Absence policies for lay trustees – is your trustee board prepared?
So, what are the regulatory requirements for a trustee board when dealing with parental leave or other absences by trustees?
There are no specific regulatory requirements for trustee family policies. It is down to each scheme to decide on their approach, in keeping with their articles of association or trust deed of course. For example ensuring that any quorum requirements continue to be met. However, it is important to consider the requirement for at least one third of trustees to be member-nominated (and to make sure that any policies don’t lead to an inadvertent breach of that requirement).
In one case the member nominated trustee (MNT) on parental leave simply remained a trustee and continued to be included in the 1/3 MNT count. They chose to use their parental leave contact days to participate when they could, although there was no expectation for them to do so, which meant that while their participation was less than usual, they stayed involved.. The trustee board also brought in an additional Company-Nominated Trustee (CNT) to plug a skills gap, whilst keeping within the 1/3 MNT and 2/3 CNT requirements.
Another approach is the use of alternates to address absences, which is particularly suitable for committees. Each trustee nominated alternates (albeit in practice existing trustee board members) on a just-in-case basis to cover unexpected absences.
What is the optimum solution for trustee boards?
The need to consider parental leave is in part driven by the increase in diversity on trustee boards. What that looks like in practice is specific to each scheme but based on our experiences across the LawDeb team we have developed some guidance.
The first point is that being on parental leave of course doesn’t prohibit the trustee from carrying on their role, so they are not obliged to stop fulfilling their trustee obligations if they want to stay as an active participant. The same applies to furloughed staff, as we have received legal advice confirming furloughed staff are still permitted to continue their role as a trustee on their employer’s pension scheme.
In the case of parental leave absence, sickness or other commitments, if a trustee does not want to continue to participate during their period of absence, the trustee board could look to appoint another trustee on a temporary basis. For an MNT, this could be done perhaps by approaching the next in order MNT candidate from the last selection exercise or ballot. This would need the agreement of the current MNT as it would be terminating their appointment (albeit temporarily).
Finally, where a scheme has sufficient numbers and capacity to carry on business during the period of absence, there may be a decision to do nothing.
How should this be communicated to scheme stakeholders?
To have a policy in place in advance of this situation arising sends a positive message to existing and potential trustees about the inclusive trustee board culture and demonstrates appropriate governance frameworks are in place.
Of course, any details of changes to the trustee board or significant absences should be included in the Annual Report. The trustee board may also wish to add a note into a member newsletter about the change to ensure members are kept informed and to pre-empt any concerns that may be raised.
Over the last five years we have seen an increase in these situations arising and have found that creating a policy that suits the individual scheme in advance of the situation occurring can be the most effective way to manage medium-term and unplanned absences on the trustee board, as well as demonstrating commitment to diversity on the trustee board.
If anyone has just such a situation arising and would find it helpful to run through the options, do feel free to get in touch with Venetia Trayhurn for a confidential discussion.