As was reported in our April E-news the House of Lords voted in March to strike down clause 27 of the Growth and Infrastructure Bill, which is the clause introducing the concept of employee shareholders.

Earlier this week the House of Commons voted to reinstate clause 27 of the Bill with 277 votes in favour and 239 against reinstatement.

Under an employee shareholder contract an employee will receive at least £2,000 worth of shares in their employer in exchange for surrendering certain employment rights, such as the right to a statutory redundancy payment and the right not to be unfairly dismissed (except in health and safety cases, automatically unfair cases, or cases where the dismissal is discriminatory under the Equality Act 2010).

The House of Lords had voted for the removal of clause 27 due to concerns over employees being encouraged to give up their employment rights, in particular as employers are often in a better negotiating position than employees. Lord O'Donnell asked, "In the old days the price of slavery was 20 or 30 pieces of silver - is it now £2,000?" However, despite there being little enthusiasm for this change from employers or employees, the Coalition are clearly determined to introduce employee shareholder contracts, which they believe will benefit individual employees as well as the wider economy.

Before clause 27 was struck out by the House of Lords, the Chancellor had indicated that the employee shareholder status would be introduced on 1 September 2013. The Bill will now go back to the House of Lords and it will be interesting to see if agreement can now be reached.