Take-up expected to be highest with start-up companies
Employees can now trade their rights at work for shares via the Chancellor of the Exchequer’s controversial “employee shareholder” scheme.
In return for at least £2,000 worth of shares in their employer company, employees can give up their rights not be unfairly dismissed in certain circumstances, to statutory redundancy payment, to request time off for study or training, to make a flexible working request, and to give only eight weeks’ notice to return early from maternity, adoption or parental leave.
However, they will still be protected from discrimination-related dismissal, health and safety-related dismissal and automatically unfair dismissal. If returning from parental leave, they can make a flexible working request within 14 days of their return.
Writing in this week’s NLJ, employment law solicitor Roderick Ramage describes the scheme as “harebrained”.
Ramage warns that the value of shareholdings in unquoted companies is often “illusory rather than real”; that valuing the shares is “an uncertain exercise”; that dismissed employees might claim employment rights on the grounds the valuation was incorrect and the shares are worth less than £2,000; and that employees will lose both statutory redundancy and their shares in the event of insolvency.
From a company owner’s perspective, minority shareholdings dilute the controlling shareholders’ rights and create regulatory complications, he adds.
The scheme, introduced under the Growth and Infrastructure Act 2013, took effect on 1 September.
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