Employee-shareholder contracts are introduced
The Government is introducing a new type of employment contract, under which employees will be given shares in exchange for waiving certain employment rights. Announcing the proposals on 8 October 2012, the Chancellor of the Exchequer stated that the Government would bring in legislation so that employers would be able to use the new type of contract from April 2013.
Under the proposals, the Employment Rights Act 1996 will be amended by the Growth and Infrastructure Bill to create a new tier of employment status: employee shareholders, who will receive shares with a value of at least £2,000 in return for giving up specified employment rights. The shares will be exempt from capital gains tax, up to a maximum threshold of £50,000. Employee shareholders will not have the right to:
- claim unfair dismissal (except for reasons that are automatically unfair);
- statutory redundancy pay;
- make statutory requests to work flexibly (except on return from parental leave, details of which are yet to be confirmed); or
- make statutory requests in relation to study or training.
Employee shareholders will also have to give 16 weeks' notice to return early from additional maternity, adoption or paternity leave (as compared with eight weeks for normal employees on additional maternity and adoption leave and six weeks for normal employees on additional paternity leave).
However, employee shareholders will be able to claim unfair dismissal in relation to nearly all of the automatically unfair reasons, such as making a protected disclosure. They will also retain protection against discrimination, including in relation to dismissal.
The Government ran a short consultation on the implementation of employee-shareholder status (or employee-owner status, as it was originally to be called) and published its response on 4 December 2012.
- Employee-owner status: a radical but unwanted addition to the statute book XpertHR consultant editor Darren Newman argues that the Government's proposed new employment status is both unwanted and ill thought out.
- Implementing employee-owner status: Government response to consultation (PDF format, 331.6K) Download the Government's response to its consultation from the BIS website.
- Consultation on implementing employee-owner status The consultation document is available on the BIS website.
Also
XpertHR legal timetable and HR calendar Keep up to date with new legislation, consultations and HR developments in 2012 with XpertHR's legal timetable and HR calendar.
Government issues response to consultation on employee-owner contracts More information from XpertHR on the proposals for employee-shareholder contracts.
