From the beginning of September 2013, the government introduced new rules enabling employers to offer contracts allow workers to trade their employment rights in return for shares.
So what, exactly, is an employee shareholder contract and what are?
Well the new employment contract allows an employer to offer shares in the business to either new or current employees in return for those employees giving up some employment rights. The shares have to have a minimum value of £2,000 and the recipient doesn’t need to pay any tax or national insurance contributions on them. And if you really lucky and the shares do well, your first £50k in profit will be free of any capital gains tax.
So that’s the good news.
One the flipside, you will need to give up the following rights to receive the shares:
- The right to claim unfair dismissal in certain situations*
- Statutory redundancy pay
- The right to request to work flexible hours (but parental leave is not included in this)
- Leave or time off for training or study
You will also have to give twice as much notice period if and when you want to return from maternity leave; – now 16 instead of 8.
*You’ll still be able to claim unfair dismissal for discrimination under existing law and where that dismissal relates to an “automatically unfair reason” including things like trade union membership, “whistle-blowing”, asserting your statutory rights, or certain health and safety matters. Also; you’ll still be entitled to minimum periods of notice, sick pay, maternity pay and holiday pay.
So it’s a mixed bag for working Mums, so it’s very much worth remembering that your existing employer cannot force you to take up your employee shareholder’s rights, nor treat you differently from any employee who has decided to take up these rights.
However – if you’re going for a new job, your new employer is able to insist that you enter into this new type of contract.
Your employer has to set out in writing the employment rights you’re giving up. You must also be provided with sufficient information regarding the shares being offered – and this must include the rights and any restrictions the shares carry, and how to sell or redeem them.
Your employed also has to ensure that you get independent legal advice on the offer, and pay any reasonable costs for you to get this advice, whether or not you then decide to take it up. You also get a seven-day “cooling-off” period to consider your position once you have that independent
Good or bad news?
As with most things in life, and certainly matters pertaining to employment law – there are good and bad points here. The advantages to companies are obvious in that it gives them better ability to plan their workforce needs without the “distractions” your previous rights inferred.
It also gives employees a stake in the business and a vested interest in the company doing well. But for busy Mums, the lack of a right to request flexible hours is the biggie.
It’s going to be different for different women in different situations – so take advantage of the free legal advice and carefully consider your options.