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EMPLOYEE SHAREHOLDER

30.09.2013

On 1 September 2013, the government introduced a new type of employment status, the employee-shareholder.

Employees with this status will give up certain employment rights in exchange for shares in the employer. 

There are various conditions that must be met for an employee to become an employee-shareholder, including that both the employer and employee must both agree that the employee will be an employee-shareholder and the employer must pay for the employee to seek advice on the agreement.  The shares must be worth at least £2,000 and the employee must not pay for the shares.

Specifically the employee-shareholder:

•  Loses the right to claim unfair dismissal,

•  Will not be entitled to statutory redundancy pay,

•  Loses the right to request time off for                study or training,

•  Loses the right to request flexible working except where this is a request within 14 days of returning to work after a period of parental leave.

•  Will have to give 16 weeks’ notice if they intend to return early from maternity, additional paternity or adoption leave.

It should be noted that, although shareholder-employees are barred from bringing a normal unfair dismissal claim, the right to claim unfair dismissal survives if the dismissal was on discriminatory grounds, related to health and safety or
for an automatically unfair reason.

Existing employees have the right not to be subjected to a detriment on the ground that they have refused to accept an offer
to be an employee shareholder.  It will also be unfair to dismiss an employee for refusing to accept an offer to become an employee shareholder.

There has been much criticism of the new status and early indications as reported in the press were that take-up the new scheme would be low, but it remains to be seen what impact this new status will have on businesses. 

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