The Employee Shareholder Scheme

14th January 2014
The Employee Shareholder Scheme image

The Employee Shareholder Scheme


Under the Growth and Infrastructure Act 2013 (Commencement Number 3 and Savings) Order 2013 the new employment status of employee shareholder was introduced with effect from the 1st September 2013.

Under the scheme, employee shareholders waive certain rights such as the right not to be unfairly dismissed, the right to a statutory redundant payment etc (subject to some exceptions and limitation) in return for at least £2,000.00 of shares in the employer’s company.

Existing employees who refuse to become employee shareholders are protected from dismissal or other detriment but job applicants who are refuse an employee shareholder job because they do not want to join the scheme will not be afforded protection.

Employees must receive independent legal advice before joining the scheme, and the company must meet the costs of the advice.

Interest in the Scheme

There was a consultation on the employee shareholder status in October 2012, but the results showed that only a very small number of respondents anticipated using the proposed status.

Daven Naghen, head of the Maples Employment Team, does not expect interest in the scheme to increase significantly:-

“From an employee’s prospective they are unlikely to be interested in such a scheme as they will not want to lose certain employment rights (e.g. right not to be unfairly dismissed) and they will need to weigh up the value of any potential compensation they are waiving against the benefit they will gain from the shares.

Employers are likely to be put off by having to pay for the employee to take independent legal advice even where the employee decides later not to proceed with the scheme, as well as the cost of share valuations and any buy-back requirements.

There is however some enthusiasm for the scheme with start-ups and fast growing companies.

Possible tax-savings are likely to be of great interest to senior employees, particularly those in companies with good growth potential.

I remain sceptical as to whether interest in the scheme will significantly increase.”

How does the Scheme propose to help running a Business?

The intention of the scheme is to provide a flexible workforce for small and medium sized businesses.  Although it cannot be imposed on existing employees, it could be imposed on future employees.  This means that smaller businesses can recruit knowing that ordinary unfair dismissal claims cannot be brought against them, giving these businesses greatly flexibility in re-structuring and greater certainty of termination costs.

Implications in terms of Tax

The most significant tax relief under the scheme is that shares acquired in consideration of an employee shareholder agreement are exempt from capital gains tax, representing a potential tax saving of up to 28% of the growth in the value of the shares from acquisition until disposal. The relief only applies if at the time of acquisition the market value of the shares is not greater than £50,000.00.

Income tax may arise on acquisition of the shares by the employee shareholder but only to the extent that the market value of the shares on acquisition exceeds £2,000.00.

HMRC has helpfully indicated that it will agree a market valuation of shares with a company before such a scheme is commenced.

Obviously advice should be taken from a tax specialist or financial advisor on these points. Do you need Advice?

If you are a business considering entering into such a scheme, or you are an employee that has been offered such a scheme, then please contact Daven Naghan for advice and guidance on 01775 722261 or email or write to Dav at 23 New Road Spalding Lincolnshire PE11 1DH

Maples supporting Macmillan Coffee Morning image

Maples supporting Macmillan Coffee Morning

On 29th September 2017 Maples Solicitors LLP will be hosting a coffee morning as part of Macmillan’s “World’s Biggest Coffee Morning”.

Tea, coffee and cakes will be served from 10:00am until 1:00pm and all donations received will go to Macmillan Cancer Support to assist them with providing medical, emotional, practical and financial support to those facing cancer and their families.

At the same time, Maples will also be running a free Wills, Lasting Powers of Attorney and Probate clinic so that whilst you are in the office you may take the opportunity to discuss any of these with one of the Private Client Team with no obligation to commit. You can use the time to raise any questions you may have about making a Will, who you could appoint as Executors, whether you need a Power of Attorney or how a Power of Attorney works, for example.

Maples hope to see their existing clients join them for the coffee morning and very much look forward to meeting new people- everyone is welcome!

If you would like to discuss any matters in relation to Wills, Lasting Powers of Attorney or any Probate related matters prior to the coffee morning then please contact one of the lawyers in our private client team:-

Jane Mawer-
Jamie Dobbs-
Faye Blair-

Or telephone the office on 01775 722261 and ask to speak with one of the team.

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Gemma Mayer LLB

"I would highly recommend Maples Solicitors, especially Gemma Mayer, for any conveyancing work. The level of support and professionalism was excellent at all times. I also felt if I needed to ask or clarify anything that it was not an issue. Buying and selling a house is stressful enough, but Gemma helped me through it step by step."

Anita Toal LLB BA

"I think you are brilliant. You can use my comments above. You are efficient, friendly and quite clearly very good at what you do. Mainly you don’t leave people hanging around too long for." "So easy to talk to her and she understood what I wanted. She put me at ease and I cant thank her enough"

Daven Naghen LLB

"I felt the service I got from Maples was excellent and was very honest all through the process. I would recommend Maples as a first class Solicitors group"

Faye Blair LLB

Faye was excellent, sensitive and acted very well to the time constraints we faced. Great service and dealt with compassion at such sad times made the process less painful very professional.

Jamie Dobbs ACILEx

Over the last forty years I have cause to deal with many law firms both in a personal and professional capacity, including some ‘top’ London Companies. In all of those dealings I have never found anyone as proactive and so willing to offer help and advice as Jamie Dobbs. During the last two years Jamie guided my parents through the completion of Lasting Powers of Attorney. Helped myself with the use of the LPA and recently dealing with Probate and Estate Administration following their death.

Mike Pepper MA

This is the second time we have used Mike Pepper at Maples Solicitors in the sale of our house. We cannot praise Mike enough for the highly efficient and professional service that he has provided us with. He is by far the best solicitor we have ever worked with, and the service that he has provided us with has gone far and beyond anything we have ever experienced. We have found the whole process to be a very relaxing experience.

Claire Smith FCILEx

Claire Smith has been amazing in every way. I highly recommend her and I am so grateful for all her help. She’s professional on all levels, reliable, extremely organised and I will be recommending her to everyone. I’m very lucky to have had her representing me and I can’t thank her enough. She is an asset to Maples. Thanks so much Claire!

Anita Zaborniak

We found it a pleasure to deal with Anita Zaborniak, she was most helpful and informative and kept us up to date with the progress of the purchase of our new home. If we were to move again we wouldn’t hesitate to use Maples again.