At this year's Conservative Party conference George Osborne announced radical new proposals to allow employers to offer employees shares in exchange for sacrificing their rights to unfair dismissal claims, redundancy packages, restrictions on maternity leave and requests for flexible working.
As employment lawyers, the old adage ‘don’t talk about sex, religion or politics’ simply doesn’t apply: it’s all we talk about. I’ll leave sex and religion to others for now and concentrate on politics. Some may disagree (as evidenced by an open letter to the Telegraph by a small group of entrepeneurs) but, in my view, this proposal is pointless, ill-considered and counter-productive.
For a start, it is supposedly aimed at fledgling businesses which are, by their nature, unlikely to have tradeable shares. They are also not going to want to spend money obtaining formal share valuations or drawing up shareholder agreements. Finally, they are businesses that can ill afford to get involved in shareholder disputes as well as employment disputes. For that will surely happen.
If the Government wants to erase unfair dismissal rights (which must be the main target here) it should just do so and face the consequences. The qualification period for unfair dismissal rights has already been moved to two years so this proposal, which purportedly panders to business, looks even more ill-conceived.
Understandably, even small businesses appear not to support the proposal, with nearly three quarters of those asked in one recent survey thinking it is a bad idea. As an indication of how some big businesses feel, Justin King, the chief executive of Sainsbury’s, has publicly voiced his scepticism about the idea.
The proposals seem fundamentally flawed. As mentioned above, share issues in small companies can be very tricky which often means costly. There is, of course, no signing away discrimination or whistle-blowing rights so businesses will still have those claims (and possibly more of them as fewer employees qualify for the protection from unfair dismissal). Perversely, the largest businesses (with established share schemes) would, in fact, be best placed to benefit from this proposal but it is expressly not aimed at them.
For now, politics over and I will return to sex and religion in future issues: unless this becomes law of course…