The House of Lords have been very difficult to please about the House of Commons’ motion to introduce employee shareholder contracts, which would see individuals give up some major employment rights in exchange for shares in the company where they work. Concessions were made and the Houses have now come to an agreement after a lengthy period of ‘ping pong’ – the term given to the process of final amendments swiftly being sent from one House to the other at the end of the long deliberations, with the House of Commons having to concede to extra criteria on their usage pushed by the House of Lords.
In order for an employee shareholder contract to be used, the following must now be observed:
- The individual must receive independent legal advice on how the scheme works. The employer must pay for reasonable legal advice costs, even if the individual does not go on to join the company;
- The employee will have a 7 day cooling off period after signing the contract within which to withdraw their agreement;
- Employers must provide a written statement, in addition to the contract, with full details about the shares and the rights they carry;
- The first £2000 of shares will be tax free;
- Existing employees who refuse to convert to employee shareholders will be protected from detriment/dismissal.
Also shelved was the House of Lords’ suggestion to prevent employers from offering jobs solely on an employee shareholder basis.
The Growth and Infrastructure Bill, within which this provision is contained, has not yet received Royal Assent but this is expected shortly.
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