Employment rights – would you give them up for shares?

Back in October we published an article on George Osbournes proposal to allow employers to offer shares to employees in return for sacrifing key employment rights.

Amazingly, this week, the House of Lords has backed down in its long battle with the Government over the controversial ‘shares for rights’ scheme, but only after extra safeguards were added to the bill to protect workers from exploitation.

HR Magazine today wrote the following:

Ministers said companies would have to arrange for employees to be given free independent legal advice before deciding to give away some of their employment rights for shares in the company.

That legal advice will cover the terms and effects of the new employment status, including precisely what employment rights will be lost. The advice will also cover the terms and effect of the shareholding including whether they cover voting rights, a right to dividends, the distribution of any surplus assets, the redeemable value of shares and whether they can be sold.

Where there is a cost to the advice, the company will have to meet the reasonable costs, even if the individual does not take up the advice.

The potential employee will then have seven days to decide whether to take up the offer.

The House of Lords had originally rejected the proposal twice, but yesterday voted by 275 to 168 to accept the plans.

We still believe this piece of legislation is inherently wrong. The plan effectively involves workers gambling on their career prospects, by sacrificing their protection against unfair dismissal and other rights in return for profits on company shares which will be free from capital gains tax.

According to the proposal, employees will receive between £2,000 and £50,000 in return for giving up their rights to bring a claim for unfair dismissal, redundancy, and the right to request flexible working and time off for training. New mothers would be required to provide 16 weeks’ notice of a firm date of return from maternity leave, rather than the current eight week limit. However, if you give up your right to flexible working, your rights to decide on your maternity leave or your right to claim unfair dismissal for the sake of owning shares, which lets face it in a recession may or may not be worth the paper they are written on, then it seems to us that you are taking a massive gamble on your family life. For a government that claims to be all about the family, this seems like a massive investment in companies and not in ordinary every day people. So the Government will charge no capital gains tax at all on the profit you make on your shares. Zero percent capital gains tax for these new employee-owners but what happens if you make no profit in the first place and then you are dismissed having had no time to train in order to get the skills to find a new job and with no money to allow you some breathing space whilst you do look for a new job?

For so many parents who are trying to negotiate flexible working patterns with their employers in order to enable them to organise their childcare (which is already so ridiculously expensive in this country) and be back in time to take care of their children, proposing such a policy really seems to be sticking two fingers up at the people who are trying their best to work and have a career. Political parties talk about the “squeezed middle” and looking after those who are really feeling the pinch in these economic times but taking away their rights for the sake of a potential rise in the value of their shares seems at best naive and at worst insulting!