The House of Lords has voted to accept clause 27 of the Growth and Infrastructure Bill after a further concession by the government. The Bill received Royal Assent yesterday and became the Growth and Infrastructure Act 2013. This new type of employment status is expected to be implemented by the government on 1st September 2013.
The latest concession is that the individual entering into an agreement to become an employee shareholder must, prior to entering into the contract, receive legal advice from a relevant independent advisor i.e. independent solicitor, barrister, legal executive, union official or advice centre, or the agreement will be invalid. The employer has to pay the reasonable costs of that advice, regardless of whether or not the employee accepts the position, if they would otherwise have been payable by the employee.
If the employee does not receive independent legal advice before agreeing to become an employee shareholder, they will be an ordinary employee, as the agreement will not be legally binding.
During the proposal stage a number of other concessions were made by the government, including the following:-
- Offers of employee shareholder status must include a written statement explaining the rights that would be given up or varied and the rights attaching to the shares.
- Those agreeing to become employee shareholders will be entitled to a seven-day cooling off period.
- The first £2,000 of shares will be tax free.
- Any jobseekers who refuse an offer with employee shareholder status will not forfeit their social security benefit.
- Existing workers will be protected from detriment if they refuse to change to an employee shareholder contract.
Edward Aston 26th April 2013