The proposals announced by the Chancellor for a new type of employment status, whereby employees give up some of their employment rights in exchange for shares in their employer, is finally set to become law.
George Osborne announced proposals for a new type of employment status on 8th October 2012, the provisions of which were included in the Growth and Infrastructure Bill 2012-13.
An employee-shareholder would have the same rights as an employee, subject to a number of exceptions including the loss of the right to a statutory redundancy payment and not to be unfairly dismissed. In exchange for the loss of these employment rights, the employee-shareholder would be issued with shares in their employer.
The Growth and Infrastructure Bill has ping-ponged between the House of Lords and the House of Commons for over 6 months, with the House of Lords rejecting the clause in the Bill that would introduce the new employee-shareholder employment status on two separate occasions. The Lords finally accepted the Bill, including the contentious clause, after the Government confirmed that the following concessions would be made:
1. Jobseeker’s allowance will not be withdrawn if an employee-shareholder job is refused;
2. An offer of a job with employee-shareholder status must include a statement explaining the employment rights that will be sacrificed and a statement of the rights attached to the shares issued;
3. The employee-shareholder must receive independent legal advice about the job offer, the reasonable costs of which shall be met by the employer regardless of whether the job is accepted or not; and
4. Employee-shareholders who agree to the new status will be entitled to a seven-day cooling off period.
The Growth and Infrastructure Bill finally received Royal Assent on 25th April 2013 and the new employee-shareholder status is intended to be available from 1st September 2013.
If you would like any further information about the new employee-shareholder status or you are considering offering the new status to prospective employees once it becomes available and would like to discuss this option, please contact a member of ourEmployment team.