Employee shareholders

From 1 September 2013 new and existing employees can become employee shareholders. Whether businesses will choose to offer employee shareholder status roles remains to be seen but if they do (and if the employee agrees) the status essentially means that the employee will be given shares in the employer’s company, with a minimum value of £2,000, in return for giving up some of their employment rights.

Specifically, employee shareholders will not have the following rights:

• Unfair dismissal rights (with the exception of automatically unfair dismissals, where dismissal is based on discriminatory grounds or in relation to health and safety);
• Right to statutory redundancy pay;
• Right to request flexible working except in the two week period after a return from parental leave; and
• Certain statutory rights to request time off to train.

Employee shareholders must also give 16 weeks’ notice to their employer if they intend to return to work early from maternity, additional paternity or adoption leave.

Certain conditions must be met for an individual to become an employee shareholder, for example, the individual and the company must both agree that the individual will be an employee shareholder. The individual must also be given a written statement of the particulars of the status of employee shareholder and must obtain advice from an independent adviser on the terms and effect of the written statement. The individual cannot accept or agree to an employee shareholder job until 7 days have passed following receipt of the advice.

For further advice contact David Hacker.