Following last night's defeat in the House of Lords, the Law Society has repeated its call for the scrapping of the discredited 'shares for rights' scheme, which allows workers to give up basic employment rights in exchange for company shares.
The proposals to implement a new employee shareholder status are contained within Clause 27 of the Growth and Infrastructure Bill, which is currently in ping pong between the House of Commons and the House of Lords.
The government said the aim of the new status is to boost employee engagement and productivity and to remove the perceived barriers around the fear of being taken to employment tribunal, which the government says is deterring businesses from hiring.
Commenting on last nights defeat in the House of Lords, Law Society chief executive Desmond Hudson said:
'The government needs to drop this misguided policy. Employment Rights are not commodities. It is the universality of their status which helps to create a positive business environment.'
Ends
Notes to editors
In October 2012, the Chancellor of the Exchequer, the Right Honourable George Osborne MP announced plans for a new kind of employment contract called an employee-shareholder.
Clause 27 of the Growth and Infrastructure Bill creates a new 'employee shareholder' status, under which employees will lose certain employment rights, including unfair dismissal and statutory redundancy pay, in return for at least £2,000 worth of shares in their employer. Shares will be subject to income tax at time of receipt, but gains made on the first £50,000 of shares will be exempt from capital gains tax.
As presently drafted the proposals are likely to impose additional costs, in terms of an increased administrative burden and complex company and tax law requirements, that far outweigh any potential saving from reduced employment disputes.
The proposed rights from which employee shareholders will opt out, such as requests for flexible working, may in some cases have detrimental consequences and are incongruent with the government's publically stated objectives.
While the government's new amendment does increase the safeguards in the Bill to limit the possibility that employees will either be coerced in accepting the new status, or will enter into it without full and proper consideration of the possible consequences, these risks still remain.
About the Law Society of England and Wales
The Law Society is the independent professional body, established for solicitors in 1825, that works globally to support and represent its members, promoting the highest professional standards and the rule of law.
Press contact
Catherine Reed
Press Officer
+44 (0)20 7320 5902
Catherine.reed@lawsociety.org.uk