Labour Shares
A Labour Share is a share owned by a member who invests labour in the Company or Co-operative, entitling her or him to participate in governance and receive a share of the surplus. For the purposes of clarity, any person recognised in UK Employment law as a ‘worker’ will qualify for Labour Shares.
From Version 3.0, the FairShares Rules Generator allows Labour Shares to be renamed to 'Employee Shares', 'Producer Shares' or another label of the Founders' choosing. Their characteristics are identical.
Labour Shares are defined in Clause 10(ii) as follows:
- Labour Shares: issued at par value to natural or legal persons who invest remunerated labour in proportion to their labour contribution; non-transferable; one vote per shareholder at General Meetings (as defined in Clauses 23 and 24); forfeited on holder's death, bankruptcy or insolvency; cancelled upon cessation of contracts to provide labour; cancelled without payment on winding up.
Like User Shares, the model rules suggest that a person should only be issued a Labour Share if they have made a Qualifying Contribution as defined by members in General Meeting. This prevents having to issue shares for short term contracts, and also permits the issue of shares to self-employed contractors and suppliers who enter into long-term supply relationships.
The number of Labour Shares becomes important when surpluses are generated. In companies and cooperatives it determines both the share of surplus distributed as a cash dividend, and the number of Investor Shares (Member Shares) that are distributed to represent Labour Shareholders' ownership of the company's assets. In associations and partnerships, it determines the share of surplus the Labour members control (individually), but can be spent only on social investments of the members' choice that are consistent with the objects of the enterprise.
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