cases of wrongful or fraudulent trading, or where a trustee has acted in breach of duty causing loss to the charity.

Unincorporated charities (trusts and unincorporated associations) do not have separate legal personality. Trustees of unincorporated charities can be personally liable for the charity’s contractual obligations and for claims by third parties that the charity cannot meet from its own assets. A trustee who has acted properly is generally entitled to be indemnified from the charity’s assets, but if those assets are insufficient, personal exposure is real.

In all structures, personal liability can arise from:

1. Misapplying or misappropriating charity funds, or authorising activities outside the charity’s objects;
2. Causing financial loss to the charity through breach of duty; and
3. Allowing the charity to incur liabilities it cannot meet (particularly relevant for unincorporated charities).

Relief available for trustees

Two important relief mechanisms exist.

First, section 61 of the Trustee Act 1925 gives courts the power to relieve a trustee from liability for breach of trust if the trustee acted honestly and reasonably and ought fairly to be excused. This mirrors the relief available to company directors under section 1157 CA 2006.

Second, section 191 CA 2011 gives the Charity Commission a parallel power to relieve a charity trustee from personal liability for a breach of trust or duty if the trustee acted honestly and reasonably and ought fairly to be excused. This is a significant additional avenue: you can apply to the Charity Commission for relief without going to court. Note that this power does not extend to personal contractual liabilities, and it is not available for trustees of exempt charities in the same way – for those, the principal regulator’s powers apply.

Taking independent advice

Trustees should ensure they can access independent professional advice where necessary to discharge their duties. This is also reflected in the Charity Governance Code, which is a voluntary, “apply or explain” framework of good-governance principles that many charities choose to adopt or follow as a benchmark of good practice. The practical route mirrors that for NEDs. Usually, the trustee body will identify the need for advice and ask the executive (or, in a charity with staff, the relevant officer) to obtain it. However, there may be circumstances in which an individual trustee considers that independent advice is necessary to enable them properly to discharge their duties – for example, where they have concerns that cannot otherwise be resolved. In that situation, the trustee should raise the matter with the chair (or, where appropriate, the wider trustee body) and seek to ensure that appropriate advice is obtained.

Collective decision-making, dissent, and escalation for trustees

The same collective decision-making principles apply to trustee bodies as to company boards. A majority decision binds all trustees, and a dissenting trustee remains associated with it unless they act. The escalation options mirror those for NEDs:

1. Ensure your dissent is accurately recorded in the minutes;
2. Circulate a written note to the trustee body setting out your concerns;
3. Seek independent legal advice – trustees have the same right as NEDs to take advice at the charity’s expense where necessary to discharge their duties, and this should be facilitated by the chair or the charity’s secretary;
4. Escalate to the chair or, if the chair is the problem, to the full trustee body;
5. Resign, with a written resignation letter recording your reasons; and
6. Report a serious incident to the Charity Commission (or principal regulator) – trustees have a legal duty to report adverse events that risk significant harm to beneficiaries, significant loss of funds, or serious damage to the charity’s reputation. If a decision of the trustee body creates such a risk, reporting it may be both necessary and protective.

As with NEDs, resignation and external reporting are serious steps requiring careful consideration and, ideally, legal advice before action.

Practical steps for trustees

1. Read the charity’s governing document (trust deed, constitution, or memorandum and articles) before accepting the role.
2. Understand the charity’s financial position, any existing disputes, and its regulatory history with the Charity Commission or principal regulator.
3. Check for conflicts between your personal interests and your duties to the charity, and disclose them promptly.
4. Understand what the real time commitment is likely to be – see the section Due diligence before accepting any role.
5. Attend trustee meetings regularly and engage actively – absence does not protect you.
6. Ensure minutes accurately record decisions and, where relevant, your dissent.
7. Monitor the charity’s financial health and take independent advice at the first sign of financial difficulty.
8. Confirm whether trustee indemnity insurance is in place and review its scope.
9. For unincorporated charities, consider whether incorporation as a CIO or charitable company would reduce personal exposure – this is a governance question worth raising with the trustee body.

Insurance is the most important practical protection available to NEDs and trustees, and it should be one of your first enquiries before accepting any role.

Directors’ and Officers’ Insurance (D&O) – for company roles

For NEDs of companies, Directors’ and Officers’ insurance (D&O) is the key protection. A D&O policy typically covers:

1. Legal defence costs in civil, criminal, and regulatory proceedings;
2. Settlements and court awards resulting from claims against directors in their official capacity;
3. Costs of regulatory investigations (including dawn raids by the Competition and Markets Authority or enquiries by the Financial Conduct Authority); and
4. Claims arising from alleged wrongful acts – a broad term covering negligence, breach of duty, errors, omissions, and misrepresentation.

D&O policies do not cover deliberate fraud or dishonest conduct, criminal fines, or personal profits obtained unlawfully.

Trustee Indemnity Insurance (TII) – for charity roles

For trustees of charities, the equivalent protection is trustee indemnity insurance (TII). Section 189 CA 2011 gives charity trustees the power to purchase TII using the charity’s funds, even if the governing document does not expressly authorise it, provided the trustees are satisfied that doing so is in the best interests of the charity. TII typically covers legal defence costs and civil claims arising from the trustee’s role, including claims for breach of trust, breach of duty, and negligence.

The statutory exclusions for TII mirror those for D&O: TII must exclude criminal fines and regulatory financial penalties, defence costs in criminal proceedings where the trustee is convicted of fraud, dishonesty, or wilful or reckless misconduct, and liabilities to the charity arising from conduct the trustee knew, or should have known, was not in the charity’s best interests.

For trustees of charitable companies, the organisation may hold both D&O insurance (covering the company-law director duties) and TII (covering the charity-law trustee duties), or a combined policy. Check which duties each policy covers.

Practical points on insurance (both contexts)

1. Ask to see the relevant policy before accepting a role. Check the coverage limit is appropriate for the organisation’s size and sector, and whether the limit is on a per-claim or aggregate basis (aggregate limits can be eroded by multiple claims).
2. Check whether the policy provides run-off cover – this extends protection after you leave the board or trustee body, which matters because claims can be brought years after the relevant conduct occurred.
3. For company roles, consider whether to take out an individual D&O policy in addition to the company’s policy. This gives you a separate limit of indemnity that cannot be eroded by other claims, and remains available even if the company becomes insolvent and its policy is compromised.
4. Be aware that policies may have exclusions or conditions that reduce protection in specific circumstances. Read the policy, or take advice on it.

Accepting a NED or trustee role without adequate prior investigation is itself a governance risk. Before you commit, consider the following:

1. Review the last three years’ filed accounts (at Companies House for companies; at the Charity Commission register for charities). Look at revenue trends, net asset position, and any qualified audit opinions.
2. Search for any County Court judgments, regulatory sanctions, or publicly recorded disputes involving the organisation or its current and former directors or trustees.
3. Ask about any ongoing or threatened litigation, regulatory investigations, or material compliance issues.
4. Review the composition of the board or trustee body. Are they people of substance and integrity? Is there a culture of openness and accountability?
5. Board culture matters. Most NED and trustee liability cases do not arise because individuals lack technical legal knowledge. They arise because warning signs were ignored, concerns were not escalated, or a dysfunctional board culture discouraged challenge. Pay attention to how the board or trustee body operates: do people ask difficult questions, is dissent welcomed and recorded appropriately, and is there a genuine willingness to escalate concerns and seek advice where necessary? If a board or trustee body appears defensive, dismissive of challenge, or overly reliant on a dominant individual, consider carefully whether it is the right environment in which to serve.
6. Ask how board or trustee information is provided – quality of papers, frequency of updates, access to management.
7. Be realistic about the time commitment. The headline figure – a handful of board or trustee body meetings a year – rarely reflects the real demand: reading papers properly, sitting on a committee, informal contact between meetings, and (if things go wrong) sustained involvement in crisis management all take time, and chairing a board or committee adds more. Dedicating sufficient time is itself part of your duty of care, so if you have a portfolio of appointments, be careful not to take on more than you can properly service. Ask what the realistic commitment is – including committee work – and plan your time accordingly.
8. Ask specifically about D&O insurance (for companies) or trustee indemnity insurance (for charities): who is covered, what the policy limit is, and whether run-off cover is included.
9. If the organisation operates in a regulated sector (financial services, healthcare, environmental), understand the regulatory framework and the organisation’s compliance history.
10. For charities, identify whether the charity is registered with the Charity Commission or is an exempt charity with a principal regulator, and understand the relevant regulatory framework.
11. Consider whether the role creates any conflicts with your existing commitments, business interests, or investments.

Some areas generate particular anxiety among aspiring NEDs and trustees – health and safety (including the spectre of manslaughter), bribery, and the duty to prevent harassment. In each case, the law is more targeted than the fear suggests. Personal liability requires real personal fault, not merely holding office.

Health and safety and manslaughter

The Corporate Manslaughter and Corporate Homicide Act 2007 created a statutory offence of corporate manslaughter. This offence applies to organisations only – it cannot be used to prosecute individuals. A company, charity, or other organisation can be convicted where a gross breach of a duty of care owed to a person causes their death, and where the way in which the organisation’s activities were managed or organised by its senior management was a substantial element in that breach. The penalty is an unlimited fine. Individual directors and trustees cannot be convicted of corporate manslaughter.

Individual criminal exposure arises through two separate routes. First, section 37 of the Health and Safety at Work etc. Act 1974 (HSWA) provides that where a body corporate commits a health and safety offence, a director, manager, or similar officer who consented to or connived in the offence, or whose neglect caused it, is personally guilty of the same offence. Consent and connivance require knowledge and agreement or wilful blindness. Neglect requires a failure to take reasonable steps to prevent the offence where the individual had a duty to do so. Passive office-holding is not enough. Second, the common-law offence of gross negligence manslaughter can be charged against an individual where they personally owed a duty of care to the deceased, breached it in a manner so serious as to be criminal, and that breach caused the death. This is a high threshold and prosecutions are rare.

For NEDs and trustees who are not operationally involved in day-to-day management, the practical risk under section 37 HSWA and gross negligence manslaughter is low, provided they engage with health and safety governance at board level, ensure the organisation has adequate policies and systems, and do not ignore known risks. The concern is most acute in sectors with significant physical risk (construction, manufacturing, schools, universities, care settings), where boards should ensure health and safety is a standing agenda item and that they receive regular, meaningful reporting.

Bribery

The Bribery Act 2010 creates two categories of relevant liability.

The corporate offence under section 7 applies to commercial organisations that fail to prevent bribery by an associated person (such as an employee or agent) intending to benefit the organisation. This is an offence of the organisation, not of individual directors. The full defence is that the organisation had adequate procedures in place to prevent bribery. Boards and trustee bodies are expected to demonstrate top-level commitment to anti-bribery compliance as part of those procedures – so NEDs and trustees should ensure the organisation has a credible anti-bribery programme and that it is reviewed periodically.

Personal liability for individual directors arises under section 14, which provides that where a body corporate commits a substantive bribery offence under sections 1, 2, or 6 of the Act, a senior officer (including a director) who consented to or connived in that offence is personally guilty of it. Section 14 does not apply to the section 7 corporate offence. The maximum sentence for an individual convicted of a bribery offence is ten years’ imprisonment. Again, the key point is that personal liability requires actual knowledge and agreement or wilful blindness – not mere office-holding.

Failure to prevent fraud

Like the corporate bribery offence, the failure to prevent fraud offence introduced by the Economic Crime and Corporate Transparency Act 2023 (in force since 1 September 2025) targets the organisation, not individual directors. It applies to large organisations (broadly, those meeting at least two of: more than 250 employees, turnover above £36 million, or total assets above £18 million). NEDs and trustees of large organisations should nonetheless ensure there is a credible fraud-prevention framework, because top-level commitment to fraud prevention is one of the Government’s six prescribed principles for the reasonable-procedures defence.

Duty to prevent sexual harassment

The Worker Protection (Amendment of Equality Act 2010) Act 2023, which came into force on 26 October 2024, introduced a proactive duty on employers to take reasonable steps to prevent sexual harassment of their workers. This is an obligation on the organisation, not on individual directors or trustees personally. If an employment tribunal finds that an employer has breached this duty, it may uplift any compensation award by up to 25%. Enforcement is by the Equality and Human Rights Commission (EHRC), which can take action against the organisation.

Boards and trustee bodies are expected to lead on this: demonstrating top-level commitment, ensuring adequate policies and reporting channels are in place, and overseeing training. A NED or trustee who actively participates in governance of this area – rather than ignoring it – is doing what the law expects.

Two further changes are worth noting. The Employment Rights Act 2025 will raise the standard from reasonable steps to all reasonable steps, and will extend employer liability to harassment by third parties (such as customers or clients) where the employer has not taken all reasonable steps to prevent it; these changes are expected to take effect from October 2026, subject to commencement regulations. Since 6 April 2026, reports of sexual harassment automatically qualify as protected disclosures under whistleblowing legislation, giving workers who report such incidents enhanced protection against detriment and dismissal.

This is a question that comes up sometimes, and the honest answer is: it depends – and the position is less straightforward than many people assume.

The statutory whistleblowing regime in the United Kingdom is set out in Part IVA of the Employment Rights Act 1996 (ERA 1996), as amended by the Public Interest Disclosure Act 1998. It protects workers who make a qualifying disclosure – a disclosure of information that the worker reasonably believes is in the public interest and tends to show wrongdoing (such as a criminal offence, a breach of a legal obligation, a danger to health and safety, or a miscarriage of justice). A worker who makes a protected disclosure is protected from detriment and, if an employee, from dismissal.

The critical question for NEDs and trustees is whether they qualify as workers for these purposes. The answer is generally no – a NED or trustee who holds office under a letter of appointment or governing document, without a contract of employment or a contract personally to perform services, will typically fall outside the statutory definition of a worker. This means they do not automatically benefit from the detriment and dismissal protections the regime provides.

However, the position is developing. The Employment Appeal Tribunal, in MacLennan v British Psychological Society, left open the possibility that a trustee could in some circumstances be treated as akin to a worker, depending on the nature of the role and the contractual arrangements. A NED who receives a fee under a contract that requires personal performance of services may also qualify, depending on the facts. The position is therefore uncertain and fact-specific.

What this means in practice:

1. A NED or trustee can and sometimes must raise concerns – their duties to the organisation require it, regardless of whether statutory whistleblowing protection applies to them personally;
2. The internal whistleblowing policy (where one exists) should be followed in the first instance, even if the NED or trustee is not technically a protected discloser under it;
3. External routes remain available regardless of worker status: concerns can be reported to a prescribed person (a regulator designated to receive disclosures in their area – for example, the Financial Conduct Authority for financial services matters, the Health and Safety Executive for health and safety concerns, or the Information Commissioner’s Office for data protection issues); and for charities, a serious-incident report to the Charity Commission (or principal regulator) is a separate and important avenue;
4. In FCA-regulated firms, a NED is often appointed as the firm’s whistleblowers’ champion under the FCA’s SYSC 18 rules – this is an oversight and governance role (ensuring the firm’s whistleblowing arrangements are effective and that whistleblowers are protected from victimisation), not the same as being a whistleblower oneself; and
5. Because statutory protection is uncertain for NEDs and trustees, anyone in this position who is considering making an external disclosure should take legal advice first – both to understand their position and to ensure the disclosure is made through the most appropriate channel.

Many organisations – particularly larger companies and charities – have fraud policies, serious-misconduct policies, conflicts-of-interest policies, and speak-up frameworks that designate a NED or trustee as the escalation point for concerns that cannot be raised through normal management channels. This is especially common where the concern involves a senior member of the executive team, where the chief executive is implicated, or where there is a potential conflict of interest at management level.

If you are appointed to such a role – whether as the senior independent director, the audit committee chair, or simply as the designated recipient under a policy – you should understand what it involves before you accept it, and discharge it carefully if a concern is raised.

The key principles are:

1. Follow the policy to the letter. The policy sets out the process for a reason: it protects the organisation, the person raising the concern, and you. Departing from it – even with good intentions – creates risk for everyone involved;
2. Document everything. Keep a contemporaneous record of what you were told, when, by whom, and what steps you took in response;
3. Act promptly. Delay in responding to a serious concern can itself constitute a failure of governance;
4. Take independent advice. Where the concern is serious – potential fraud, criminal conduct, regulatory breach – take legal advice before deciding how to proceed. Do not try to investigate or resolve it alone;
5. Maintain confidentiality. The identity of the person raising the concern may have to be protected to the extent the policy requires and the law permits; and
6. Report upwards where necessary. If the concern is sufficiently serious, it may need to be escalated to the full board or trustee body, to the regulator, or – for charities – reported as a serious incident to the Charity Commission or principal regulator.

Discharging this role properly is itself protective: it demonstrates that the organisation took the concern seriously and that you acted in accordance with your governance responsibilities. Ignoring a concern that was formally raised with you, or handling it in a way that departs from the policy, is where personal exposure potentially arises – not as a standalone liability, but because it can amount to a breach of your duty of reasonable care and diligence (section 174 CA 2006, or the equivalent trustee duty), count against you on the question of unfitness in any later disqualification proceedings, and undermine both the “honestly and reasonably” relief under section 1157 and the protection of your D&O or trustee indemnity cover.

One of the most common mistakes made by new NEDs and trustees – particularly those who are enthusiastic about the organisation and want to make a real contribution – is to drift from governance into operations. It is worth being direct about this, because the instinct to get involved can feel like diligence, when in fact it creates risk.

The role of a board or trustee body is to set strategy, approve significant decisions, hold management to account, and provide independent challenge and oversight. The role of the executive (or, in a charity, the staff and volunteers) is to run the organisation day to day. These are distinct functions, and the distinction matters.

Operational drift is usually poor governance and increases your practical exposure: by involving yourself in operational decisions, you make yourself answerable for matters you could otherwise have been entitled to leave to the executive. The more operationally involved you become, the harder it is to maintain the independence and objectivity that effective oversight requires – and the more exposed you become to liability for decisions that were not yours to make.

The counter-intuitive point is this: close operational involvement does not protect you – it exposes you. What protects you is engaged, informed, and constructively challenging oversight. That means:

1. Asking probing questions and demanding satisfactory answers;
2. Challenging management assumptions and stress-testing plans;
3. Ensuring the organisation has adequate policies, controls, and reporting mechanisms;
4. Holding management to account for delivery against agreed objectives; and
5. Escalating concerns through the proper channels when something is wrong.

None of that requires you to do the operational work yourself. If you find yourself being asked to step in operationally – or if you feel the urge to do so – that is a signal to pause and consider whether the organisation has the right executive capacity, and whether the governance structure is functioning as it should.

One qualification: in very small charities or early-stage organisations with minimal staff, trustees or NEDs may sometimes need to carry out practical tasks out of necessity. Where this happens, it should be a conscious, time-limited decision – not an unexamined drift – and the trustee body or board should keep it under review and seek to restore the proper governance boundary as soon as practicable.

The legal duties applicable to NEDs and charity trustees are real and should be taken seriously. But they are also manageable. The law does not expect you to be perfect, to be involved in day-to-day management, or to prevent every organisational failure. It expects you to engage genuinely, to bring your expertise and independent judgment to bear, to ask the right questions, and to act honestly and reasonably. Those who do those things – and who have the right protective framework in place – are very rarely exposed to personal liability.

And to repeat the point made at the outset: whether you are paid or volunteering your time makes no difference to any of this. The duties are the same. The protections are the same. The due diligence you should do before accepting a role is the same.

The steps that matter most are straightforward: do your due diligence before you accept a role, get a proper letter of appointment or trustee induction pack, understand the organisation’s constitution and finances, attend and participate actively, record your reasoning, disclose conflicts promptly, check the insurance, and take advice at the first sign of financial distress.

A NED or trustee role, approached with care, is a valuable and rewarding contribution to organisational life. The legal framework is designed to support good governance, not to deter capable people from serving.

This article is a general summary of the law as at 10 June 2026 and does not necessarily deal with every important topic or cover every aspect of the topics with which it deals. It is not designed to provide legal or other advice and should not be relied on as a substitute for legal advice.

© MR&T Advisory Limited, 10 June 2026