After rejecting the proposals twice, the House of Lords last week voted in favour of the plans, which will see workers give away employment rights in exchange for receiving shares between £2,000 and £50,000 in their company.
Tom Flanagan, head of employment law at law firm Irwin Mitchell, has described the decision to pass the measures as a "worrying step" which, despite approval from Westminster, is "unlikely to find the same favour with either workers or their employers".
"The 'ping pong' process which this legislation has been through in the Lords and Commons highlights the divisive and troublesome nature of the key measures in this bill," he said.
"However, the fact it has been passed by the House of Lords may now set a dangerous precedent."
The bill was passed but extra safeguards were added to the bill to protect workers from exploitation. These include:
- A seven day 'cooling off period'
- Employers must provide a written statement with full details about the shares and the rights they carry
- Any jobseeker who refuses the offer would not forfeit social security benefits
- The first £2,000 of shares would not attract income tax
- Existing employees will be protected from detriment if they refuse to switch
Flanagan said: "It seems evident there is a drive to establish a principle, that universal statutory employment rights are able to be eroded in this way.
"The rights that can be removed by this Bill are something of a 'hotchpotch'. The common thread appears to be they are UK law rights and not ones which emanate from Europe."
James Hall, associate at law firm Charles Russell, said: "It is interesting to view the determination of the Government to push this new status into being within the wider context of the current trend of watering down employees' rights.
"Given the fact that there is seemingly little interest from employers or employees in this new status, a cynic might say this recent move is simply the latest step in removing the traditional employment contract altogether."
