Controversial Shares for Rights Scheme Approved
Twice rejected by the House of Lords, the controversial "shares for rights" scheme will become law in the autumn…
Announced at the Tory party conference in October last year, George Osborne’s "shares for rights" scheme was intended to usher in a new style of relationship between workers and employers.
The Chancellor’s idea was that employees could take share options in their employers’ business in return for giving up some of their employment rights.
Deputy PM, Nick Clegg, welcomed the move, saying that it was a form of "responsible capitalism" and would encourage more business in the style of the John Lewis Partnership where employees take a stake in the success of their employer’s venture.
Shares for Rights Gets Mixed Reaction
The response to the announcement was mixed with the Institute of Directors (IoD) highlighting that it would reduce the burden of employment law on employers.
The Frederation of Small Businesses (FSB) was also positive, looking forward to the details of the sdheme, but urged caution, as did the Confederation of British Industry (CBI) and the British Chambers of Commerce (BCC).
However, the GMB workers’ union was highly critical of the proposals, accising the Government of "slashing employment rights".
The shares for rights bill was then rejected twice in the House of Lords, with one peer even saying that the proposed scheme would "bring out the worst in business and not the best".
Despite the lack of support the government has pushed ahead with the new amended "employee contract" which has renamed "employee-owners" as "employee-shareholders".
The shares must now be fully paid up, free to employees and worth a minimum of £2,000. The ceiling of £50,000 has now been lifted and but up to this level employees will have share free of CGT.
Further ammendments to the scheme include additional safeguards for employees including that they should be priovided with full, written information about the shares they will receive and the rights they will forego, a seven day cooling off period.
Workers will also have to find and and pay their own costs for any independent advice that they receive.
The amendemts to the proposal employees will not be forced into applying or accepting the new terms and existing employees will be protected if they turn down an offer of an employee-shareholder contract.