Loss of shares and Pension contribution due to employer
Discussion
A colleague in work signed up to the company share scheme approximately 5 years ago, it has since emerged that due to a company error he wasn't enrolled in the scheme until 5-6 months after he originally signed up. He became eligible via promotion and it turns out the company entered his payroll number into the system wrong and his share contribution and pensions contribution didn't start until an error was noticed that half year later.
Employer has effectively admitted fault and rectified the pension error but not the share error as they say they are tied by a tax law and plus the share price and exchange rate is vastly different to 5 years ago, they are now probably worth about 3 times as much as those 5-6 months he missed out on so he is in the mid to high four figures worse off than his colleagues.
Where does he stand on this legally? does he have a case to argue with the employer for recompense similar to what the shares are worth today as it wasn't his error that led to this..?
Employer has effectively admitted fault and rectified the pension error but not the share error as they say they are tied by a tax law and plus the share price and exchange rate is vastly different to 5 years ago, they are now probably worth about 3 times as much as those 5-6 months he missed out on so he is in the mid to high four figures worse off than his colleagues.
Where does he stand on this legally? does he have a case to argue with the employer for recompense similar to what the shares are worth today as it wasn't his error that led to this..?
The Leaper said:
Why has it taken the employee/colleague 5 years to realise something was wrong with the administration of the share scheme as far as he was concerned?
R.
Can't sell them for 5 years (at least not without paying tax on the sale & losing any matched shares the company bought you), Company hadn't set up an online share portal during that time so that employees could monitor their shares. So nobody paid them much interest knowing you couldn't sell any without paying tax. R.
briangriffin said:
The Leaper said:
Why has it taken the employee/colleague 5 years to realise something was wrong with the administration of the share scheme as far as he was concerned?
R.
Can't sell them for 5 years (at least not without paying tax on the sale & losing any matched shares the company bought you), Company hadn't set up an online share portal during that time so that employees could monitor their shares. So nobody paid them much interest knowing you couldn't sell any without paying tax. R.
Btw (from memory) these share option schemes need to be available to ALL employees AFAICR so it's odd that he only became entitled to them on promotion.
elanfan,
I disagree. OP must accept some responsibility. He was a member of a presumably valuable scheme and yet he seemed to show no interest in making sure all was managed on a proper basis. Of course, if the employer has not implemented and maintained the scheme correctly they need to put things right but OP will not necessarily get any form of compensation and he will certainly be responsible for paying any past contributions that were due.
This can escalate to the grievance procedure and on to an employment tribunal if still unresolved.
R.
I disagree. OP must accept some responsibility. He was a member of a presumably valuable scheme and yet he seemed to show no interest in making sure all was managed on a proper basis. Of course, if the employer has not implemented and maintained the scheme correctly they need to put things right but OP will not necessarily get any form of compensation and he will certainly be responsible for paying any past contributions that were due.
This can escalate to the grievance procedure and on to an employment tribunal if still unresolved.
R.
elanfan said:
It's their problem not his and they need to put him in the same position he would have been. They can pay any tax hit and just buy him the equivalent number of shares. He needs to make an official complaint via the Greivance procedure
Not sure why it's their problem tbh. It's not a compulsory payment. It's a perk that Employees can opt in to. If the payments hadn't been taken from his pay it should have been clear to OP that they hadn't put him into the scheme and he should have said something.Mattt said:
Did he have money deducted from his payslips?
I'm not 100% sure on that I'd have to ask him, he didn't technically work for the company when he had a promotion he was a contractor even though the promotion was basically him qualifying out of an apprenticeship and he'd have been doing the job for a few months unsupervised before finishing the apprenticeship. briangriffin said:
I'm not 100% sure on that I'd have to ask him, he didn't technically work for the company when he had a promotion he was a contractor even though the promotion was basically him qualifying out of an apprenticeship and he'd have been doing the job for a few months unsupervised before finishing the apprenticeship.
If he didn't work for the company how did he sign up to the Company's share scheme?Mattt said:
Did he have money deducted from his payslips?
Ok so he originally sent off his details ready for deductions to start on October, He noticed in December that the deductions were not showing on his pay slip, he queried this with HR and was told they would start again for December payroll if possible, he noticed that they didn't and queried again in January, they stated again that the deductions should be in January payroll, again they were not and he quereied again in February. Therefore his contributions didn't start till March and he missed out on 5 months of the scheme. He then noticed 5 years later when we had direct access to our shares online set up by the company how much those shares he's missed out on are now worth by comparing with a colleague.
Employer has in a way admitted the fault of not setting up the purchase due to a clerical error: his payroll number as an apprentice which he used on the form didn't technically exist as he would have been issued with a new number when becoming full time employed he was not aware of this but the contractor dealing with the form submission should have flagged this.
Company backdated his pension contributions because of this but state they cannot share purchase for him to the value because of tax reasons. But I would have thought they can pay him the value of the shares as a form of bonus?
If the company continues to be difficult, your friend should take legal advice and if need be send the company a letter indicating an intention to make a claim for the loss that he has suffered because of the company's mistake. I can recommend a direct access barrister who has the appropriate skill set to advise on this matter (not me - I don't do direct access work). PM me if you would like details.
The Leaper said:
...
This can escalate to the grievance procedure and on to an employment tribunal if still unresolved.
This is not obviously a matter for an employment tribunal. Tribunals have some limited jurisdiction in contractual matters, but if the company doesn't agree to compensate the employee, he would probably have better remedies via a court rather than an employment tribunal.This can escalate to the grievance procedure and on to an employment tribunal if still unresolved.
Breadvan72 said:
If the company continues to be difficult, your friend should take legal advice and if need be send the company a letter indicating an intention to make a claim for the loss that he has suffered because of the company's mistake. I can recommend a direct access barrister who has the appropriate skill set to advise on this matter (not me - I don't do direct access work). PM me if you would like details.
Cheers mate, waiting to hear back from his union ATM to see what they say about it in a legal sense although it's unlikely they'd be able to help him in any legal proceedings they may be able to tell him where he stands so il let him know about your offer. Even if there's no legal obligation I would say there's a moral one especially when the sum involved is significant to him and for them they've probably put more in the bin/the drain today. Breadvan72 said:
If the company continues to be difficult, your friend should take legal advice and if need be send the company a letter indicating an intention to make a claim for the loss that he has suffered because of the company's mistake. I can recommend a direct access barrister who has the appropriate skill set to advise on this matter (not me - I don't do direct access work). PM me if you would like details.
Good to see you back BV72!Mattt said:
Breadvan72 said:
If the company continues to be difficult, your friend should take legal advice and if need be send the company a letter indicating an intention to make a claim for the loss that he has suffered because of the company's mistake. I can recommend a direct access barrister who has the appropriate skill set to advise on this matter (not me - I don't do direct access work). PM me if you would like details.
Good to see you back BV72!
Surely he knew when he finally started making payments that he'd missed out on buying 5 months worth? Why did he not continue to query it then and only now? Maybe it's because he knows the profit on the shares is guaranteed? 
Struggling to have sympathy for him TBH.
Maybe chase it again in another ten years when they're double the price again? Making ~£6k from ~£2k you never invested sounds good to me!
Struggling to have sympathy for him TBH.
Maybe chase it again in another ten years when they're double the price again? Making ~£6k from ~£2k you never invested sounds good to me!
Breadvan72 said:
(2) Any claim would have to take account of the cost of buying the shares, so there would be no freebie.
The shares would have been offered at a certain "strike price" if the strike price 6 months earlier was lower then there would have been a greater profit margin for the OP's mate when the options eventually mature.OP's mate may only just have realised this.
Gassing Station | Jobs & Employment Matters | Top of Page | What's New | My Stuff