A new employment status that allows workers to waive certain rights – such as the ability to claim for unfair dismissal – in exchange for shares has come into effect.
The introduction of 'employee shareholder' contracts on 1 September follows the 2012 Nuttall review, which found employee-owned companies enjoyed higher job creation rates, greater financial resilience and increased staff commitment.
Under the scheme – also referred to as 'shares for rights' – employees must hold a minimum of £2,000 worth of shares in their employer's company and give up rights including:
- Most unfair dismissal rights
- Statutory redundancy pay
- Flexible working rights – except for in the two week period after a return from parental leave
- Certain statutory rights to request time off to train.
Employee shareholders still have the right to claim sick pay, maternity leave, time off for emergencies and paid annual leave.
Certain tax reliefs are available on the sale of shares received as an employee shareholder to encourage take-up of the scheme.
Anyone can apply for an employee shareholder position although workers cannot be forced to accept the status if they do not want to.
Chancellor George Osborne first announced plans for employee shareholders status in the March 2013 Budget, saying it would 'help create an enterprise culture.'
