Morgan Russell Solicitors

'Employee ownership' - full steam ahead (extract from the November 2012 edition of Employment Law News)

No review of recent employment law news would be complete without at least a passing reference to the new proposals to introduce a new "employee-owner" status, which after a very short consultation period, are being rushed through with what some might describe as unseemly haste in order to come into effect next April.  The basic proposition is that employers will be allowed to offer employment on terms that an employee receives between £2,000 and £50,000 worth of shares in return for signing away a number of employment rights, including the right to claim unfair dismissal or a redundancy payment, to request flexible working (in most circumstances ) or to ask for time off for training.  Employees would also have to agree to giving longer notice of their intention to return early after maternity or adoption leave.  Employees who agree to such a deal could then be required to sell back any shares if they leave or are dismissed at “unrestricted market value”.  Any gains in value would be free of capital gains tax, but the shares will be subject to tax and NI in the same way as other employee shares.

There seems to be little enthusiasm for the measure, for a variety of reasons.  Some suggest it will not be widely adopted, others that it is too cumbersome a mechanism and will be too expensive to run, and still others that it is open to abuse by the unscrupulous employers at the expense of economically weaker employees.  Moreover, when disputes arise (as they inevitably will) they are likely to prove will be more difficult and expensive to resolve than unfair dismissal claims.

Further Information

If you have any questions regarding the above or require any assistance, please do not hesitate to contact Melanie Smith, Anne-Marie Pavitt or Jemma Thurlow on +44 (0)1372-461411.

The data contained within this document is for general information only. No responsibility can be accepted for inaccuracies. Readers are also advised that the law and practice may change from time to time. This document is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.
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