Skip to content
Employee Benefits
  • News
  • Jobs
  • Tax & Legal
  • Benefits
  • Events
  • Suppliers
  • Email sign up
Search Login / Register Primary Menu
Close
or Register
news Share schemes Share schemes Tax and legislation

Shares for rights scheme comes into force

By Ian Silvera 1st September 2013 12:00 am 6th April 2017 3:39 pm

The government’s Employee Shareholder Scheme came into force yesterday.

The scheme, also known as shares for rights, was passed in Parliament after the government made several concessions to its original proposals.

The legislation will enable staff to swap some of their employment rights, including unfair dismissal and redundancy rights, for shares in their organisation worth between £2,000 and £50,000.

However, Sarah Ozanne, employment partner at CMS Cameron McKenna, questioned the scheme’s likely popularity “It is questionable whether the shares for rights scheme will garner much popularity with employers or employees,” she said.

“While some employers and employees may see it as a practical route to share ownership, many are likely to be put off by the complexities of share valuation, the costs to employers of implementing the scheme and the forfeiture of what many employees view as core employment rights.”

Jonathan Exten-Wright, partner in the employment, pensions and benefits team at DLA Piper, added: “The tax and employment law obligations are surprisingly more complex than might first appear when revisiting the legislation.

“There are also issues surrounding how articles of association of relevant companies permit the issue of such shares which will need to be addressed in each instance.

“Matters are not quite so straightforward, but clearly the goal of increased shareholder status among employees and/or the potential tax efficiencies will invite people to address these issues.”

A spokesperson for Department for Business, Innovation and Skills said:  “It is up to individual companies to ensure any shares they issue have been valued. Professionals such as accountants or actuaries will normally value shares. Companies may also apply to HM Revenue and Customs in advance of an award, or at the time of award, to agree a valuation of the shares for tax purposes. 

“If the person is not issued with shares with a value of at least £2,000, the criteria for the employee shareholder status would not be fulfilled,  and the person could be found to be an employee by an employment tribunal, and be entitled to the associated rights of an employee. 

“Issuing new shares to minority shareholders will have implications for companies. The government guidance is clear that before offering employee shareholder contracts current shareholders should consider the wider implications on their shareholdings.”

Case studies

American Express rolls out global health programme

3rd September 2013 4:07 pm 3rd November 2015 5:15 pm
news Pay strategy

Which? uses auto-enrolment to promote reward

30th August 2013 12:41 pm 3rd November 2015 5:15 pm
news Pensions

Camden and Islington NHS aims for payroll savings

3rd September 2013 12:55 pm 3rd November 2015 5:15 pm
news Motivation and recognition

Recognition impacts key business results

29th August 2013 12:51 pm 3rd November 2015 5:15 pm
news

Hertfordshire Council to launch benefits portal

4th September 2013 12:12 pm 3rd November 2015 5:15 pm
Sign up for the leading independent source of news and expert analysis delivered straight to your inbox. Sign up
Latest ArticlesComments
news Pay strategy

Pay gap between executives and staff narrowed during Covid-19

24th May 2022 11:36 am 24th May 2022 11:36 am
news Mental health resilience

31% of banking staff plan to leave roles due to pressure

24th May 2022 11:06 am 24th May 2022 11:06 am
news Pay strategy

Bank of America ups minimum hourly wage to $22

24th May 2022 10:46 am 24th May 2022 10:46 am
Opinion Pensions

Aida Rehmatullah: It is never too early for staff to engage with pension decisions

24th May 2022 6:00 am 23rd May 2022 11:30 am
  • Cancel reply

    Threaded commenting powered by interconnect/it code.

Explore

  • Email sign up
  • News
  • Benefits
  • Analysis
  • Supplier network
  • Events
  • Jobs
  • Video
  • Buyer’s guide
  • Case studies
  • Opinion
  • Industry sectors
    • Building & Construction
    • Charity / Voluntary
    • Financial Services
    • Healthcare
    • Industry
    • Leisure
    • Logistics
    • Manufacturing
    • Media
    • Pharmaceuticals
    • Professional Services
    • Public Sector
    • Retail
    • Technology / telecommunications
    • Transportation
    • Utilities
  • Digital editions
  • Contact us
  • Twitter
  • LinkedIn
  • Contact us
  • Cookies
  • Privacy
  • Website Terms and Conditions

Copyright @ 2021 DVV Media HR Group Ltd

built by Bournemouth Digital

DVV Media HR Group Limited. Registered in England and Wales no. 6776955.

Registered office 1st Floor Chancery House, St Nicholas Way, Sutton, Surrey SM1 1JB