After twice rejecting clause 27, which proposed to introduce the new employee shareholder employment status of the Growth and Infrastructure Bill, the House of Lords accepted the clause on 24 April 2013. Clause 27 essentially allows an employee to trade some or all of their employment rights for shares in the company they work for.
The House of Lords made the following changes:
- The employee must receive independent advice from a solicitor, barrister, legal executive, union or advice centre and the company must pay the reasonable costs incurred by the employee seeking such advice, even if the employee rejects the offer;
- There is a seven-day ‘cooling off’ period;
- There must be a written statement detailing the shares, the rights the employee has and the rights the employee has agreed to waive;
- The first £2,000 of shares will not be subject to income tax;
- If a new recruit rejects the offer, their benefits, such as job seeker’s allowance will not be withdrawn;
- A current employee cannot be subject to a detriment for refusing an offer of the new status.
The bill received Royal Assent on 25 April 2013 and the current implementation date is 1 September 2013. It will be interesting to see how many companies try to make use of this new employment status.
For more information on the issues raised in this article or on employment law matters in general, please contact us on 0117 904 6000.