The Employment Appeal Tribunal (EAT) in the case of Nosworthy v Instinctif has held that 'bad leaver' provisions forcing an employee to up a shareholding were not a penalty or unlawful deduction from wages.
Miss Nosworthy was given a 2% shareholding in her employer as a condition of its sale to Instinctif Partners Ltd. Under a Share Purchase Agreement and the Articles of Association the shares of a 'bad leaver' were reacquired. A bad leaver included someone who voluntarily resigned. Miss Nosworthy resigned and had to transfer her shares. Under the Articles her shares were valued at acquisition cost, a total of £143.
An Employment Tribunal ruled the bad leaver provisions were neither unconscionable, nor a penalty, and nor was the forced share transfer an unlawful deduction from wages. The EAT has now upheld the decision.