News & Views

Autumn Statement: key employment law changes

BY Heather Kemmett
Employment law
BG Purple

The Government has announced a raft of employment-related measures in its Autumn Statement including moves to shelve employee shareholder status and restrictions to salary sacrifice schemes. In other employment-related news, the Prime Minister made a speech days before the Statement in which she also appeared to back away from her previous proposals to require companies to have employees on boards.

In 2013 the Government introduced a new form of employment status (the Employee Shareholder) to much scepticism from the business community and employee groups alike. The idea was that employees would be issued with shares up to the value of £2,000 in exchange for sacrificing certain employment rights, such as unfair dismissal rights. While unions decried this as a backhanded way of denying employees their statutory rights, businesses too were critical of the usefulness of the scheme. The widely-held view was that, while this might be appropriate for fast growing, informal start-up companies, it was unlikely to be favoured by established businesses with an existing structured hierarchy.

Those concerns appear to have scuppered the scheme from the outset and led to incredibly low take-up among businesses. According to HMRC data published in October, only 40 companies issued employee shareholder shares to just 230 employees between September 2013 and April 2016. Unsurprisingly, the government now plans to quietly shelve the scheme and will do so “at the earliest opportunity”. In the meantime, the Chancellor announced in his Autumn Statement that tax breaks for employee shareholders will be abolished after 1st December 2016.

In his Statement the Chancellor also announced that restrictions will be placed on new salary sacrifice schemes from April 2017. Existing arrangements will be protected until April 2018, but new schemes will only attract tax relief if they relate to:

  • Enhanced employer pension contributions;
  • Childcare benefits (i.e. childcare vouchers and workplace nursery schemes);
  • Bikes bought under the cycle to work scheme; or
  • Ultra-low emission cars.

And finally to Mrs May’s speech at the CBI Annual Conference. In what is widely-regarded as a U-turn, the Prime Minister has clarified that she will not require businesses to include elected employees on boards, a pledge she initially made during her leadership election campaign. After being met with concerted criticism from the business community, Mrs May now appears to have backed out of that promise. She has not abandoned her proposals altogether, but has suggested that the “voices of workers and consumers should be represented” in a model that works for the company concerned. The government has indicated that this issue, together with proposals to curb executive pay and increase shareholder accountability, will be examined in an upcoming Green Paper.

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