A leading law firm says a new form of employment status created by the Government has met with a lukewarm response from company bosses.

Experts at Higgs & Sons say their own research shows a mixed response from employers to the new employee shareholder status.

The new status came into effect on September 1 and allows workers to give up some employment rights in exchange for shares.

But Simon Bond, from Higgs’ employment team, said the complex nature of the scheme and the nature of the rights still retained by the employee, meant there had been little take-up so far.

“The basic concept of the scheme is that employees give up certain employment rights, including unfair dismissal and redundancy pay, in exchange for shares,” said Simon.

“The shares must be fully paid up and be worth at least £2,000 and come with certain tax advantages. For example, Income Tax and National Insurance is not usually chargeable on the first £2,000 of share value received by an employee shareholder and there is no capital gains tax up to £50,000 on disposal.”

But Simon said there were a number of procedural hurdles that an employer must jump before an employee had employee shareholder status, including:

  • Giving the member of staff a written statement detailing their employment rights and any rights/obligations attaching to the shares.
  • Pay for the employee to take independent legal advice.
  • Allow a seven day cooling-off period after the member of staff has taken advice.

Simon added:  “The idea has met with a fairly lukewarm reception from employers because employee shareholders still retain some important rights, for example to automatically claim unfair dismissal and protection from discrimination, and because of the legal and financial complexities involved.

“This is borne out by a survey at a recent seminar we staged which showed that 59 per cent of employers had “no interest at all” in offering employee shareholder status. Whilst 29 per cent of respondents said that they would possibly consider doing so at some point in the future, only eight per cent were actively considering it and only four per cent would “definitely” offer employee shareholder status.”

Higgs & Sons works from two offices in the Black Country – Waterfront Business Park in Brierley Hill and Kingswinford. The firm employs more than 200 people, which includes over 100 specialist lawyers.

For specialist advice for your business relating to employment issues, contact Simon on 0845 111 5050 or email