Shares for rights consultation an early Christmas present

Amongst all the miserable weather and the rapid approach of the odious time of year that is Christmas, Guru has been hugely uplifted by the publication of a document entitled “Implementing Employee Owner Status: Government Response to Consultation“.

The BIS is not usually a source of happiness and laughter, but the document delivers in spades. An early highlight is the admission that “a very small number of responses welcomed” the Government’s proposal that employers give employees shares in exchange for rights related to unfair dismissal, statutory redundancy pay, flexible working and training.

The report goes on to reveal that employers feel that the situation regarding different employment statuses is already complicated enough (with “employees”, “workers” and “self-employed”) and that introducing another status (the provisionally named “employee owners”) would just add to the confusion. Furthermore, employers felt that having another set of workers with diminished rights could lead to friction in the workplace.

The report really hits its stride with the consideration of how the buy-back of shares should work. The Government’s spirited suggestion that businesses be able to sack employees who’ve sold their rights and then buy back their shares at rates below market rate was met with “surprise” by employee representatives, who clearly hadn’t even considered that the Government’s proposal might be quite so demented. The report cites their response as “the employee would, in effect, be giving up employment rights for nothing”. Brilliantly, business organisations suggested that employees who leave on good terms get market rate for their shares and that employees who are dismissed (remember: not necessarily for any good reason) get a lower rate. In effect, they have suggested that employees sell their rights for something of indeterminate value, with employers having the discretion to define the final value of the share. That should inspire confidence.

Even better than all this is the general bafflement over how the hell tiny businesses would actually value their shares at all and, then, what say in the management of the business these shares would give the “employee “”owners”" (sometimes there aren’t enough quotation marks in the world), and, indeed, whether employers would really want to give these desperate disempowered workers any say in the running of the business. Law firms helpfully told the Government that it would be very easy for companies to ensure workers with full voting rights actually have no power at all by diluting the influence of their shares.

By this point, Guru was practically beside himself with joy over the collective commonsense of his fellow employers, but the report just keeps giving. In response to the, fairly important, question: “What impact will allowing individuals limited unfair dismissal protection and equity shares have on employers’ appetite for recruiting?” 80% of respondents said it would make no difference and 8% said it would have a negative effect.

A further, related, question asked “What impact do you think the proposal will have on labour market flexibility – that is, in relation to hiring and letting people go?”. To this hopeful question 54% said it would have no effect at all and… wait for it… 25% said it would have a negative effect. One-quarter of respondents said the measure would have a NEGATIVE effect on the very thing it was introduced to improve. The Government may as well have been suggesting adding whiskey to drinking water to curb alcoholism.

It really is an amusing read, and Guru recommends that everybody finds time to look over it. The message Guru takes from the document, possibly rather sentimentally, is that both employers and employees regard employment rights as, well, rights. There really does not seem to be a general appetite to meet business challenges by encroaching on the dignity and security of employees. Furthermore, businesses are telling the Government that the scheme won’t actually work and that it is confusing and impractical for most businesses.

So, essentially, the Government has proposed an immoral and unethical monetisation of hard-fought rights that in the minds of employers will not solve any problems. It’s a damning verdict for the Government – but an early Christmas present for the rest of us.