“Employee Shareholders” Law Agreed
After concessions that the Lords considered would result in the new employment law introducing an “employee shareholder” status more or less meaningless for all practical purposes, clause 27 of the Growth and Infrastructure Bill has tonight been agreed by the House of Lords.
The clause has been subject to significant amendments since its first draft, and would now place a wide variety of responsibilities on employers before this new employment status can be used.
Employers will have to:
• provide a cooling-off period, as any employment contract will be of no effect until seven days have passed from the date of the offer;
• potentially provide two written statements of particulars – the statement of particulars required under Section 1 of the Employment Rights Act, required within two months after the beginning of the employment. And a written statement of the particulars of the status of employee shareholder and of the rights which attach to the shares; and
• meet any reasonable [members of the House of Lords suggested this cost alone could be in the thousands] costs incurred by the individual in obtaining the advice which would otherwise be met by the individual (this cost will be payable whether or not the individual becomes an employee shareholder).
The clause will insert a new section into the Employment Rights Act – section 205A. Whether this section will ever see an employee working under its restrictive terms probably remains open to at least as much debate as this proposal has attracted. If any employee does contemplate a vacancy under these new terms, one thing is certain: employers will be taking a gamble to offer these new terms, conscious of the costs of legal fees just to get a job offer considered, with nothing binding until a potential employee has received legal advice & allowed a cooling-off period.
The Chancellor of the Exchequer has got his way, but with a status that comes so many strings, opponents of this proposal can safely feel the same way.