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.
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:
- The protection against unfair dismissals. Exceptions apply to health and safety issues and a dismissal on grounds of discrimination.
- The right to ask for flexible working agreements. An exception applies in the first 2 weeks of a return after taking parental leave.
- Statutory redundancy pay and some rights to request time off for training.
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.
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.