Last year the Chancellor, George Osborne, announced plans for the introduction of a new employment status called an employee shareholder. The new status is intended to remove some of the risks businesses face when hiring employees and to introduce new flexibility into the labour market especiallyfor fast-growing small and medium sized companies who are looking for a highly motivated workforce.
The new employment status became available from 1 September 2013. An employee shareholder is someone who works under an employee shareholder employment contract. Under this new arrangement the company must give shares to the employee shareholder in the company or parent company with a minimum value of £2,000 on receipt. There is no set upper value. Employees will benefit from a CGT exemption for gains on the disposal of up to £50,000 worth of shares received.
However, the employer shareholders lose important rights compared to other employees. Namely they will give up their rights to:
- claim unfair dismissal (except for reasons that are automatically unfair or that relate to discrimination)
- claim redundancy pay, and
- request flexible working and time off for training.
Owner-employees would also be required to provide 16 weeks’ notice of a firm date of return from maternity or adoption leave compared to 8 weeks’ notice for employees.