The new status of Employee Shareholder became effective from 1st September 2013.
Under the scheme an Employee receives a minimum of £2,000 and a maximum of £50,000 worth of fully paid up shares. When the Employee sells those shares they will be exempt from Capital Gains Tax.
In return an Employee Shareholder will not have the following rights:
• The right to request flexible working.
• The right to a statutory redundancy payment.
• The right not to be unfairly dismissed, unless the dismissal is one of the automatically unfair dismissals, in breach of the Equality Act 2010 or concerns health and safety issues.
So the Employee Shareholder gives up a lot and is probably only going to be attracted to this scheme if the shares being offered are at the upper end of the scheme.
In order for the scheme to be properly established the Employee Shareholder must receive a written statement setting out their status (including the points mentioned above) and they must receive independent legal advice before entering into an Employee Shareholder Agreement.
Those interested in entering into Employee Shareholder Agreements may include:
• Employees who feel that they do not need unfair dismissal or redundancy protection (either because they trust their Employer or would not use unfair dismissal rights).
• Employees who are keen to have tax efficient equity participation in their Employer.
• Start up and growth businesses where there is significant potential for capital growth
At Wake Smith LLP we can provide more detailed advice including a statement explaining to the Employee Shareholder particulars about their status and an Agreement to become an Employee Shareholder.
Contact us on 0114 266 6660, alternatively you can email Mark Serby at [email protected]