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Employee Shareholder Status – Commons overrules Lords

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Despite the majority of the House of Lords recently voting against the proposals relating to employee shareholders, it is being reported on Twitter and elsewhere, that yesterday afternoon, the House of Commons voted in favour of creating a new “Employee Shareholder” status by reinstating clause 27 of the Growth and Infrastructure Bill.

An employee shareholder will receive shares worth at least £2,000 in their employer Company, in exchange for giving up certain employment rights, including the right to claim unfair dismissal and the right to a statutory redundancy payment.

The first £2,000 of shares will be tax free and any monies not exceeding £50,000 on those shares will be exempt from capital gains tax when the shares are sold. Details of how the shares will be valued on buy-back or sale are to follow.

It is viewed by some commentators as a “bully’s charter” and a way of enabling employers to avoid costly compromise agreements by effectively “buying out” employment rights at the outset.

Written by Edward Aston

17th April 2013