Jersey Employment Trust has placed all its 38 staff at risk of redundancy and paused new client referrals following a 'substantial' cut to its government funding.
The charity says the jobs of all its staff are on the line after the government pulled 'top-up funding', forcing it to look at ways to cut costs.
JET receives £1.9 million a year from the government's Employment, Social Security and Housing department to provide vocational training and employment support for islanders with
disabilities and long-term health conditions.
For the past four years, 'top-ups' in the form of one-off grants have been necessary to meet increased demand for JET's services and the cost of living.
Last year that additional funding was £785,000.
It is the top-up grants that have been withdrawn.
To stay within the £1.9m grant, JET says it likely need to refer more than half of the 550 clients it supports each year to the government.
JET says that no final decisions have been made on individual roles within the organisation, and the consultation process is intended to explore all options, including ways to minimise compulsory redundancies where possible.
It will, however, close its waiting list of more than 50 islanders and stop accepting any new referrals, including any school leavers this summer.
All clients are being contacted in the coming days.
JET estimates it provides more than £10m social value benefit to the island every year, including through increased tax and Social Security contributions and savings to the Income Support bill.
Staff at Acorn Enterprises, which is a separate company under the umbrella of JET encompassing Acorn Reuse, the plant nursery and Woodshack, are unaffected.
Jersey's government has been approached for comment.
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