On 1 September, a new kind of employment contract will be introduced; the employee-shareholder contract will mean that firms can give employees shares in the company worth between £2,000 and £50,000 in exchange for them giving up certain statutory UK employment rights.
The new form of contract will be voluntary for existing employees but new employees can be required to take up a job on these terms. In addition, not all employees who have shares in their employer’s business will be employed under an employee-shareholder contract.
The rights that employee shareholders will give up in exchange for shares include claiming ordinary unfair dismissal, with some exceptions, a statutory redundancy payment, most requests for flexible working or time off to undertake study or training. In addition, employees who take shares will have to give longer notice if they want to return early from family-related leave, such as maternity leave.
The exceptions to not being able to claim unfair dismissal are if the dismissal is for a reason that amounts to unlawful discrimination or is automatically unfair, such as if it is related to certain health and safety rights, family leave, union membership or activities, or for asserting a statutory right.
In order to enter into an employee shareholder agreement, there are four basic requirements:
- The company and the individual must both agree to the deal
- The company must issue or allot fully paid up shares in the company, or its parent company, with a market value of at least £2,000 on the day of issue or allotment
- The company must give the individual a written statement of the particulars of the status of employee shareholder and any important information relating to the rights attached to the shares
- The employee must give no consideration except entry into the employee shareholder agreement.
Prospective employees should note that they will not forfeit their jobseekers’ allowance if they do not wish to accept an employee shareholder contract and existing employees will be protected from detriment or dismissal if they refuse to switch to one.
Mackrell Turner Garrett Solicitors in London
Latest posts by Mackrell Turner Garrett Solicitors in London (see all)
- Male police officer wins sex discrimination case - June 16, 2016
- Woman wins £10,500 pay-out at sex discrimination Tribunal - June 10, 2016
- UK landlords plagued by increasing number of tenants ‘abandoning’ rented properties - May 23, 2016