In last month’s March Newsletter we informed you that the House of Lords voted (by 232 to 178) against introducing the concept of employee shareholders (whereby employers would be able to offer to swap some employments rights, including those relating to redundancy, for at least £2,000 of shares).
There has been some ‘ping-pong’ between the two Houses since then. The House of Commons voted to reintroduce the employee shareholder scheme, but the House of Lords then voted for the second time to reject it. Indeed, the Lords were seemingly very against the proposal and Lord Pannick QC said that the scheme “frustrates the very purpose of employment rights”.
However, the Government was determined to pursue the scheme and introduced a further concession, in addition to a number of previous concessions. The final list of concessions now reads:
- the first £2,000 of shares will not attract income tax;
- existing workers will be protected from detriment if they refuse to switch to an employee-shareholder contract;
- an individual cannot accept an employer’s offer before the expiry of a seven day ‘cooling off’ period;
- employers making an offer of a job under one of the new contracts would have to provide written statements setting out (i) the rights that the employee is giving up in exchange for shares and (ii) full details of the shares being offered including any dividend or voting rights attached to them;
- anyone on Jobseeker’s Allowance will not be sanctioned for refusing to accept a job offer contingent on participation in the shares-for-rights scheme; and
- prior to becoming an employee shareholder, an individual must receive advice from a relevant independent advisor (i.e. a lawyer, CAB, law centre). The employer has to pay the reasonable costs of that advice, whether or not the individual then accepts the role.
These concessions together seem to have made the scheme more palatable to the Lords, as it has now voted to accept it and Employee Shareholders will now become law.
Royal Assent for the scheme is expected today and the Government intends to implement it in Autumn 2013.