Government ignores feedback on employee owners
Labour & European Law Review Weekly Issue 299 13 December 2012
Despite an overwhelmingly negative response to the idea of “employee owners”, the government has said in its consultation response published last week that it is going ahead with the proposal anyway.
Although interested parties were only given three weeks to reply to the consultation on employees swapping rights for shares in their employer’s firms, 209 organisations responded.
Even the government had to admit that of those, only a “very small number” welcomed the scheme. Most raised a number of concerns, including the fact that individuals would lose important employment protections and might be coerced into taking on employee owner status against their will.
Of the 184 respondents who replied to the question “would you be likely to take up the new status”, only three said they would do so. Two of these were individuals and one was a person representing a small business.
Of the others who replied, 85 were negative or had a mixed response, representing 92 per cent of respondents to that question. They said they were concerned about the additional administrative burden of having another employment status to deal with and the lack of clarity regarding the valuation of shares when employees leave and join the company.
Although the whole idea behind the new employment status was ostensibly to enhance “labour market flexibility”, the majority of respondents said the effect would either be negligible or could even be negative. Those who predicted a negligible effect cited limited take-up (especially among small employers) as the main reason. Of those who predicted a negative effect, most said that recruiting staff would be made more difficult.
However, despite all the evidence to the contrary, the government still insists in the consultation response that the new employment status is a “novel way for companies to arrange their workforce, and builds on the already flexible labour market enjoyed in the UK today”.
Its only concession to the negative feedback seems to be a decision to provide further clarity – both through guidance for individuals and businesses and through the legislation which underpins the new status.
The government has also reflected on the employee owner name, and decided to re-name it employee shareholder.
Visit our Briefings and responses section to read Thompsons’ response to the consultation.