The Government's proposals for employee shareholder contracts which appear in the Growth and Infrastructure Bill and are currently before the House of Lords, envisage that employees will be given shares in small businesses in exchange for giving up some employment rights.
The Government says it wants to boost engagement and productivity through shareholder contracts and to reduce the number of disputes ending up before an Employment Tribunal. However, opponents are rallying. One of the major criticisms is that employers are "trading in" rights for shares. They will give out shares and take away employment rights from their employees.
It is argued that restrictions on an employee shareholders access to maternity rights and flexible working are incongruent with the Government's stated commitment to family friendly policies.
Critics also say that there is potential for costly satellite litigation on a range of complex issues which are likely to arise at the outset and upon termination of an employee's contract. For example, if an employer buys back shares when an employee leaves, satellite litigation could ensue on the question of market value. This runs counter to the Government's stated aim of supporting small and medium sized enterprises through simpler regulation.
If you are interested in looking further at the employee share plans then please contact Mark Serby at [email protected].
