Commentary on Sections Example 3 Ne = £5,000; Da = 183; De = 183; Smg = 0 Section 535: Disqualifying events relating to employee
2172.This section sets out the disqualifying events that can occur in relation to an employee. These result in the share option held by that employee ceasing to qualify under EMI. It derives from paragraphs 47(1) (part), (3), and 52(1), (2) and (6) of Schedule 14 to FA 2000 and relates to provisions in Schedule 5 to this Act. It picks up on some new expressions introduced in paragraph 26 of that Schedule to set out more clearly the requirement on working time.
2173.First there is the employment requirement in subsection (1)(a). Next, under subsection (1)(b), there is a disqualifying event if, on the facts of the arrangement between employer and employee (usually the contract), the employee ceases to meet the requirement as to commitment of working time, contained in paragraph 26 of Schedule 5 to this Act.
2174.Finally, and the different nature of this test is emphasised by the words “in addition” in subsections (2) to (5), there is what is known as the “working time rule”. This takes into account the time actually spent by the employee on work in the relevant employment.
2175.The provisions in paragraphs 47 and 52 of Schedule 14 to FA 2000 are cumbersome to operate, do not work satisfactorily in all circumstances and could impact harshly on employees working flexi-time. Under subsections (2) to (5)  there is a much simpler “working time rule”. See Change 130(A) in Annex 1.
2176.There is another minor change to the law in subsection (3). This corrects an omission in the source legislation, by providing a cross-reference to paragraph 26(3) of Schedule 5 to this Act. See Change 130(B) in Annex 1.