April 29, 2013

The new ‘employee shareholder’ status is finally set to become a reality.  After having twice been rejected by the House of Lords, the proposed new category of employee has now successfully passed through parliament following a number of concessions made by the Government.  Set to be introduced on 1 September 2013, the status will allow employers to offer employees at least £2,000 in shares in exchange for them giving up a certain employment rights (including unfair dismissal and the right to a statutory redundancy payment). However, as a result of the Government’s concessions, the employer will now also have to provide the employee with a statement explaining the employment rights that would be sacrificed and the rights attaching to the shares and (in a similar requirement to that for compromise agreements) pay for the employee to take independent advice about the offer (from a solicitor, barrister, advice centre or union official etc).  In addition, the employee must be given a 7 day “cooling off” period from the day the legal advice is received. Given these developments, the take up of the new status by established employers may be low although it should still prove to be an attractive tax efficient proposition for entrepreneurs employing themselves in their new companies.  Time will tell. For further information contact Seth Roe: seth.roe@wiggin.co.uk / 01242 631 262