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Employee Shareholder Status and Rights

The category of employee shareholder is a person working under an employment contract. They relinquish some rights to own at least £2,000 worth of shares in the company (or parent company) of their employer.

EMPLOYEE SHAREHOLDERS: The employee shareholder status is like a worker or an employee.

You would get most of the same employment rights. You would also keep your right to TUPE and collective redundancy consultation.

TUPE stands for the Transfer of Undertakings (Protection of Employment). It protects employee terms and conditions if a business gets transferred to a new owner.

There are some significant differences between an employee and an employee shareholder.

Employee shareholders must give 16 weeks of notice to come back early from some work leave. This rule applies to maternity leave, adoption leave, and to additional paternity leave.

Note: UK law provides some statutory employment rights for employee shareholders. Even so, employers may choose to offer more generous ones than those stated.

Having employee shareholder status means you do not have entitlement to the employment rights of:

Employee Shareholder Tax Relief and Obligations

As an employee shareholder you may get tax relief on the first £2,000 worth of shares. But, reliefs only apply to shares owned before the 1st of December 2016. This is the date the chancellor removed tax reliefs for individuals entering into Employee Shareholder Status (ESS) agreements.

The tax free shares in employee shareholder schemes are also exempt from Capital Gains Tax upon disposal. But, other tax rules apply to employee shareholders when buying and selling shares.

Note: HM Revenue and Customs provides further information on tax when you sell shares. Read their guidance when considering the employee shareholder employment status.

Applying for an Employment Shareholder Job

All individuals can apply for an employee shareholder job in their employer’s company. But, employers cannot force their existing employees to become employee shareholders. Thus, an employee does not have to accept a change to an employment contract unless they want to.

Note: Jobcentre Plus cannot force people claiming Jobseeker’s Allowance to apply for an employee shareholder job.

Employers offering Employment Shareholder Status

All employers must follow specific rules if they offer a change in status to their employees. Read the HMRC guide for further clarity on employment shareholder status.

Employment Status of Employee Shareholders in the United Kingdom