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After some legislative ping-pong played out between the Commons and the Lords and much scepticism from employers, employee shareholder status arrives in September.
Despite initial doubt around this third type of UK employment status, it may after all have some merit, allowing entrepreneurs and small companies to create a more flexible, more committed workforce with less fear of litigation and a greater alignment of interests.
Fashion businesses appear to be well placed to take advantage of this new status, which should not be overlooked too hastily.
What is it all about?
What will the employee lose?
Employee shareholders will lose the rights to:
In addition, more notice of the proposed date of return from maternity leave (16 rather than 8 weeks) will be required from the returning employee shareholder.
As they are giving up important employment rights, employees must receive independent legal advice before becoming an employee shareholder.
Can the employer force employees to sign up to shareholder contracts?
No, but it can decide to only offer shareholder status to new hires.
Will the new status be sufficient to incentivise fashion companies to give up shares in the company?
How attractive will employee shareholder status be for employees?
Potentially, very. Start up fashion companies could be the very type of business that will succeed in attracting high calibre staff by holding out the potential for significant capital gain, notwithstanding the loss of key employment rights.
Summary
Employee shareholder status is an innovative concept. Fashion businesses, and those who work in them, are by their very nature innovative and ambitious. Mutuality of interest may make employee shareholder status the new “must have” for fashion firms and their employees next season.