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Employee shareholder status proposals become law

26 April 2013

Having been rejected by the House of Lords twice, the Growth and Infrastructure Act 2013 received Royal Assent on 25 April 2013. Under the new law, expected to come into effect this Autumn, an employee may receive shares worth between £2,000 – 50,000 in return for giving up rights to claim unfair dismissal; redundancy, right to request flexible working and to give only 8 weeks notice of return from maternity leave.

In order to gain approval a number of concessions were made to the original proposals including:

  • a 7 day cooling off period
  • protection from detriment for existing workers who refuse to switch to an employee-shareholder contract
  • the individual must have received advice from an independent legal advisor prior to entering into the contract.

Discrimination claims are unaffected so it is questionable whether the provisions will have a dramatic impact on the number of Employment Tribunal claims – especially as senior employees are most likely to take shareholder status and not most prone to bring an unfair dismissal claim.

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