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Question mark over the future of employee shareholder contracts

BY Daniel Gorry
Employment Law & HR
BG Purple

The government’s controversial plans to introduce “employee-shareholder” or “employee-owner” contracts have been placed in disarray after the House of Lords voted to delete the proposals from the Growth and Infrastructure Bill.

The scheme was intended to introduce a new form of employment status whereby an employee could give up their right to certain employment protections (including the right to claim unfair dismissal) in exchange for shares worth a minimum of £2,000. 

The proposals came under fire during parliamentary debate and the vote to delete the scheme from the bill was passed by 232 votes to 178. However, this may not be the end of the road for employee shareholder contracts. In a twist of fate, the day the Lords voted to remove the plans from the Bill was the same day that the Chancellor announced that the scheme would come into force on the 1st September and confirmed the income tax treatment of employee shareholder shares. 

The Bill will now be passed back to the House of Commons where the government will have to decide whether or not to reintroduce the proposals in the same or amended form.

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