15 November 2012

The Growth and Infrastructure Bill entered its Committee Stage in the House of Commons on Tuesday (13 November), with Minister for Business and Enterprise Michael Fallon responding to questions on Clause 23: to implement a new status of worker as employee owner.

Employee owners would be given the option of taking between £2,000 and £50,000 of shares in their company, which would not be subject to capital gains tax. But in order to obtain these shares and thus earn part of the profit they help to make, workers would have to give up critical employment rights including the right to claim unfair dismissal should their employer sack them for no reason or be treated unfairly in the event of redundancy.

Faced with difficult questions, the Minister reminded the house the scheme would be "voluntary" and said he simply does not think it is likely businesses would put pressure on workers to take on the offer of giving up the right not to be unfairly dismissed. We do not share his optimism.

There has been broad opposition to the implementation of employee owner status, with several experts pointing out the wide-ranging problems with the proposal for both workers and employers. Indeed, Fallon admitted that a number of respondents to the recent consultation into the proposal had "opposed it and thought that is would be an erosion of rights".

He attempted to play down this opposition by stating that becoming an employee owner would be "entirely voluntary", but Liberal Democrat MP for Hazel Grove, Andrew Stunell, raised his concerns about whether workers would have any real ability to turn down such an offer from their employers. Fallon responded that he found it "unlikely" a company would set up an employee ownership scheme and then put pressure on workers to accept it.

What of the fact the clause is already being discussed in parliament before an impact assessment has been completed and all consultation responses have been taken into account? Ian Murray, Labour MP for Edinburgh South, asked Fallon whether the Clause would be withdrawn from the Bill if it was found to be widely opposed. This question was left somewhat conspicuously unanswered by Fallon, who simply reminded the House that the scheme would be voluntary and the results of the consultation are as yet unknown.

The IER will continue to keep a close eye on this story as it develops. Sign up to our mailing list on the top left to receive regular updates.

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