Employment status

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Employee shareholders

An employee shareholder is someone who works under an employment contract and owns at least £2,000 worth of shares in the employer’s company or parent company.

Employment rights

Employee shareholders have most of the same employment rights as people who are workers and as people who are employees.

They also have the right to collective redundancy consultation and transfer of undertakings (TUPE) - this protects the employee’s terms and conditions when the business is transferred to a new owner.

Employee shareholders do not have these rights:

  • protection against unfair dismissal - apart from dismissal on grounds of discrimination and in relation to health and safety
  • statutory redundancy pay
  • the right to request flexible working - except in the 2 weeks after returning from parental leave
  • certain statutory rights to request time off for training

Employee shareholders must give 16 weeks’ notice if they want to come back early from:

Employers can choose more generous employment rights than the statutory ones.

Tax relief and obligations

Employee shareholders can get tax relief on the first £2,000 of shares they get before 1 December 2016.

Employee shareholders must pay tax on buying and selling shares.

HM Revenue and Customs (HMRC) has further guidance on tax relief for employee shareholders.

Applying for employment shareholder jobs

Anyone can apply for an employee shareholder job.

People claiming Jobseeker’s Allowance do not have to apply for an employee shareholder job that Jobcentre Plus have told them about.

Existing employees do not have to accept a change to an employment contract to become an employee shareholder if they do not want to.

Offering employment shareholder status

Employers must following certain rules when offering employment shareholder status to their employees.

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Part of Get your business ready to employ staff: step by step

  1. Step 1 Decide what type of employee you need

    1. Check whether you need full time or part time staff
    2. Check the different types of employment status

  2. and Check you can afford to take on employees

    1. Check how much the National Minimum Wage is
    2. Find out how much National Insurance you need to pay for your employees
    3. Check how much sick pay your employees are eligible for
    4. Check how much you need to pay towards your employee's pension
    5. Check how much Maternity Leave you need to pay your employees
    6. Check how much Paternity Leave you need to pay your employees

  3. Step 2 Make your workplace safe and accessible for employees

    1. Prevent discrimination
    2. Make your workplace accessible for employees with disabilities or health conditions
    3. Keep employee information and data safe
    4. Fire safety
    5. Health and safety

    You also need to make checks when you recruit and employ someone.

    1. Find out what you need to check when you employ someone

  4. Step 3 Register as an employer and set up PAYE

    You need to register with HMRC so you can pay tax and national insurance for your employees.

    1. Register as an employer and set up PAYE
    2. Choose how to run payroll
    3. If you decide to run payroll yourself, choose payroll software

  5. Step 4 Check your responsibilities around workplace pensions

    1. Understand your pension responsibilities as an employer

  6. Step 5 Get Employers' Liability insurance

    1. Find out about Employers' Liability insurance

  7. Step 6 Recruit and employ staff

    1. Employ someone