EU laws may block rights for shares

Government plans to offer workers a chance to receive shares in their company in return for giving up some of their employment rights could be frustrated by European law, ministers have been warned.

The proposals could also have hidden costs for businesses, according to law firm Pinsent Masons.

The voluntary employee-ownership scheme was announced by Chancellor George Osborne at the Conservative Party conference in Birmingham, involving workers giving up their rights to statutory redundancy pay and protection from unfair dismissal and the ability to request flexible working, in return for between £2,000 and £50,000 worth of shares, which would be exempt from capital gains tax when sold.

Chris Mordue of Pinsent Masons said any rights traded in for shares would be restricted to UK employment law because the Government couldn't allow an opt out from European laws.

"For example, the Government can't use this arrangement to allow employers to escape from restrictions on working hours or obligations to provide paid holiday under the working time directive.

"The Government's ambitions could be frustrated to some extent by European law, or other UK employment laws.

"A woman dismissed for being pregnant would still be able to sue for a discriminatory dismissal even if her right to claim unfair dismissal had been traded in."