Osborne's 'employee-owner' proposal gets mixed reaction

Posted by Richard McKenna

Proposals made by chancellor George Osborne to allow workers to swap employment rights for shares in their company have been met with mixed reaction from business leaders, legal experts and trade unions.

Mr Osborne unveiled the 'employee-owner' contract scheme at the Conservative Party Conference in Birmingham on Monday (October 8th).

Under the proposals, employees will receive shares in the company they work for, worth between £2,000 and £50,000, in return for giving up a number of rights, such as being able to bring a claim for unfair dismissal, receive redundancy pay, and the right to request flexible working and time off for training.

According to Mr Osborne, this will help remove the burden of red tape placed upon employers and so encourage them to take on more staff, while at the same time making employees better off.

But the plans have met with strong opposition from several quarters, with critics claiming that, among other things, they could lead to cases of workplace discrimination.

Stephen Simpson, senior employment editor at XpertHR, told Personnel Today: "For example, a company in a male-dominated sector offers this contract to a female job applicant, who accepts after the company indicates that it prefers staff to be on this contract. She later finds out that the (mostly male) workforce hasn't historically been offered this contract.

"The company would have quite a job showing in any subsequent tribunal proceedings for sex discrimination (which could still be claimed) that the employer hasn't made assumptions that female staff are more likely to request flexible working."

Brendan Barber, general secretary of the TUC, also attacked the proposals, but questioned whether many businesses would be attempted to take up the scheme.

"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," he said.

However, Mr Osborne's plans have received backing from some of those in the business community.

For example, Simon Walker, director general, Institute of Directors (IoD), commented: "The IoD applauds [Osborne's] innovative proposal on employee ownership, which could make a real difference to jobs and shareholding."