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Proposed Changes To Employee Rights And Status

On Tuesday 16 April 2013 the House of Commons voted to reinstate clause 27 of the Growth and Infrastructure Bill, creating a new ‘Employee Shareholder’ status, following its defeat in the House of Lords last month. The proposal is that in exchange for shares, an employee owner will give up their employment rights in regard to unfair dismissal; redundancy; the ability to request flexible working and time off for training; and the ability to give only eight weeks’ notice of a firm date of return from maternity leave, instead an employee owner will be required to provide 16 weeks’ notice.

The government plans to introduce the new “employee shareholder” employment status with effect from 1 September 2013. In return for giving up the above rights the “employee shareholder” will receive shares (worth at least £2,000) in consideration of becoming an “employee shareholder” and will enjoy a capital gains tax (CGT) exemption on disposals of such shares (worth up to £50,000 when acquired). Legislation to amend the Employment Rights Act 1996 to introduce the new employment status was originally included in the Growth and Infrastructure Bill 2012-13, but was deleted at the Bill’s third reading in the House of Lords. The House of Commons has now re-instated it, so everyone will have to see over the next few months how the scheme is going to work in practice, once the government releases further details ahead of the launch on 1 September 2013.

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