What to do if You're Facing Closure
- Sally Gridley
- Nov 6
- 3 min read
A Legal and Operational Guide for Charity-Managed Early Years and Childcare Settings
Facing the prospect of closure is a daunting experience for any charity-managed early years or childcare setting. Whether driven by financial challenges, regulatory changes, or shifts in community demand, closure requires careful planning and thoughtful action.
This blog provides a comprehensive overview of the legal and operational steps you need to take to ensure a responsible, compliant, and compassionate approach to winding down your service.
Assessing the Situation
Begin by thoroughly reviewing the circumstances that are leading to the potential closure. This may involve financial analysis, consultation with trustees, and consideration of alternative options such as mergers or restructuring.
Ensure that all stakeholders, including staff, parents, and local authorities, are kept informed and involved as appropriate.
Review Governing Documents
Examine the Dissolution Clause of your constitution, articles of association, or other governing documents for any specific requirements about closure, such as voting procedures or asset transfer protocols.
If you are a CIO or a Company Limited by Guarantee there are additional regulations to follow.
Legal Obligations
Charity Commission Notification: If your organisation is registered as a charity, you are legally obliged to notify the Charity Commission about your intention to close. Follow their guidance on dissolution and asset distribution.
Employment Law Compliance: Consult an employment law specialist to manage redundancies fairly. This includes giving appropriate notice, consulting with staff, and ensuring redundancy payments where applicable.
Contracts and Leases: Review all contractual obligations, including leases, supply agreements, and service contracts. Special attention should be paid to Local Authority Agreements relating to the Early Years Entitlements. If you close part way through a term you may be required to pay back funds. Give notice according to the terms and settle any outstanding liabilities.
Data Protection: Ensure personal data is going to be securely stored or disposed of in accordance with GDPR and other relevant data protection legislation.
Financial Considerations
Final Accounts: Prepare final accounts, ensuring all income and expenditure is recorded up to the point of closure.
Asset Disposal: Follow your charity’s rules regarding the distribution of remaining assets. This often requires passing assets to another charity with similar aims, whether that is the physical assets or the income from an asset sale.
Debts and Liabilities: Settle all outstanding debts and financial obligations. If liabilities exceed assets, seek professional advice.
Communication and Stakeholder Management
Parents and Carers: Notify families as early as possible, providing information about the closure timeline and support for finding alternative provision.
Staff: Maintain open and honest communication with your team. Provide support and signpost them to employment and training resources.
Local Authorities and Funders: Inform local authorities, funding bodies, and partner organisations of your plans, ensuring you meet any contractual notice periods.
Safeguarding and Child Welfare
Ensure continuity of care and support for children until the final day of operation. Liaise with local safeguarding partners to address any concerns and facilitate a smooth transition for children to new settings.
Record Keeping and Reporting
Ofsted: Notify Ofsted of the planned closure and follow their procedures for deregistration.
Retention of Records: Keep records for the legally required periods, especially those relating to safeguarding, financial transactions, and employment.
Winding Up the Charity
Final Meeting: Hold a final meeting of trustees to formally approve closure and sign off on final accounts and reports.
Dissolution: Complete the necessary paperwork to dissolve the charity with the Charity Commission and Companies House (if applicable).
Public Announcement: Consider a public statement to thank the community and celebrate the legacy of your setting.
Seeking Professional Advice
Closure is a complex process with significant legal and financial implications. Engage with solicitors, accountants, and sector specialists to ensure all aspects are handled properly and in the best interests of children, families, staff, and the wider community.
If you need support with closing your charity I provide a package of support to guide you through the process from the initial discussions through to closure of the charity.
Contact me for more information.
Final Thoughts
While closing your charity-managed early years or childcare setting is never easy, following a clear legal and operational framework will help you fulfil your responsibilities and support those affected. Remember, planning, transparency, and compassion are key to managing this challenging process as smoothly as possible.
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