The recent news that eight members of private-equity-backed Whitworths’ management team are being offered ‘shares for rights’ by their private equity owner may be an indication of things to come.
Under the new scheme, contained in section 31 of the Growth and Infrastructure Act 2013, and which came into force on 1 September 2013, employees can give up their right to claim unfair dismissal (except for reasons that are automatically unfair, such as discrimination), the right to request flexible working, the right to statutory redundancy pay and certain other statutory employment rights, in return for shares in their employer (or its parent company) worth at least £2,000.
The scheme is open to all employees although clearly the scheme is better suited to senior employees than it is to junior staff. Senior management are unlikely to bring an unfair dismissal claim in any event — and will have contractual protection — so have little to lose and potentially plenty to gain by agreeing to become an ‘employee shareholder’. Anyone can apply for an ‘employee shareholder’ position, although they cannot be forced to accept the status if they do not want to…
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