Growth and Infrastructure Act 2013: rights for shares
By Jonathan Exten-Wright
The parliamentary term ended on 25 April 2013 with a narrow win for the government in a stand-off over the ‘shares for rights’ scheme. This controversial employment measure, contained in the Growth and Infrastructure Act, will allow employers to offer employees a new form of employment contract under which they give up certain employment rights in return for shares in the business.
Before receiving Royal Assent, the Growth and Infrastructure Act 2013 went back and forth between the House of Commons and the House of Lords a number of times. The House of Lords voted in March to remove the provisions creating ‘employee shareholder’ status from the then Bill. The House of Commons voted to reinstate employee shareholder status but the government was only able to gain approval for the then Bill from the House of Lords after making significant concessions.
The basic principle of employee shareholder status is that an employee shareholder will receive shares in their employer worth at least £2,000, in exchange for giving up a bundle of employment rights including ‘ordinary’ (i.e. not automatic) unfair dismissal, the right to a statutory redundancy payment and the right to request flexible working. The first £2,000 of shares will be free from income tax and NICs, and on sale the first £50,000 of shares will be free from capital gains tax…
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