Employee Shareholder Advice

With effect from 1 September 2013, the Government introduced a new employment status, referred to as ‘employee shareholder’ status.  This is a tax efficient way for employees to share in the growth and success of their employers.

Individuals accepting employee shareholder status will give up certain employment rights in return for shares in their employer or its parent which benefit from exemptions from capital gains tax (CGT).

The legal requirements regarding this new employment status are relatively complex and there are strict rules regarding how employee shareholder status should be implemented. These rules include a requirement that those individuals receive independent legal advice at the company’s expense.

As such, it is vital for companies and prospective employee shareholders alike that the relevant corporate, tax and employment law requirements are complied with to avoid complex and costly problems later on.

Teacher Stern is one of the leading advisors in the UK on employee shareholder mattes having advised on a large percentage of the schemes put in place in the UK.

We can advise both companies and individuals who are considering employee shareholder status on the implications of employee shareholder status for them and assist in any negotiation of the terms of an employee shareholder agreement. On employee shareholder matters, we work closely with members of our corporate team who regularly draft and advise on the constitutional and corporate documents necessary to create the employee shareholder structure and issue shares to employee shareholders.

Representative Employee Shareholder Advice Work

Examples of our employment team’s employee shareholder work include:

  • Advised 40 senior employees in a large multinational on the terms on which they were offered the opportunity to become employee shareholders of their employer.
  • Advised numerous senior management teams of companies acquired by private equity firms on offers of employee shareholder status.
  • Working alongside City law firms who regularly recommend us to provide independent statutory advice to employees of their clients on employee shareholder matters.

Key contacts:

Photo of James Baker

James Baker

Partner Employment
Home 37 – 41 Bedford Row London WC1R 4JH United Kingdom Tel: +44 (0) 20 7611 2349


James qualified as a solicitor in 1997 and is Head of Teacher Stern’s Employment practice. He regularly advises a wide variety of clients ranging from large multi-national companies to senior executives. James has, along with Teacher Stern’s employment practice, been listed in the Legal 500 Directory where he has been described as a “real star”.

Along with the other members of the employment team, James has spent many years developing close relationships with clients and regularly advises on all aspects of employment law. These range from “day-to-day” employment issues to more stand-alone matters such as collective consultation on redundancies and high value employment tribunal and high court cases.

James has expertise and experience in dealing with restrictive covenants, employee competition and the protection of confidential information, as well as the employment aspects of business sales and staff transfers (including the regulations governing transfers of undertakings in the UK). He has particular sector experience in the financial services arena, and regularly advises regulated businesses and senior individuals on employment law issues.

The firm’s employment team is well-known and respected for its work for senior individuals in relation to the negotiation and termination of employment contracts and restrictive covenant/”team move” issues. James has successfully negotiated for his clients with employers in many different business sectors including with some of the largest financial services institutions.

Representative Experience

James has:

  • Advised a global bank in relation to lengthy disciplinary issues and regulatory investigatory proceedings involving the alleged manipulation of the financial markets.
  • Advised a listed IT services company in relation to the acquisition of its business by a rival company and a subsequent business reorganisation involving collective consultation with trades unions and elected employee representatives.
  • Advised a logistics business in relation to matters including the negotiation of services contracts with customers involving the transfer under TUPE of employees, settlement agreements with senior individuals, disciplinary and grievance matters and data protection issues.
  • Advised a private wealth management business and family office in relation to an Employment Tribunal claim from a former employee including allegations of discrimination, whistleblowing and unfair dismissal.
  • Advised a senior board member of an international bank in relation to a bonus claim and disciplinary investigation into alleged regulatory breaches.
  • Advised an investment management firm in relation to the recruitment of a team of senior employees from a rival business who were subject to restrictive covenants.
  • Advised a recruitment business in relation to the departure of a team senior employees and the removal by them of confidential information and the establishment of a competing business.

Career History

Partner, Teacher Stern

Solicitor, Macfarlanes

Solicitor, Stringer Saul

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37 – 41 Bedford Row London WC1R 4JH United Kingdom