Employee-Shareholder status goes live
The new status of employee-shareholder, which took effect on 1 September 2013, has been the subject of some scepticism, and even derision from many different quarters, with only a few commentators seeing its potential.
Take-up is widely expected to be very low – at least initially.
Nevertheless, the new status is now with us, as enacted in the Growth and Infrastructure Act 2013. In our previous article we set out the criteria for becoming an employee-shareholder which were included just before the Act was passed.
The Government has now produced guidance on employee shareholders.
Key concerns for employers who want to offer the new status will be to ensure they have considered all implications concerning the shares (valuation; authority to issue them; and provisions on termination of employment) as well as the legal aspects (procedural requirements; legal costs; risks of claims that are not given up such as discrimination; and protection of employees from detriment or dismissal).
Individuals who are offered the status will need to think not only about the package being offered in light of the rights given up, but, amongst other considerations, their tax position (whether a capital gains benefit will actually apply), potential pitfalls when they want to dispose of the shares or leave, and the risk of shares going down in value.
These provisions are separate from the Government review of wider employee share ownership consequent on the Nuttall review.
We are able to offer both employers and individuals a full service in relation to the new employee-shareholder status, including advice on the company, employment and tax law issues raised and on issues relating to employee share ownership generally.