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Eversheds comment: Uncertain future for UK employee shareholders scheme

  • United Kingdom

    23-04-2013

    Yesterday the future of the concept of employee shareholders was back in the hands of the Lords. Last week, the House of Commons resuscitated the clause in the Growth and Infrastructure Bill which seeks to introduce the new employment status, following the House of Lord’s recent vote to exclude it from the Bill. Simon Rice-Birchall, partner at global law firm Eversheds comments:

    "What seemingly swayed the House of Commons was the Government’s assurance that it would make it clear in guidance that a potential recruit will not lose job seekers’ allowance if he or she turns down a job offered only on an employee shareholder basis. Originally the Government said unemployment benefits wouldn’t be withdrawn provided there was a good reason for turning down such a job. The question yesterday was whether or not the Government’s assurance would persuade their Lordships’ to agree to the clause.

    "The Government’s change of position, though it persuaded the House of Commons, was not sufficient to swing the vote in the Government’s favour in the House of Lords, and their Lordships have voted against the inclusion of the employee shareholder clause in the Bill. This means that the clause will go back to the Commons, in the process known as “ping pong”, possibly today or later this week. For employee shareholder status to become a reality in the autumn, both Houses must agree to the clause, and time is running short. In early May, all amendments must have been agreed. Although the future of employee shareholders looks uncertain, a compromise provision has already been put together, which involves the potential employee shareholder receiving a statement setting out the rights he won’t have as an employee shareholder and what rights attach to his shares, with a seven day “cooling off period”. These proposals may mean there is hope for the Government yet.”

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