Employee Ownership: Devil in the detail

The devil is in the detail as they say, and that is what we are waiting for on the Government’s proposed plans to introduce “employee ownership” in exchange for employment rights.

The concept of employee ownership (recently rebranded as “employee shareholders”) is that employees joining a new employer would give up some unfair dismissal rights, rights to statutory redundancy pay and certain rights to request flexible working or training in exchange for “free” shares in their employer with a value of anywhere between £2,000 to £50,000 (although employers can grant shares worth more than this if they chose to do so). The plans will also introduce a provision that any employee shareholders would have to give 16 weeks’ notice to return early from maternity leave as opposed to 8.

As things currently stand, the proposals raise a myriad of questions which will need to be answered before any assessment can be made on the merits of such a scheme for either the employer or the employee. If the existence of employee shareholders fetters a company’s ability to determine its own fate (such as whether to sell) it is hard to see what would attract a company to such a scheme. Conversely, if an employee shareholder’s rights were to be so curtailed as to be meaningless, it is hard to see why an employee would give up their employment protection rights. How the competing issues of either party will be addressed remains to be seen.

We will keep you updated on future developments but it seems that the Government is committed to pressing ahead with these proposals and is aiming to implement the new ’employee ownership’ legislation this coming Spring.

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