Employee Shareholder saga over…

Following a second rejection by the House of Lords (on 22 April) the proposed employee shareholder scheme appears now to have finally been ratified following a number of concessions.

The scheme creates a new type of employment status, namely: ‘employee shareholders’.  Employee shareholders will receive shares from their employer and benefit from various tax advantages.  The quid pro quo comes with the employee agreeing to give up certain employment rights including the right to claim unfair dismissal (not if the reason renders the dismissal automatically unfair) in exchange for the shares.

This proposal was rejected by the House of Lords twice.  The reasons for the ‘no’ vote appear to be largely based on a fear that employees will be losing significant employment rights and the suspicion that it will allow employers to force employees to contract out of these rights.

Despite the rejections the Commons have successfully navigated the Lords with a number of concessions.  These include: any agreement will not be binding unless the employee has taken advice from an independent adviser (the employer will be responsible for the reasonable cost of this advice), there will be a seven day cooling off period to allow the employee to consider the proposal and existing employees are protected from suffering a detriment because they rejected the offer of becoming an employee shareholder.

Implementation is expected in autumn 2013.