Shares-For-Rights Scheme Begins

UK workers have the chance to give up some of their rights to become shareholders in companies under a new employment law scheme that began on Sunday. The Government’s controversial employment status allows firms to ‘buy’ legal rights, such as unfair dismissal and statutory redundancy payments, from their staff with shares when they start new jobs without the need for expensive compromise agreements when they part company.

The reforms give workers the opportunity to become ’employee shareholders’ but they do not have to do it unless they want to. Those who opt into the scheme can expect around £2,000 of tax-free shares in return for giving up some of their rights.

Employers wanting to introduce shares-for-rights are advised to seek employment law advice. Critics of the status fear employees will lose basic working protections but it has also been suggested that the scheme will prove to be particularly beneficial for bigger firms. Chancellor George Osborne believes the shares-for-rights idea would suit the fastest-growing companies in Britain the most, but some experts are of the opinion that few will actually take it on.

Our Employment team provides advice on the employment aspects of all major business decisions. For advice on employee shareholder contracts, contact a member of the team, call us on 08456 381 381 or email employment@ibblaw.co.uk.