Employee ownership: Government calls for evidence

The Government is seeking views on how a right to request employee ownership could work, as it looks to “knock down the barriers” that prevent businesses from following the likes of John Lewis.

Deputy Prime Minister Nick Clegg and employment relations minister Norman Lamb announced at a summit at the Institute of Chartered Accountants yesterday that the Government will act on recommendations put forward in the Nuttall Review of Employee Ownership and introduce a number of measures to promote the benefits of employee ownership in the private sector.

As part of this, the Government will launch a call for evidence on the introduction of a right to request employee ownership that will examine what the minimum number of employees needed to make a request should be; what fair grounds for turning down a request could be; whether or not requests should be allowed at any time; and whether the best way to achieve this is through a new statutory right or another mechanism.

Alongside this, the Government will introduce an independent institute for employee ownership, which will provide information and advice to managers, employees, lawyers, ministers and others; and it will put together off-the-shelf “DIY packs” to help companies deal with the legal and tax issues involved when becoming employee-owned.

It is hoped that the measures will help tackle three main barriers to the creation of employee-owned businesses identified in the Nuttall review: a lack of awareness; a lack of resources; and perceived or real legal, tax and regulatory complexities.

Clegg commented: “Employee-owned firms have lower levels of absenteeism, higher productivity and growth rates and smaller gaps between the pay at the top and ordinary workers. But if we want to make employee ownership a larger slice of our economy, we have to make it simpler.

“These are important steps to help get employee ownership into the bloodstream of the British economy. We won’t stop there and it won’t happen overnight but, at last, we are on our way.”

The Government will be publishing a formal response to the Nuttall review in the autumn, which will set out an action plan for implementing its recommendations.

The Nuttall Review of Employee Ownership is available here.

Further details on what the right to request employee ownership would entail can be viewed on XpertHR.

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