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Growth and Infrastructure Bill 2012-2013

PLEASE NOTE: Information in this article is correct at the time of publication, please contact DFA Law for current advice on older articles.

Proposals were announced by the Chancellor for a new type of employee ownership arrangement on 8th October 2012. Under these proposals employees would give up some employment rights in return for shares in their employer. The Growth and Infrastructure Bill 2012 – 2013 will insert a new section (205A) into the Employment Rights Act 1996, providing the means for an employer and employee to agree that in consideration of an individual becoming an “employee shareholder” rather than an employee, the company will allot a minimum of “2000 worth shares to the individual, with any gains made on the first 50,000 of shares being exempt from Capital Gains Tax.

An employee shareholder will have the same rights as an employee with the following exceptions

  • No  right to request time off for study or training;
  • No right to make a flexible working request, aside from those employee shareholders returning from parental leave, who will be restricted to making a formal request for flexible working to the period of 14 days beginning with their return to work;
  • No right not to be unfairly dismissed (except in Health & Safety cases, automatically unfair cases, or cases where the dismissal is discriminatory under the Equality Act 2010)
  • No right to a statutory redundancy payment.
  • The employee must give 16 weeks’ notice if they want to return early from statutory maternity, adoption or additional paternity leave (which is double the amount of notice employees are currently required to provide).

A number of concessions were made by the Government following rejection of the new legislation by the House of Lords twice. These included:

  • Protections from dismissal or other detriment for existing employees who refused to become employee shareholders;
  • Jobseeker’s allowance cannot be withdrawn if an employee shareholder job is refused;
  • An offer of employee shareholder status must include a statement explaining the employment rights that would be sacrificed and the rights attaching to the shares;
  • The individual must receive advice about the offer from an independent solicitor, barrister, legal executive, union official or advice centre. The employer must meet reasonable costs incurred in receiving this advice, regardless of whether the offer is accepted;
  • Individuals agreeing to the offer will be entitled to a 7 day “cooling off” period from the day legal advice is received.

 The new scheme will be introduced on 1st September 2013.

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