Growth and Infrastructure Bill — Employee Shareholder Scheme Safeguards — 25 Apr 2013 at 11:30

The majority of MPs voted in favour of safeguards to ensure that those entering a employee shareholder scheme^[1] receive independent advice paid for by the employer at least seven days before the agreement to enter the scheme is made.

The employee shareholder scheme is an employee status where an employee is given shares worth at least £2,000 on receipt in return for which the employer is permitted not to extend unfair dismissal rights, rights to statutory redundancy pay and other employment rights to the employee.

MPs were debating the Growth and Infrastructure Bill^[2]

The text of the approved motion was:

• That this House
• does not insist on its amendment 25E, to which the Lords have disagreed, and agrees with the Lords in their amendments 25H rev and 25J in lieu.

Amendment 25H rev^[3] stated:

• Page 34, line 38, at end insert—
• “( ) Agreement between a company and an individual that the individual is to become an employee shareholder is of no effect unless, before the agreement is made—
• (a) the individual, having been given the statement referred to in subsection (1)(ca), receives advice from a relevant independent adviser as to the terms and effect of the proposed agreement, and
• (b) seven days have passed since the day on which the individual receives the advice.
• ( ) Any reasonable costs incurred by the individual in obtaining the advice (whether or not the individual becomes an employee shareholder) which would, but for this subsection, have to be met by the individual are instead to be met by the company.”
• 25J Page 35, line 25, at end insert— ““relevant independent adviser” has the meaning that it has for the purposes of section 203(3)(c);”

The amendment would have taken effect on clause 27^[4] of the Bill.

The explanatory notes to the resultant Act^[5] explain the effect of the new sections introduced the amendments, which became New Sections 205A(6) and 205A(7) within section 31 of the Act.

• New section 205A(6) prevents an employee shareholder agreement between a company and an individual from taking legal effect unless the individual has received advice from a relevant independent adviser about the terms and effect of the proposed agreement, and until seven days have elapsed since the day on which the individual received that advice.
• New section 205A(7) states that the company must pay any reasonable costs incurred by the individual in obtaining legal advice, irrespective of whether the individual takes up the job or not.

==

• [1] Employee Shareholder Scheme page on Gov.uk
• [2] Parliament's webpage on the Growth and Infrastructure Bill (now the Growth and Infrastructure Act 2013)
• [3] Amendment sheet containing the amendments which were the subject of this vote
• [4] Clause 27 of the Growth and Infrastructure Bill on which amendments would take effect
• [5] Explanatory notes to the Growth and Infrastructure Bill 2013

Debate in Parliament | Source |