We’ve been discussing Employee Shareholder Contracts today – from September 2013 employers can offer employees shares in the business worth a minimum of £2,000 in return for them waiving some pretty fundamental employment rights.

The New Growth & Infrastructure Act comes into force on September 1st 2013.  If a business has share capital it can enter into an agreement whereby it gives the employee fully paid up company shares that must value at least £2,000 on the day of issue.

In return, this is an amendment to the Employment Rights Act 1996 such that employees waive their rights to:

• request to undertake training or study

• request flexible working

• not to be unfairly dismissed

• a redundancy payment

Much like Compromise Agreements (which are now called Settlement Agreements of course) there is a period in which either party can change their mind, and the employer must pay for independent legal advice for the employee regardless of whether or not they then take up the share offer.

Currently I’m cynical about the potential for these to be abused by companies looking to avoid their employment obligations, rather than being used for good as part of strategic reward and remuneration packages aimed at retaining and incentivising great employees.

We’ll keep an eye out for more news as it unfolds in the next few months and keep you updated.

Free eBook!

Simply provide your details to receive your free ebook '7 Questions For Sure-fire Success As An Employer'. You will then receive important legal updates, HR tips and important news right into your inbox.

By the way, we can't stand spam so be assured that we will never share your information. 

You have Successfully Subscribed!