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Eversheds comment: New UK employee shareholder laws may create difficulties for the unwary employer

  • United Kingdom

    30-08-2013

    A new UK employment status begins on Sunday when employee shareholder contracts become a reality. As a result, from Sunday, businesses of all sizes will be able to offer new starters and current employees the option to become an employee shareholder instead of an employee. Those individuals will similarly be able to elect whether or not to take up that offer.

    The controversial proposals for the new employment status were eventually approved by the House of Lords but only following the inclusion of a compromise provision, which involves the potential employee shareholder receiving a statement setting out the rights they won’t have as an employee shareholder and what rights attach to their shares, with a seven day “cooling off period”. Ahead of the change in the law, Simon Rice-Birchall, partner at global law firm, Eversheds, comments:

    “Employee shareholders, who will own between £2000 and £50,000 of shares, will waive their right to claim unfair dismissal, to be paid a statutory redundancy payment, to request time off for study or training or make a flexible working under the statutory scheme. Employee shareholders will also have to give their employers longer notice (16 weeks’) of return from maternity or adoption leave.

    “Employee owners will still be able to bring an unfair dismissal claim from day one of their employment if the reason for the dismissal is one of the automatically unfair reasons, which include whistleblowing or taking maternity leave. They will also have a right to bring a claim if they allege that their dismissal was discriminatory. In addition, some of the potentially most costly and damaging claims, such as discrimination claims other than those arising out of a dismissal and working time, cannot be avoided as these are rights guaranteed by EU law. These may well create difficulties for the unwary employer.”

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