Employee Shareholder Status - an Update
Last night, the House of Lords voted for the second time to reject the proposed Employee Shareholder status set out in the Growth and Infrastructure Bill (by 260-191).
Under this scheme, which creates a third type of employment status, employers can award employees at least £2,000 in shares in exchange for the employee giving up a bundle of employment rights (including 'ordinary' unfair dismissal and the right to a statutory redundancy payment).
The government is determined to pursue the scheme, however, and this morning published a list of concessions which it hopes will mean the Lords accepts the proposed legislation. The concessions include:-
- a provision that the employee cannot accept the offer within seven days of it being made (how that would work in practice is unclear, and an employer remains free to refuse to offer the job to a prospective employee who doesn't want to take up employee shareholder status)
- a written statement setting out the rights that the employee is giving up
- a written statement setting out the details of the shares being offered (including whether they are voting or non-voting shares, whether they carry a dividend, and whether they carry a right to a share in the company's assets if it is wound-up, whether pre-emption rights are excluded, and details of drag-along and tag-along rights). Most employees will not understand the implications of this information, and there is nothing to prevent employers issuing pages of gobbledigook about the shares which buries this information somewhere within.
The government had made some earlier concessions to the original proposals:-
- a jobseeker who refuses a job on an employee shareholder basis will not automatically forfeit their unemployment benefits
- the first £2,000 of shares given to the employee will not attract income tax
So, the Commons will now re-debate - and presumably re-pass the relevant clause of the Growth and Infrastructure Bill. It will then go back to the Lords for a third time. Meanwhile, shadow Business Secretary Chuka Umanna has tweeted