After two previous refusals, the House of Lords has finally accepted the Government’s proposal to introduce employee-shareholder contracts having secured a number of concessions.
The Government proposes to introduce the contracts from September this year. Under the contracts employees will receive shares in their employer’s business of between £2,000 and £50,000, exempt from capital gains tax, in return for giving up a number of employment rights. In order to get the Bill through the House of Lords, the Government has now agreed that:
- benefits such as jobseeker’s allowance will not be affected if an individual does not wish to take up an employee-shareholder position;
- there will be unfair dismissal rights from day one and protection against detrimental treatment for refusing to agree to an employee-shareholder contract;
- employers will be required to provide full details of both the employment rights being given up and the rights and restrictions attached to an employee’s shares
- there will be a seven day “cooling off” period, during which acceptance of an offer to become an employee shareholder will have no effect.
The provisions were only passed by the House of Lords at the third time of asking after the Government made a final concession, namely that an employee-shareholder contract will be valid only if the employee receives independent legal advice prior to entering into it. Furthermore, the employer will be liable to pay the reasonable costs of that advice.
For information on employee contracts please contact employment law specialist Vaishali Thakerar at Lawson-West on 0116 212 1000.