Workers of the world unite

Earlier this week, George Osborne the Chancellor of the Exchequer made his speech to the Conservative Party conference.  You may just have heard about it (!), you may have seen it, and/or you may have seen the subsequent explosion of opinion and comment in the press and via social media.  The part of his speech that made the headlines came right at the very end where he outlined in broad terms a proposal for a new type of employment contract for so-called “employee-owners”.

The speech was a little light on detail, there was a little more in the BIS press release which was published at the same time.  The aim of this post is to set out:

  1. What George said
  2. What the press release says
  3. What some interested parties have said, so far, and what I think.

As regards point c., I cannot possibly mention all of the people within the #ukemplaw community who have tweeted and blogged about the topic so far, there will be much more to come when the consultation paper is published.  If you want to see what people are saying, use the Twitter hashtags #ukemplaw, #rights4shares, #sharesforrights (please comment below if I have missed any other variations and I will edit the post accordingly).  You can also look at barrister Anya Palmer’s round up of tweets on Storify (link here)

So here goes:

George said:  “It’s a voluntary three way deal.”

BIS says: “..both established companies and new start-ups can choose to offer only this type of contract for new hires” (my emphasis)

Ruth Waldram (@Ruth_UU) tweeted: “sadly I .. expect there will be plenty of employers happy to re-organise and re-employ their entire workforce”

Daniel Barnett (@daniel_barnett) tweeted: “wrong if employees given no choice and forced to waive employment rights as condition of recruitment…”

George said: “You the company: give your employees shares in the business.”

BIS says: “employees will be given between £2,000 and £50,000 of shares that are exempt from capital gains tax”

Sean Jones QC (@seanjones11kbw) tweeted: “Loving BIS’s proposal to replace emp rights with shares. ETs replaced with complex valuation disputes and minority s/holder actions in H Ct” (High Court)

Simon Jones (@ariadneassoc) tweeted:  Any experience I’ve had of ESOPs /share option plans have involved far more red-tape than employment law issues..”

George said: “You the employee: replace your old rights of unfair dismissal and redundancy with new rights of ownership.”

BIS says: “In exchange, they will give up their UK rights on unfair dismissal, redundancy, and the right to request flexible working and time off for training, and will be required provide [sic] 16 weeks’ notice of a firm date of return from maternity leave, instead of the usual 8”

Laurie Anstis (@ljanstis) tweeted “..(9) what if it’s a constructive dismissal? (10) will whistleblowing be exempt? (see his Twitter feed for his full list of points)

Benjamin Fletcher (ChiefHROfficer) tweeted: “Goodbye procedural unfair dismissal. Hello valuation disputes, vexatious discrimination cases & costly whistleblowing”

George said: “And what will the Government do?  We’ll charge no capital gains tax at all on the profit you make on your shares.  Zero percent capital gains tax for these new employee-owners.”

BIS says: “The Government Consultation on the employee-owner contract will include the details of restrictions on forfeiture provisions to ensure that if an employee-owner leaves or is dismissed, the company is not able simply to take the shares back but is able to buy them back at a reasonable price”

Daniel Barnett (@daniel_barnett) tweeted: “shares will often be useless..most start-ups fail”

Richard Murphy (@RichardJMurphy) tweeted:  “RT @tonyhatfield: Am I right in reading these provisions as taxpayers helping employers to buy out employment rights? > Yes, you are…”

George said:  “Get shares and become owners of the company you work for. Owners, workers, and the taxman, all in it together.” 

BIS says: “Legislation to bring in the new employee-owner contract will come in later this year so that companies can use the new type of contract from April 2013”

I say:  Where does that sit with the current requirements for individuals to be advised by an independent adviser before compromising out of (sorry.. “settling”) employment rights?  The new contract (on the information available so far) looks to be no more than a front-loaded compromise agreement which, in its traditional format has that safeguard of independent advice as a prerequisite to completing the agreement.  That requirement is of course specifically intended to ensure that individuals know what they are letting themselves in for before signing on the line.  What happens with the new “employee-owner” contracts? If they do not require independent legal advice then it is only a short hop to dispensing with the requirement in traditional compromise agreements, isn’t it?  If they will require independent legal advice before entering into, how does that sit with the intention that this will be a quick way to create a “flexible” workforce.  Who will give the advice?  Employment lawyers? Share schemes lawyers? Corporate lawyers? Tax lawyers?  And who will pay for the advice?

George said:  “Workers of the world unite”

Justin King, Chief Executive of Sainsbury’s said: “This is not something for our business,” … “The population at large don’t trust business. What do you think the population at large will think of businesses that want to trade employment rights for money?”

The Employee Ownership Association said: “We welcome this latest contribution to the debate on employee ownership, but whilst growing employee ownership should be part of the UK’s Industrial Policy, such growth does not require a dilution of the rights and working conditions of employees…”

Brendan Barber, TUC General Secretary said: “We deplore any attack on maternity provision or protection against unfair dismissal, but these complex proposals do not look as if they will have very much impact as few small businesses will want to tie themselves up in the tangle of red tape necessary to trigger these exemptions.”

John Cridland, director general of the CBI said: “In some of Britain’s cutting-edge entrepreneurial companies, the option of share ownership may be attractive to workers, rather than some of their employment rights. But I think this is a niche idea and not relevant to all businesses.”

Simon Walker, director general of the IOD said: “The IoD applauds [Osborne’s] innovative proposal on employee ownership, which could make a real difference to jobs and shareholding. This scheme has the potential to reduce the employment law burden on companies and make employees better off at the same time. The key to the success of the idea will be in encouraging employers and workers to make use of it.”

I say: “I don’t think this is going to make that happen, George”

Comments very welcome as always!

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One Response to Workers of the world unite

  1. Pingback: Change for change’s sake | teagoemplaw

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