Hot Topic: Is George Osborne's 'employee-owner' scheme where workers give up rights for shares a good idea?
Emma Blaney, November 16, 2012
Chancellor George Osborne may have put the cat among the pigeons when he unveiled his proposal for ‘employee-owners’ at the Conservative party conference last month, whereby workers in SMEs and start-ups would give up employment rights on redundancy and unfair dismissal in exchange for tax-free shares in their employer’s company. Would such a scheme inspire staff engagement and enterprise, or might it achieve the opposite, and create a whole new set of unforeseen problems?
From what we have seen so far, I personally think George Osborne's plan is full of holes and risks for employees and employers, and impractical to implement.
For employers, I see it as trying to mirror the US system where there is no right to claim unfair dismissal. Yet the reality is that any disgruntled departing employee finds a way to claim discrimination instead. This is far harder to defend as an employer and has a significantly higher risk involved, not just because of litigation costs, but potential damage to the company's reputation too.
Managers could be lulled into a false sense of security that this group of staff have no protection. This will only make it harder to implement good performance management systems, and result in strengthening any employee's case.
I see, too, individual hiring managers making recruitment decisions based on a candidate's preferences for shares or rights. Getting the right people to fit the role should always be a priority.
And what if people change their minds? What if they take the shares initially, but want their rights back later - perhaps when they start a family or need to support elderly relatives? Before having my children, I would have happily taken shares in return for giving up my right to request flexible working, but that is a priority for my working life now.
I wonder how a private company, let alone a public one, would deal with this situation. As a corporate with a large number of specialist and bespoke roles, we do not have a company-wide grading system. So how will we be able to fairly allocate shares, and how will we deal with our overseas staff?
Yes, this could be ideal for a certain type of employer and employee, and yes, excellent engagement can heighten a company's successes, but we seem to be trying to create legislation with no consideration to how to implement it.
I see this as creating more red tape, requiring additional resources and money, rather than getting UK plc into the black.
Emma Blaney, group HR director at Informa