Shares for rights

The government has confirmed, in its response to the consultation on implementing employee owner status, that it will press ahead with its controversial “shares for rights” proposals.

It is planned to allow employers to offer between £2,000 and £50,000 worth of shares in their company, free of capital gains tax, to an employee in return for that employee agreeing (i) to give up rights in respect of unfair dismissal, redundancy, flexible working, and time off for training, and (ii) to provide 16 weeks’ notice of a firm date of return from maternity or adoption leave (instead of the usual eight).

The government is pressing ahead despite acknowledging that ‘a very small number of responses welcomed the scheme’. According to the published summary of consultation responses:

  • only three out of 184 respondents (two individuals,and one a small business) confirmed that they would take up the new status;
  • 87 of those 184 respondents either said the question was either not applicable to them, or did not give a view either way, although the breakdown between those two responses is not clear;
  • a large majority (146 respondents) took either a negative (57%) or mixed (35%) view of take-up of the policy by companies and individuals.

In particular, there was a lack of support from respondents for removing:

  • unfair dismissal rights: the majority of respondents felt this was of no benefit to companies, or that any benefit would be outweighed by costs;
  • statutory redundancy pay: most felt this would have no impact or a negative impact on businesses;
  • maternity leave notice period: of the majority who cited possible impacts, responses focused primarily on disadvantages for employers, for example being less able to attract women recruits;
  • right to request flexible working: respondents were not asked about the impact of this change, only whether they felt four weeks was the right period. Respondents noted that this proposal contradicts the proposal to extend the right to request flexible working to all employees; and
  • right to request time to train: the majority opposed removing access to right to request time to train. However, a significant number (30%) felt it would have little effect, given the right was used only infrequently by employees.

For further information and advice please contact our Commercial team – commercial@blasermills.co.uk