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Following a number of concessions introduced by the Government, the latest one being yesterday (April 24), Employee Shareholders will now become law. The concessions resulted from the House of Lords voting twice to reject the scheme whereby employers can award employees at least £2,000 in shares in exchange for the employee giving up employment rights (including 'ordinary' unfair dismissal and the right to a statutory redundancy payment).

The concessions include:-

  • a provision that the employee cannot accept the offer within seven days of it being made.
  • a written statement setting out the rights that the employee is giving up.
  • a written statement setting out the details of the shares being offered
  • an agreement that someone shall become an employee shareholder is invalid unless, prior to entering into the contract, the individual has received advice from a relevant independent advisor (ie lawyer, union etc). The employer has to pay the reasonable costs for that advice - whether or not the employee then accepts the role (sounds a bit like a compromise agreement then). If the employee does not receive independent advice before agreeing to become an employee shareholder, then s/he will be an ordinary employee.

Those of us who are a tad cynical about such matters would say that it appears that employees are been asked to give up valuable employment rights for not very much in terms of reward. The current government seems determined to chip away at employment rights (see the recent amendment to qualifying periods for unfair dismissal claims, the proposals to further cap unfair dismissal claims and the reduction in the period of time required for collective redundancies - see earlier blog).

It is of course questionable whether the scheme will in fact reduce employment tribunal claims. It may simply encourage employees to try and bring other claims, such as discrimination claims to try and get around the opt outs.

Sarah Rushton

Tel: 0207 539 4147


Standout firm known for its personal insolvency work for clients including private companies, individuals and governmental institutions. Frequently acts for insolvency practitioners, assisting with the realisation of assets, both in the UK and abroad.

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