House of Lords accepts employee-shareholder scheme after government concessions
The House of Lords has accepted the proposal to introduce employee-shareholder contracts after the Government made a number of concessions in response to the Lords blocking the relevant provisions in the Growth and Infrastructure Bill.
The Government proposes to introduce employee-shareholder contracts, under which individuals would receive shares from their employer of between £2,000 and £50,000, exempt from capital gains tax, in return for giving up specified employment rights. A clause was added to the Growth and Infrastructure Bill to effect this proposal. The Government has stated its intended implementation date of 1 September 2013.
However, the House of Lords voted on two occasions to remove the provisions in the Growth and Infrastructure Bill introducing employee-shareholder contracts.
The Government made a number of concessions in an attempt to get the Bill through the House of Lords, including that:
- benefits such as jobseeker's allowance will not be affected if an individual does not wish to accept an employee-shareholder position;
- there will be day-one unfair dismissal rights and protection against detrimental treatment for refusing to agree to an employee-shareholder contract;
- there will be a requirement for employers to provide a written statement of the particulars of employee-shareholder status and the rights attached to the shares;
- the written statement will have to set out the employee shareholder's loss of specified employment rights; and
- there will be a "cooling off" period of seven days, during which an individual's acceptance of an offer to become an employee shareholder will have no effect.
On 24 April 2013, the provisions were passed by the House of Lords at the third time of asking after the Government made a final concession. The Government agreed that an employee-shareholder contract will be valid only if the employee receives independent legal advice prior to entering into it. The employer will be liable to pay the reasonable costs of that advice.
The Growth and Infrastructure Bill became the Growth and Infrastructure Act 2013 on 25 April 2013, when the Bill received Royal Assent.
- Royal Assent for Growth and Infrastructure Act Read about the Growth and Infrastructure Act receiving Royal Assent, on the UK Government website.
- House of Lords debate on employee shareholders Read the House of Lords debate of 24 April 2013 on s.27 of the Growth and Infrastructure Bill regarding employee shareholders, on the UK Parliament website.
- Growth and Infrastructure Bill Read the Bill on the UK Parliament website.