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Osborne proposes company shares in exchange for employment rights

Posted by simontoffel on November 8th, 2012

In news that will interest clients of human resource consultants, Employee Management Ltd (http://www.employeemanagement.co.uk), and as previously mentioned on their blog, the Government has proposed that employees who agree to give up various employment rights could soon be offered shares in their company.

At the annual Conservative party conference, George Osborne stated:

“Today we set out proposals for a radical change to employment law. You the company: give your employees shares in the business. You the employee: replace your old rights of unfair dismissal and redundancy with new rights of ownership.”

“And what will the government do? We’ll charge no capital gains tax at all on the profit you make on your shares. Zero per cent capital gains tax for these new employee-owners. Get shares and become owners of the company you work for.”

Of the many employer clients of EML’s HR services, the Chancellor suggested that the new John Lewis-style staff contract would be best suited to small to medium sized companies and new start-up firms.

However, the plans are viewed with scepticism by the Chartered Institute of Personnel and Development (CIPD), who point out that according to the Government’s own research, unfair dismissal was not among the top ten regulations that deterred small businesses from taking on new employees and that there were few indications that small businesses were being prevented from recruiting staff by employment legislation.

It is unclear how attractive sacrificing employment rights in return for shares will be to prospective employees of SMEs and whether it will produce the motivated, high performance workforce that small firms need to succeed. Businesses heralded as leading examples of employee ownership have tended to be base their success on cultures of trust, engagement and collective focus rather than reduced job security.

Indeed, Chief executive at Working Families, Sarah Jackson, warned that employers were unlikely to enjoy the “highly motivated, engaged workforce” they required as a result of offering such employee ownership contracts. She said that she would be “alarmed” if it was necessary for jobseekers to accept such offers, given that “we don’t think these would be reasonable jobs for many people to accept”.

Employee Management Ltd (http://www.employeemanagement.co.uk) will keep you informed of the latest news relating to the Chancellor’s plans. In the meantime, why not get in touch with us to find out more about how our employment law services can help your company to comply with the full range of current legislation?