Govt to ignore repeated calls to scrap shares for rights plans

24 April 2013

Business Minister Michael Fallon has made it clear that the government does not intend to listen to strong and repeated calls – not only from workers, but also from employers and the House of Lords – to scrap its plans to introduce a shares for rights scheme.

The proposed programme would see workers giving up their fundamental rights to redundancy pay, to claim unfair dismissal, and to request flexible working and training, in return for shares in their organisation, which it has argued may be of negligible value.

Having been introduced to the Growth and Infrastructure Bill as Clause 27 late last year, the plans have already been voted out in the House of Lords twice, and twice MPs have voted it back in.

On Monday (22nd April), 265 peers showed opposed the proposals, while 221 supported their inclusion in the Bill. Shadow Treasury Spokesperson Lord Adonis highlighted that the duty of the House was to ensure that poorly reasoned policy was either improved or removed before it entered law, not to “dilute to entitlements of the workforce, without which there will be no growth and no recovery in this country”.

The next day, when the vote returned to the House of Commons, Shadow Competitiveness Minister Ian Murray argued the shares for rights scheme is “worse than Beecroft and goes to the heart of what this ideologically driven government are all about”.

“How it can it be right to give up the right to a redundancy payment at the same time as the shares may not be worth anything at winding up?” he added.

Mr Fallon claimed that the government had ensured the voluntary nature of the scheme by legislating to protect jobseekers from having their benefits sanctioned for not accepting a role using the programme if they did not wish to give up their rights. He also pledged that the government would not allow the scheme to be used for tax avoidance purposes.

Following the second rejection of the scheme by the Lords, two new amendments were made to the Clause 27. One of these states that a company using the programme must provide affected workers with a written statement of particulars making it clear which rights they will lose and which they will retain, as well as whether the shares they receive in return come with voting or dividend rights, whether the worker may sell them, whether they can be bought back or redeemed, and whether there are any restrictions to the shareholder. The statement must be provided before the worker begins in their job and is separate from that which is already required under the Employment Rights Act 1996. Workers will also be provided with a ‘cooling off period’ of seven days after signing up to become a so-called ’employee owner’.

The Guardian also reported that George Osborne – of whose conference party speech the shares for rights policy was a centrepiece last year – offered the Lords a commitment that all potential participants in the programme would be offered independent legal advice. Another amendment under consideration is that businesses would not be able to make the scheme a requirement for all members of staff, the newspaper stated.

But Mr Murray pointed out that there was still a risk an employer would rescind their offer of a job if a potential employee refused to sign their rights away.

After being voted back into the Growth and Infrastructure Bill by 265 votes to 221 in the Commons, the scheme will now be debated again the House of Lords.