The Family and Parenting Institute, the Employee Ownership Association and the Chartered Institute of Personnel and Development have claimed that George Osborne’s recently announced plan to create a new employee shareholder status will undermine the Government’s drive to support co-owned businesses and create a family friendly employment environment.
The proposal will damage the credibility of employee ownership schemes and also undermine family friendly employment practice, according to the three organisations.
The organisations have written to ministers expressing opposition to the Government’s plan that would see workers invited to give up hard-won employment rights for shares.
Recent weeks have seen the Government throw its weight behind the findings of the Nuttall review of employee ownership, which highlighted the link between high employment standards and employee ownership. It is also extending rights to request flexible working and shared parental leave to all workers.
But the announcement of an employee shareholder plan – made by the Chancellor in October – flies in the face of these policies. The organisations highlight that:
- Unfair dismissal safeguards are an important bulwark against poor employment practice that help to make most workplaces safe and non-discriminatory, for example preventing ‘sham’ redundancies that mask discrimination or penalise whistleblowers.
- The shares employee shareholders would receive in exchange for reduced employment rights will be of uncertain value. In some cases, where businesses fail, they would be worthless.
- Many employees will have little choice but to accept an employee shareholder contract, either because it is the only contract they are offered when job hunting or because they are in receipt of Jobseekers Allowance and are required to accept reasonable offers of employment or face benefit sanctions.
- A number of other organisations, including family charities, the Law Society and the Equality and Human Rights Commission have criticised the Government’s plan.
The government is moving to rush the new status into legislation and is receiving its third reading in Parliament on December 17.
Iain Hasdell, CEO of the Employee Ownership Association, said: “There is no need to dilute the rights of workers in order to grow employee ownership and no data to suggest that doing so would significantly boost the number of employee owners. With UK employee ownership growing and the businesses concerned thriving, the return on investment for Government would be dramatically higher if the estimated £100m of cost associated with these proposals was more wisely invested in initiatives to increase employee ownership in the UK.”
Peter Grigg, Director of Research and Policy at the Family and Parenting Institute, added: “The government deserves great credit for looking at the evidence and extending the right to request flexible working and shared parental leave to most employees. We are therefore mystified why the government has insisted on taking forward such a clearly flawed plan that flies in the face of what it is doing elsewhere. The government has a pro-growth and family friendly employment policy and should stick with it.”
Read the full Employee shareholder briefing.
Letter to Deputy Prime Minister