Contact Us

Villars Hayward LLP
Boston House, Boston Road
Henley-on-Thames RG9 1DY

Tel: 01491 411077   Fax: 01491 410199

Return to Latest News






Businesses show ‘limited interest’ in new ‘rights for shares’ scheme


A controversial new employment status that allows workers to relinquish some of their employment rights in exchange for shares in the company has come into effect.


The Government’s so-called ‘rights for shares’ scheme was introduced on 1 September, in a bid to boost hiring and productivity.


However, the British Chambers of Commerce (BCC) reports that businesses and employees have shown very little interest in the initiative.


‘We see it as an experiment. But my guess is it will never be more than a niche tool,’ said John Wastnage, head of employment and skills at the BCC.


Under the employee shareholder contract, individuals who receive shares worth between £2,000 and £50,000 will be exempt from paying capital gains tax on any profit made on the sale of those shares.


In addition, income tax and national insurance contributions will not normally be charged on the first £2,000 of shares.


However, in order to qualify for the new ‘employee shareholder’ status, workers must surrender certain employment rights including:


· the right to claim unfair dismissal (unless the dismissal is automatically unfair or discriminatory)

· the right to receive statutory redundancy pay

· the right to request flexible working, study or training arrangements.


Employee-shareholders must also give additional notice if they wish to return from certain types of leave, including 16 weeks’ notice in the case of an early return from maternity, adoption or additional paternity leave.


Commenting on the scheme, Mike Emmott, an employment relations adviser at the Chartered Institute of Personnel and Development, said, ‘It ticked a number of boxes such as tax relief, deregulation and share ownership.


‘However, it was so clearly intended to take a bite out of employment protection that most employers said they didn’t believe it was desirable’.