Employee Shareholder Status

Last October George Osborne announced proposals for a new type of employment status, creating “employee shareholders”.

As many readers will recall, last October George Osborne announced proposals for a new type of employment status, creating “employee shareholders”.

The proposal was to give employees the opportunity to give up some of their employment rights, in exchange for shares in their employer. In brief, the employee would be given at least £2,000 worth of shares, in return for agreeing that they would forego the following rights:

• The right to request time off for study or training.

• The right to make a flexible working request (although this does not include employee shareholders who are returning from parental leave, who will be able to make such a request within 14 days of their return to work).

• The right not to be unfairly dismissed. Employee shareholders will, however, retain their right not to be unfairly dismissed where the dismissal is automatically unfair or discriminatory, or in health and safety cases.

• The right to a statutory redundancy payment.

• The employee shareholder will need to give 16 weeks’ notice in the event that they wish to return early from statutory maternity, adoption or additional paternity leave.

The House of Lords originally rejected the proposal, but concessions have now been agreed and Royal Assent is expected very shortly. The concessions agreed include:

• The employee must have received independent legal advice prior to entering into the contract, and the legal costs of the advice must be paid by the employer.

• There will be a seven day “cooling off” period, meaning that the employee can change their mind about becoming an employee shareholder.

• Employees should not be subjected to detrimental treatment on the basis that they refuse to become employee shareholders.

It is anticipated that employee shareholder status will be implemented this autumn.