A worthwhile sacrifice?

The Growth and Infrastructure Act 2013 introduced a new status of employee from 1 September 2013: “employee shareholder”. Bird & Bird LLP employment lawyer Stephen Musgrave considers the impact of surrendering flexible working rights.

6848421519_6dbf90f29b_oIndividuals opting for this status will receive between £2,000 and £50,000 of shares in their employer, with some tax advantages attached, in return for sacrificing certain employment rights, including the right to claim unfair dismissal in certain circumstances and to receive statutory redundancy pay. Organisations may not impose the scheme on existing employees, but may impose it on new employees seeking to join their organisation.

Employee shareholders will not have the right to request flexible working (unless the employer expressly provides this right under contract), except during the two-week period following return from parental leave, but will remain covered by discrimination legislation.

Limited impact

The removal of the right to request flexible working will have limited impact in practice. Existing employees are unlikely to want to give up the right (and will be under no obligation to do so), unless flexible working has little or no effect on their day to day lives.

The position is different in respect of prospective employees, who may consider the benefit of a new job outweighs the detriment of sacrificing the right to request to work flexibly.

In any event, employees retain all rights in relation to discrimination and so can still bring claims based on indirect sex discrimination arising from working arrangements, whether they work part-time or full-time.

The costs associated with defending such claims, whether successfully or unsuccessfully, may significantly outweigh any cost benefits to the employer associated with the scheme, which may in turn deter employers from offering it altogether.

Cost of advice

The additional costs incurred by employers paying the reasonable costs of employees taking advice from independent advisers and the fact that in an uncertain job market employees are unlikely to want to relinquish some of their fundamental employment rights, may somewhat limit the attraction of the scheme.

Take up may be highest among senior and high-earning individuals who receive large share awards, who are seeking to benefit from the tax exemptions, and who are less concerned about reduced employment rights. It will be interesting to see how attractive the new arrangements prove, and consequently the impact which the removal of the right to request flexible working will have in practice.

Stephen Musgrave is Of Counsel at Bird & Bird LLP.Stephen Musgrave

Main image credit: http://www.flickr.com/photos/postbear/

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