Ministers said companies would have to arrange for employees to be given free independent legal advice before deciding to give away some of their employment rights for shares in the company.
That legal advice will cover the terms and effects of the new employment status, including precisely what employment rights will be lost. The advice will also cover the terms and effect of the shareholding including whether they cover voting rights, a right to dividends, the distribution of any surplus assets, the redeemable value of shares and whether they can be sold.
Where there is a cost to the advice, the company will have to meet the reasonable costs, even if the individual does not take up the advice.
The potential employee will then have seven days to decide whether to take up the offer.
The House of Lords had originally rejected the proposal twice, but yesterday voted by 275 to 168 to accept the plans.
The scheme was first proposed by chancellor George Osborne, at the Conservative conference last autumn. It has been heavily criticised by Labour and the Liberal Democrats and by some business groups as a passport for unethical employers to exploit their workforces.
Under the proposals a new owner-employee contract could be offered by employers to staff, giving them shares worth between £2,000 and £50,000.
In return they would lose rights including unfair dismissal, redundancy, training rights and the right to flexible working.
Richard Fox, head of law firm Kingsley Napley's employment department said this method of going from the House of Commons back to the House of Lords is the usual way to put through "important reforms in the hugely sensitive world of employment law" and offering free legal advice will represent "a challenge" for many small businesses.
He told HR magazine: "The radical and wholly untrumpeted policy was only announced on October 8th 2012 and given a three week consultation period.
"The Government had not begun to think through all the ramifications and certainly had not canvassed opinion from employment lawyers beforehand. That came afterwards. And numerous issues had been overlooked.
Fox added: "Now we have a whole series of changes cobbled together at the last minute. Just who are the lawyers these employees are going to take advice from? Employees will in the future need to have ready access, not only to specialist employment lawyers who can set in context the rights being surrendered, but also lawyers with expertise in shares in all their different forms and in tax (both CGT and income tax)."
Former cabinet minister Lord Adonis said that although the changes made the proposals "somewhat less objectionable", Labour still strongly disagreed with the whole concept.
Adonis said that the "scope for tax evasion was all too easy to envisage".
He added: "That is going to be quite a challenge for some of the smaller firms up and down the country that do not necessarily hold all of this expertise in house - far less in one and the same person."
The Office for Budget Responsibility has warned that the new shares scheme could lose the Government £1 billion in revenues due to loss of capital gains tax.
