The government finally succeeded last month in pushing through its proposals, despite encountering many setbacks from its original plan (including changing the name) to create “employee-shareholders“. They are likely to come into force in September 2013
The Government has effectively created a new “class” of employee. In return for the acceptance of shares in the employer, the employee forfeits key employment rights including the right to make claims for unfair dismissal, for redundancy payments, the right to make flexible working requests etc and become somewhat second class “employees”, essentially having the rights of a worker but the obligations of an employee.
What’s the benefit? For an employer the benefits are that there will be a reduced risk of employment tribunal litigation. For the employee there is shareholding in the employer without having to “buy” the said shares in the conventional manner.
Key points to note are:
o the status of employee-shareholder,
o the rights that they will give up and
o details of the rights, restrictions and other conditions attached to the shares.
o whether the shares have any voting or dividend rights;
o whether the shares can be bought back or redeemed;
o whether the shares can be freely sold; and
o whether certain other rights and restrictions are attached to them
Employees cannot be dismissed or treated any less favourably in the event that they refuse to accept Employee-Shareholder status. In those circumstances existing employees cannot be forced to accept a such a change.