Tag Archive: employees

Transparency in supply chains: The Modern Slavery Act 2015

Jonathan Exten-Wright, a Partner in our London office, comments: Worker welfare in global supply chains is back on the agenda.

While historically there were voluntary initiatives in “soft law” terms such as the UN Guiding Principles, which required multinationals to give this their attention, now there is a momentum towards compulsory reporting in non-financial narratives by major corporations. This will move forward in the EU with the coming into force by December 2016 of a Directive requiring some 6,500 companies to report on their human rights position, including labour matters.

In the UK, the landmark Modern Slavery Act 2015, which requires transparency, reporting and the taking of preventative steps in supply chains relating to forced labour and human trafficking, received Royal Assent at the end of March. This gives urgent legal force to addressing these issues.

From “soft law…”

Since the ground-breaking “Protect, Respect, and Remedy” Framework was adopted by the UN in 2011, companies are expected to respect human rights throughout their business operations.  The UN Guiding Principles (UNGP) detail how companies can know and show that they respect human rights in practice.

Companies are expected not only to avoid causing or contributing to adverse human rights impacts, but to address “human rights impacts that are directly linked to their operations, products or services by their business relationships, even if they have not contributed to those impacts”.  Thus businesses have a responsibility to address adverse human rights impacts through their own activities and across the entirety of their value chain.

Suppliers represent a particular challenge for companies: adverse human rights impacts can occur at any level of a supply chain – from the bottom tier of direct or strategic suppliers, all the way through via multiple layers of sub-suppliers and sub-contractors, to those at the end of the supply chain that provide raw material inputs.

…to “hard law”

Under the Modern Slavery Act 2015, larger businesses with a certain level of turnover derived from their UK operations will be required to publish an annual slavery and human trafficking statement.  This will mean that any relevant commercial organisation in scope by virtue of the turnover definition – to be announced by the UK Government shortly -which supplies goods and services in the UK will need to report on what actions they have taken to ensure their supply chain is “slavery free”.  Businesses will need to describe the steps they have taken to ensure that slavery and human trafficking is not taking place in their supply chains or any part of their own business.  The statement will require director sign-off.

Because of the larger number of companies likely to be affected, this potentially has a much wider application than the strategic reporting requirements for quoted companies alluded to above.  The UK Home Office consultation into what size of company this new reporting requirement will affect closed in May 2015.  The outcome of that consultation will be published in advance of the commencement of the relevant sections of the Modern Slavery Act  which are expected to come into force in October 2015 (although this is yet to be confirmed by the Home Office). At that point we will know the full scale of the impact on businesses operating in the UK, with Government Guidance to follow.

The Modern Slavery Act also criminalises arranging or facilitating human trafficking or being an accessory to such offences.

For commercial organisations operating in the UK, these provisions have extraterritorial application.

Key points to note

So, what are the five key issues to know about the Act?

1.   Action will be expected

Businesses operating in the UK need to ensure their end-to-end supply chains are free from slavery. Taking its cue from Californian legislation, the Act will require businesses to provide a statement on the steps they are taking to prevent slavery and human trafficking in their supply chains and their own business.

2.  Ensuring transparency

The statement must be signed off by a director or equivalent and published on the company website to ensure senior management engagement and transparency.

3.   Embedded in law

The UK Government’s consultation as to which businesses will be in scope, using the measure of turnover, concluded on 7 May. The future Guidance is expected to cover the information to be included in such statements – including policies that are to be adopted, due diligence processes that could be used, how risk in a supply chain can be assessed and managed, training to staff, and monitoring. No longer about corporate social responsibility or brand protection, such transparency will be a legal requirement.

4.   Measuring effectiveness

Businesses should be looking at how they show they respect human rights and prevent human trafficking and modern slavery in their supply chains, the use of appropriate mechanisms to ensure adherence to human rights standards, and how they measure the effectiveness of the steps they are taking and report this back. Moreover, there is even the theoretical risk of being an accessory to criminal offences committed in the UK or overseas: this cannot be taken lightly.

5.   Integrating the law

Integrating human rights and labour issues into existing risk management processes, identifying material and salient risks, and revisiting sourcing strategy and supply chain management will be necessary. Businesses should be considering now how they plan to comply, prevent abuses, and report on their actions.

How we can help?

With so much at stake, companies and their directors need specialist advisors to help them navigate this new terrain. With leading labour law, human rights and regulatory and government advisory expertise, DLA Piper is well-placed to be your human rights trusted advisor. We have global reach and local knowledge of the salient risks which are pertinent to each jurisdiction, making us ideally placed to support companies during the complete life-cycle of human rights issues almost any business can face.

 

Permanent link to this article: http://www.dlapiperbeaware.co.uk/transparency-in-supply-chains-the-modern-slavery-act-2015/

Failure to enhance paternity pay not discriminatory

In Shuter v Ford Motor Company, an employment tribunal has held that a male employee was not discriminated against when he received only statutory pay during a period of additional paternity leave (APL) whereas a female employee on maternity leave would have received full pay for up to 52 weeks.   Although only a first instance decision which will not bind other tribunals, this case nonetheless serves as a useful reminder to employers that they need to decide an approach to the incoming system of shared parental leave (SPL) and, in particular, to address the thorny issue of whether the benefits of an enhanced maternity scheme should be mirrored for those on SPL.

Facts

Under Ford’s family leave policies,  employees on maternity leave are entitled to occupational maternity pay at the rate of 100% for the whole leave period and employees on the two weeks of ordinary paternity leave are also entitled to 100%.   APL was a new type of family leave which took effect in relation to children born after 3 April 2011;   where the mother returns to work and ends her maternity leave,  the child’s father or the mother’s spouse/civil partner can then take between two and 26 weeks’ APL.   At the time APL was introduced,  Ford reconsidered how it might structure its pay arrangements for family leave.   Its decision was the retain 100% maternity pay and two weeks’ full pay for ordinary paternity leave but to pay only statutory pay for APL.   Among the reasons for this decision were –

  • The APL regime was likely to be temporary as the Government was already consulting on the introduction of SPL;
  • It was usual practice to initially adopt statutory minimum entitlements and then refine entitlements based on experience;
  • Paying APL at 100% would be costly and disruptive to the business given the make-up of Ford’s workforce;
  • 100% maternity pay had been introduced to enhance Ford’s ability to recruit and retain more female employees and assist its diversity targets.  A downwards equalisation of pay for maternity and APL would demotivate female staff; negatively impact the reasons for implementing 100% maternity pay; and  risk litigation and negative publicity;
  • A recognition that APL and maternity leave are different as maternity leave is connected with the biological condition of pregnancy and childbirth and facilitates the special relationship between mother and child;
  • The Government’s advice was that pay for APL did not need to be enhanced to mirror maternity pay and similar employers were not doing so;
  • Ford did not want to subsidise the less generous maternity benefits of other employers;
  • The current 2% take up of ordinary paternity leave was low; and
  • Other European companies in the Ford group did not offer such generous rights.

Ford was also able to provide statistical evidence to the tribunal which demonstrated the need to increase the number of women in its workforce; that an increase had been achieved; and also statistics on the take up of maternity and paternity leave within its workforce.

ET Claim

Following his wife’s return to work after maternity leave,  between July and December 2013,  Mr Shuter took a period of about five months’ APL from his employment with Ford.   He was paid at the statutory rate.  In October 2013,  Mr Shuter issued employment tribunal proceedings alleging both direct and indirect discrimination based on the difference in treatment by Ford of women on maternity leave and men on APL.   Had Ford’s maternity and APL pay policies been the same,  he would have received around £18,000 during his period of leave.

The employment tribunal decided that Mr Shuter had not been subject to either direct or indirect sex discrimination.   

In terms of direct discrimination,  Mr Shuter had sought to compare himself to a woman on maternity leave but the tribunal held that this was not the correct comparator.  Instead, Mr Shuter should be compared to a woman on APL who would, similarly, have received only statutory pay and, as such, there was no less favourable treatment.

In terms of indirect discrimination,  it was accepted that Ford had applied a practice of “paying women basic pay when on leave beyond 20 weeks after the birth of the child when looking after the child”.  It was also accepted that men were likely to suffer a group disadvantage from this practice given that the largest group eligible for APL are fathers.   However, the tribunal decided that Ford’s practice of paying full pay during maternity leave was justified;  its legitimate aim was to retain and increase the number of women in its workforce and its policy on maternity pay was a proportionate means of achieving that aim.

Implications

This is one of the first cases where a difference in pay for women on maternity leave and men on APL has been considered.   It is helpful for employers that, in a well-reasoned judgment, the tribunal found that there was no discrimination.   However,  businesses should not take this as an opportunity to breath a collective sigh of relief.    The decision is only at employment tribunal level so is not a binding authority and it may yet be subject to appeal.   In addition,  the case related to APL which will soon become a thing of the past when SPL comes into effect (for babies expected on or after 5 April 2015).    There are significant differences between APL and SPL including that, for example,  SPL can be taken from two weeks after the birth, rather than 20 weeks as is the case with APL,  and also that a mother and father can take SPL concurrently,  rather than consecutively as is the case with APL.    As such,  it is possible that the courts may reach a different decision when asked to consider a discrimination claim based on differences between maternity pay and pay for SPL.   

What this case is very helpful in demonstrating is the sort of detailed evidence an employer will have to provide in order to justify a decision to enhance maternity pay but not pay for SPL.  Cost alone is not an adequate reason and some additional justification will be required.   Here, Ford had carefully considered the issue when APL was introduced,  had reviewed various options and had identified sound business reasons for the decision to continue to enhance maternity pay only.     This is an exercise which employers who currently enhance maternity benefits will need to carry out before the SPL regime comes into effect and, in this regard, there is no time like the present!

 

Permanent link to this article: http://www.dlapiperbeaware.co.uk/failure-to-enhance-paternity-pay-not-discriminatory/

Holiday pay must include commission, ECJ rules

 Kate Hodgkiss, Partner in the Edinburgh office, comments: The European Court of Justice (ECJ) has today handed down judgment in a case which could mean that employers face huge liabilities for claims for holiday pay. The issue arises because of an apparent conflict between UK and European law as to how holiday pay should be calculated and in particular whether elements of remuneration such as overtime and commission must be included.

The Working Time Directive (Directive) entitles workers to 4 weeks’ leave but does not specify how pay should be calculated.  The Directive is implemented in the UK by the Working Time Regulations 1998 (WTR). Under the WTR workers are entitled to 5.6 weeks’ leave and must be paid at the rate of a week’s pay for a week’s leave. The Employment Rights Act 1996 (ERA) sets out how to calculate a week’s pay; the calculation depends on a number of factors including whether or not a worker has normal working hours. The effect of the week’s pay provisions is that many common elements of remuneration, such as overtime, commission and bonus are excluded from statutory holiday pay.

However, in cases interpreting the WTD the ECJ has stressed the need for normal remuneration to be maintained during the period of annual leave.  In a 2011 case (Williams v British Airways) the ECJ ruled that (1) workers on annual leave should receive their normal remuneration and (2) normal remuneration entitled a worker to any payment which is intrinsically linked to the performance of the tasks which he is required to carry out under his contract of employment . The ECJ held that it is then left to the national court to assess the intrinsic link between the various components making up the total remuneration of the worker and the performance of the task he is required to carry out under his contract of employment.

Following Williams it has been argued in several claims in the UK tribunals that the WTR and ERA provisions conflict with EU law and that certain payments, such as commission or overtime payments, should properly be considered normal remuneration and be included in holiday pay calculations. 

The ECJ today handed down judgment in a reference in one such case, Lock v British Gas Trading and others and has restated the principle that holiday pay must correspond to normal remuneration. Lock receives a basic salary plus commission on the sales that he achieves.  The sales commission is paid several weeks or months after a sale is concluded and makes up approximately 60% of his total remuneration. While on annual leave, he was paid his basic salary plus the commission from previous sales that fell due during the period. However, Lock then suffered a reduced income in the months following his return to work because he had not secured sales, and therefore did not generate commission, while he was on annual leave.  Lock brought a claim for unpaid holiday pay and the tribunal asked the ECJ whether commission should be included in holiday pay.

The ECJ said that commission must be included as otherwise the financial disadvantage suffered might deter workers paid on a commission basis from taking leave. Commission will, of course, vary over time; the ECJ said that it was up to the national courts to decide how to calculate how much commission should be paid during any period of annual leave on the basis of a representative reference period.

Implications

This is not good news for UK employers, but is unsurprising given the ECJ’s earlier ruling in Williams. The recent trend in case law strongly suggests that UK employers may have to include in holiday pay calculations any remuneration intrinsically linked to the performance of the contract, including overtime and commission payments – at least so far as the 4 weeks’ WTD holiday is concerned.  Most employers will, at the moment, be calculating holiday pay on the basis of basic remuneration only.  These employers may therefore face significant liabilities for underpaid holiday in the event of claims.  The key question is how these ECJ decisions are applied in a series of appeals due to come before the EAT this summer.  The EAT is due to hear an appeal in the joined cases of Neal v Freightliner Limited and Fulton v Bear Scotland on 30 and 31 July. At least two more cases are now on appeal to the EAT and may also be joined with Neal. All these claims relate to overtime.  If the EAT rules that the UK law can be read to give effect to the ECJ decisions, while individual underpayments may be relatively small, they may accumulate to a significant liability when multiplied across a large workforce.  Failure to make the correct holiday payment is an unauthorised deduction from wages and claims may be brought at any time within 3 months of the last in a series of deductions.  This means that workers can potentially bring claims in respect of holiday pay going back many years (potentially back to 1998 if the underpayment has gone on that long although there are arguments for a limitation of 6 years), provided they bring the claim within 3 months of the last incorrect holiday payment. Alternatively, the EAT may decide that UK law is simply incompatible with the WTD in which case private sector workers would have claims against the Government rather than their employer, but public sector workers would be able to rely directly on the WTD to bring tribunal claims.

Employers may have some options to reduce their potential exposure to claims, or limit their liability in the future, but these will depend on the profile of the workforce, the elements of remuneration and the nature of the employer’s business. For the majority, the most sensible option may be to wait and see how the EAT deals with the appeals. Employers will face a tense wait for the EAT’s decision.

Permanent link to this article: http://www.dlapiperbeaware.co.uk/holiday-pay-must-include-commission-ecj-rules/

Hearing date set for important holiday pay calculation cases

Kate Hodgkiss, Partner in our Edinburgh office, comments: The EAT has now listed the cases of Bear Scotland Ltd v Fulton and Neal v Freightliner Ltd to be heard on 30 and 31 July 2014. The EAT’s findings will determine whether payments in respect of non-guaranteed overtime have to be included in the calculation of holiday pay.  This issue is deemed to be of such importance to employers that BIS has been granted leave to intervene in the proceedings.

Until recently, the legal position seemed to be clear. In 2004, a Court of Appeal case, Bamsey v Albon Engineering & Manufacturing PLC, held that only guaranteed (ie obligatory) overtime needed to be included in holiday pay calculations.  However, in  2011, the ECJ indicated in British Airways Plc v Williams, that all payments which are intrinsically linked to the performance of the contract must be included in holiday pay calculations.  This led the employment tribunals in Fulton and Neal to find that regular overtime should be included in the respective employers’ holiday pay calculations, even if that overtime was not obligatory.

The outcome of these cases has potentially significant ramifications for employers who are currently only including basic remuneration in their holiday pay calculations. Employees may seek to claim any holiday pay underpayments, potentially going back a number of years, and this could result in significant costs liabilities for employers.  Employers therefore need to make an important decision now as to whether to sit tight and await the outcome of the EAT’s decision or to take steps at this stage to minimise any potential liabilities. We will continue to report any future developments in Be Aware.

Permanent link to this article: http://www.dlapiperbeaware.co.uk/hearing-date-set-for-important-holiday-pay-calculation-cases/

December 2013’s review of the year

Sandra Wallace, Partner and Employment group head, highlights the most important legislative and case law developments from 2013 and identifies the key cases to watch out for in 2014.   Remember to use our On the horizon legislation tracker to keep up to date with the further changes to legislation which are expected in 2014 and beyond.

 

2013 LEGISLATION ROUND UP

Employment Tribunals

1 February Cap on a week’s pay for statutory awards increased from £430 to £450
  Unfair dismissal compensatory award increased from £72,300 to £74,200
25 June In political affiliation cases the two year unfair dismissal qualifying period no longer applies
29 July One year cap on unfair dismissal compensatory award introduced
  Protection of settlement negotiations from admissibility in unfair dismissal tribunal proceedings introduced
  Introduction of fees regime for employment tribunal claims and new tribunal rules
  Compromise agreements renamed ‘settlement agreements’
7 October New fee remission system in force for employment tribunal fees

Family friendly

8 March Parental leave increased from 13 to 18 weeks
7  April Statutory maternity, paternity and adoption pay rates increased from £135.45 to £136.78 per week

Whistleblowing

25 June Amendments to whistleblowing legislation to remove good faith requirement and introduce public interest test
1 November

Close of call for evidence on further whistleblowing reform

Redundancy

1 February Cap on a week’s pay for statutory redundancy payments increased from £430 to £450
6 April Period of required collective consultation for 100+ redundancies reduced from 90 to 45 days

Employment status

1 September Employee shareholder status introduced

Discrimination

25 June Obligation for the Government to make an order outlawing caste discrimination came into force
1 October Repeal of third party harassment provisions from Equality Act 2010

 

 

2013 CASE LAW ROUNDUP

 Redundancy

USDAW and others v WW Realisation 1 Ltd and others This case involves the redundancy consultation obligations arising out of the closure of Woolworths and Ethel Austin stores between 2008 and 2010.   The EAT ruled that the words “at one establishment” in the UK’s collective redundancy legislation should be disregarded for the purposes of any collective redundancy involving 20 or more employees. This potentially results in employers needing to collectively consult whenever they propose to make 20 or more redundancies in a 90 day period, regardless of where the employees are based.  This case is however being appealed to the Court of Appeal.

Working time

Neal v Freightliner Ltd

 

An Employment Tribunal held that a freight worker was entitled to have overtime payments and shift premiums included in the calculation of his holiday pay as they were intrinsically linked to the performance of the tasks he was required to carry out under his employment contract.  This case is being appealed to the EAT.

Employee competition

Coppage and anor v Safety Net Security Ltd The Court of Appeal upheld an order that a former company director pay at least £50,000 following a breach of his post-termination restrictive covenants which prohibited solicitation of any customers of his former employer for a period of six months following termination.
Vestergaard Frandsen SA v Bestnet Europe Ltd The Supreme Court held that a former sales manager was not liable for misuse of confidential information.  The manager had not acquired information while working for Vestergaard and had no implied knowledge of the misuse of information by her new employer.

Transfer of undertakings

Alemo-Herron and others v Parkwood Leisure Ltd

Considering the status of collective agreements following a TUPE transfer, the ECJ decided that under the Acquired Rights Directive it is impermissible for UK courts to adopt a “dynamic” rather than a “static” interpretation.  Where transferring employees’ contracts provide that their terms are to be determined in accordance with collective agreements, the transferee cannot be bound by terms which are collectively agreed after the transfer if it is unable to be involved in the negotiating process.

Crystal Palace FC Ltd v Kavanagh & Ors

In a case which arose out of the dismissal of employees of the company which owned Crystal Palace football club when it went into administration, the Court of Appeal held that the employees were dismissed by the administrator shortly before the business was sold for a valid “economic, technical or organisational reason”. The administrators needed to reduce the wage bill in order to continue running the business and avoid liquidation.

Discrimination

Lockwood v Department of Work and Pensions

The Court of Appeal held that a severance scheme, which paid higher payments to older employees on the basis that they needed more of a cushion than younger employees, was objectively justified.

Cox v Essex County Fire and Rescue Service

In this disability discrimination case, the EAT decided that although the employee had advised that he was suffering from bipolar disorder, the absence of a definite diagnosis meant that the employer did not know, and could not have reasonably been expected to know, that the employee was disabled.

Croft Vest Ltd & Ors v Butcher

The EAT held that an employer who refused to pay for an employee with work-related stress and depression to have private psychiatric counselling and cognitive behavioural therapy breached its duty to make reasonable adjustments.

KEY CASES FOR 2014

 Redundancy

USDAW v Ethel Austin Ltd (in administration) and another case

 

The Court of Appeal will consider whether the words “at one establishment” in the UK’s collective redundancy legislation should be disregarded for the purposes of any collective redundancy involving 20 or more employees. (NB. this is the Woolworths case  – see above for EAT decision).
Lyttle and others v Bluebird UK Bidco 2 Ltd In an application from a Northern Ireland employment tribunal to the ECJ, clarification is sought as to the meaning in the UK’s collective redundancy legislation of the term “establishment” and whether the duty to collectively consult is triggered when 20 or more employees are dismissed at a particular establishment or across the whole of the employer’s business.

Working time

Lock v British Gas Trading Limited and others The ECJ will consider whether the holiday pay of a worker, who receives basic pay and sales-related commission, should be more than just basic pay, even though during holiday periods they are not undertaking work that would entitle them to commission.
Neal v Freightliner Following the Employment Tribunal in 2013 (see above), the EAT will consider if holiday pay must be calculated in a way which takes account of pay for voluntary overtime.

Discrimination

Z v A Government Department & the Board of Management of a Community School;    CD v ST There are currently two cases before the ECJ which will consider whether an mother who has a child via a surrogacy arrangement has pregnancy and maternity rights under EU law.
FOA on behalf of Karsten Kaltoft v Billund Kommune The ECJ will consider whether discrimination on grounds of obesity is prohibited by EU discrimination law.

Gallop v Newport City Council

 

Judgment is awaited in this case in which the Court of Appeal has considered if an employer’s lack of knowledge prevents the duty to make reasonable adjustments arising where the employer relied on advice from an occupational health adviser that an employee was not disabled for discrimination purposes.

Mba v Mayor and Burgesses of the London Borough of Merton

Judgment is awaited in this case in which the Court of Appeal has considered whether or not an employer’s requirement that all care workers work some Sunday shifts indirectly discriminated against a Christian residential care worker who strongly believed that Sunday should be a day of rest.

Employment law reforms

R (on the application of UNISON) v Lord Chancellor

 

Judgment is awaited in this case in which the High Court heard an application by UNISON claiming that the introduction of employment tribunal fees is in breach of EU law and contrary to the principle of access to justice.    A similar application to the Scottish Court of Session has been stayed pending the outcome of the High Court case.

R (on the application of Compromise Agreements Ltd) v Secretary of State for Business, Innovation and Skills

An application has been made for judicial review of the statutory cap of one year’s salary in unfair dismissal cases. The application is based on the premise that older people are more likely to be out of work for more than a year and therefore would be eligible to more than a year’s compensation were it not for the new cap.

Permanent link to this article: http://www.dlapiperbeaware.co.uk/december-2013s-review-of-the-year/

Growth and Infrastructure Act 2013: Rights for shares

Jonathan Exten-Wright, a Partner in our London office, comments: 

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.

One of the most controversial aspects of the original proposal was that it allowed employers to ‘buy out’ employment rights at the outset of employment, rather than at the end under a compromise agreement and whereas the compromise agreement regime requires employees to be fully informed and take legal advice about the impact of giving up their employment rights, the same protection did not apply to employee shareholder status. There was concern that this could lead to exploitation, with employee shareholders giving up valuable employment rights in exchange for shares of limited value which may not be easily traded.

The Government has been forced to make concessions on this aspect of the proposal which mean that employees will now have to take independent advice, paid for by the company, and then wait seven days before agreeing to give away some of their employment rights in exchange shares.

The House of Lords’ opposition to the scheme also led to the Government making concessions over the voluntary nature of employee shareholder status. Concerns were raised over whether employee shareholder status could really be described as voluntary, as it was not clear whether unemployed people claiming Jobseekers’ Allowance (JSA) would be penalised for not taking a job which was offered only on an employee shareholder basis. The Government has now confirmed that it will amend the guidance for DWP jobcentre advisers to state explicitly that a jobseeker cannot be compelled to apply for an employee shareholder job, nor can their jobseeker’s allowance be reduced or cut if they turn down an offer of an employee shareholder job or refuse to apply for an employee shareholder job.

The Government intends to bring employee shareholder status into force in September, although it remains to be seen whether there will be much take-up of the scheme. The proposed reform has not been met with much approval from the business community. In the Government’s own consultation, only five businesses out of the 200 responses received showed any interest in taking up the scheme. Employee shareholder status may be attractive to some companies purely as a tax efficient method of giving shares to key employees. However, for many businesses the complexity and cost of carrying out the necessary share valuation could well act as a barrier.

jonathan.exten-wright@dlapiper.com
+44 207 153 7706

Permanent link to this article: http://www.dlapiperbeaware.co.uk/rightsforshares/