Last week at the Conservative Party conference the Chancellor announced a new equity ownership scheme. His proposed scheme, targeted at small companies, is entirely voluntary and cannot be forced upon employees. It would offer employees shares (from £2,000 to £50,000) in their business in exchange for certain employment rights. The shares are Capital Gains Tax free – which if the company grows extremely fast is a valuable offer.
The scheme has had a mixed reaction. However a few important points need to be made about his proposal:
- This is categorically not a case of us allowing no-fault dismissal – a scheme championed by Tory donor Adrian Beecroft – by the back door and condemned by Liberal Democrats as introducing a ‘hire and fire’ system. That proposal would have applied to all employee contracts – this will only apply to workers at firms who want it.
- Even for those who volunteer for the proposed contracts, some key protections like those against discrimination will remain as well as the wide range of reasons for unfair dismissal, like refusing Sunday work.
There are some fast-growing businesses who may be attracted to the idea of a voluntary scheme which rewards employee ownership and provides opportunities for sharing capital gains, but it is not something intended for most ordinary businesses around the country.
For decades, many entrepreneurs have set up employer ownership businesses along traditional routes with full employment rights and this is likely to continue for the majority of cases.
* Sir Vince Cable is the former MP for Twickenham and was leader of the Liberal Democrats from 2017 until 2019. He also served in the Cabinet as Secretary of State for Business, Innovation and Skills from 2010 to 2015.
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76 Comments
I think the Minister misses the point that critics are making; a philosophical one about the idea that one cannot trade one’s rights for money. I do not particularly care what rights are up for trading and which are not; this is not a Liberal concept. I am saddened that the Minister has decided to back this hare-brained scheme by the Chancellor.
I think the real point, Vince, is whether this contract can be forced onto new employees or not.
Other than that, yes, a voluntary arrangement is fine.
In short, we surrender, Osborne gets all he wants.
“this will only apply to workers at firms who want it.”
Note: not workers who want it, but firms who want it. Workers don’t get a say in whether to be part of it or not.
This:
“Even for those who volunteer for the proposed contracts, some key protections like those against discrimination will remain as well as the wide range of reasons for unfair dismissal, like refusing Sunday work.”
Is not consistent with this in the Treasury Press release (also made under the BIS logo):
“In exchange, they will give up their UK rights on unfair dismissal, redundancy, and the right to request flexible working and time off for training, and will be required provide 16 weeks’ notice of a firm date of return from maternity leave, instead of the usual eight. ”
And also:
“this will only apply to workers at firms who want it.”
New workers can be compelled by the firm to agree to employment on these terms:
“but both established companies and new start-ups can choose to offer only this new type of contract for new hires.”
So Thomas – it seems that this can be force onto new employees.
Treasury/BIS press release:
http://www.hm-treasury.gov.uk/press_91_12.htm
As others have said no good employer should ever ask an employee to trade away employment rights for cash or the promise of it (I assume the shares couldn’t be immediately traded for cash). If the contract is set-up such that the trading of rights is mandatory then this is TOTALLY wrong.
Was there some kind of industrial or macro-economic objective for setting up this scheme? Given that some entrepreneneurs will favour employee share ownership schemes anyway, who extra will the scheme attract?
No-one at the time seemed to say that it was “not something intended for most ordinary businesses “. If this is the case, will the scheme make a real difference to our industry or economy?
@ Thomas Long
“I think the real point, Vince, is whether this contract can be forced onto new employees or not.Other than that, yes, a voluntary arrangement is fine.”
But opting out of the Working Time Directive was supposed to be voluntary, yet companies, in my own personal experience have driven a coach and horses through this by asking future employees to sign up for this as a condition of employment.
Please Vince, this is just not going to help growth in any significant way. Far more important are our maternity leave laws, which are a disaster in operational terms, particularly in small teams and companies.
Hmm, I am not convinced by Vince on this one!
@TIM: one cannot trade one’s rights for money
Of course you can. People trade their rights for things all the time, money included. You might be on slightly firmer ground if you had said “one cannot trade one’s inalienable human rights for money” (employment rights are not human rights), but even then it’s not true – are you going to argue that a soldier has the right not to be put in danger, etc?
Dear Vince,
Over 100 Lib Dem members have already put their names to this letter. Despite your post here we remain gravely concerned. by the employee share ownership policy. We call for this proposal to be amended to remove the part where workers have to give up their rights for share-ownership and rather for the proposal to mirror that agreed by conference in this document: http://www.libdems.org.uk/siteFiles/resources/docs/conference/2012-Autumn/106%20-%20Mutuals,%20Employee%20Ownership%20and%20Workplace%20Democracy.pdf
The proposal appears to allow for workers to give up their rights in return for company shares, as detailed on the HM Treasury website: http://www.hm-treasury.gov.uk/press_91_12.htm and quoted below.
“Under the new type of contract, employees will be given between £2,000 and £50,000 of shares that are exempt from capital gains tax. In exchange, they will give up their UK rights on unfair dismissal, redundancy, and the right to request flexible working and time off for training, and will be required provide 16 weeks’ notice of a firm date of return from maternity leave, instead of the usual eight”
From this we understand that as few as £2,000 of shares will potentially give employers the ability to fire workers at will, where the worker has absolutely no rights and has to sell the shares back to the company when they leave, and where the company can determine the value of those shares. The model is recommended for start- ups and small companies. Their shares are unlikely to be traded and so have no clear value. How is an employee to judge the fairness of the offer, let alone be able to dispose of them with confidence in the value? It seems that the workers would give up significant rights, whereas the employer has nothing to lose – they get rid of an employee they don’t want without any comeback or legal challenge, and also get their shares back at a price they can determine.
We have been told that employee owner status will be optional; however, it seems that this could be made compulsory for future employees in current and new businesses. “Employee-owner status will be optional for existing employees, but both established companies and new start-ups can choose to offer only this new type of contract for new hires.” The power of an employer, with a job market such as we have today, should not be dismissed lightly. Potential employees do not have the luxury of a wide choice of potential vacancies.
The Liberal Democrat Party Constitution states: “Liberal Democrats are committed to fostering a strong and sustainable economy which encourages the necessary wealth creating processes, develops and uses the skills of the people and works to the benefit of all, with a just distribution of the rewards of success. We want to see democracy, participation and the co-operative principle in industry and commerce…” We believe this policy goes against not only Liberal Democrat principles, but principles of decency and honesty in the workplace. With a loss of rights the employee will be in a more unstable employment situation, which can only decrease confidence and spending which our economy desperately needs if it is to grow successfully.
This proposal appears to be the Conservative’s way of getting “fire at will” through the back door. After the work to stop this going through via the Beecroft recommendations, isn’t it hypocritical to allow the potential for it in this bill?
There is no doubt that some unscrupulous companies will abuse this and employees will lose hard won rights . What employee would want, voluntarily, to give up these rights, for any amount of money? Please either pull or amend this proposal.
Various points:
If this is genuinely optional for all employees, new and existing, then personally my problems with it become far more technical and potentially fixable.
One point I would like further clarification over is how these shares in a private company will be valued. If I seek to sell my shares, who can I sell them to? If I can only sell them back to the private owners, then their buyer monopoly gives me no opportunity to get a better price, basically making the shares worthless and scuppering the whole scheme.
On Tim’s comment about the principle of “one cannot trade one’s rights for money” – my problem with this is what we mean by ‘rights’. To my mind, the right to request flexible working is of not of fundamental importance when compared to the right not to be tortured. Yes, there needs to be a red line separating what is negotiable from what is not, but the word ‘rights’ gets attached to too much and allows parallels to be drawn when they shouldn’t be.
I think we need a few more answers, Vince!
1) When was this signed off and by whom?
2) Can you provide a full rationale behind this proposed legislation? You need to sell it to those who have concerns. The explanation provided provides little reassurance.
3) Please clarify on safeguards for new employees. Will new contracts include the Shares option as of default or will there be a choice?
4) Please confirm if there will be any consultation on this legislation and when?
A concern which does not seem to be covered above is that if the company fails then not only does the employee lose their job but their shares are valueless as well.
Vince
This is not about whether it is voluntary or not, although like others above I note that the Treasury (and BIS!) press release says that companies can decide to offer ONLY this form of contract to new employees.
This is about the principle that rights cannot be bought and sold. The words ‘thin’, ‘end’ and ‘wedge’ come to mind.
It’s also about what plausible justification can be made for this policy./ No-one I have spoken to in business, let alone within the party, can see any justification whatsoever, and neither does your article offer any. All we are being told is, ‘there, there, don’t worry, it will only be taken up by a very few companies’.
And what about the politics? We pass an excellent paper on employee ownership at conference. A tiny fraction of one per cent of the electorate have any knowledge of this. Two weeks later Osborne offers us a brilliant opportunity to highlight our very different approach to how this should be encouraged, and what do we do?- we look like we support his madness, and make no mention that we have a much better idea.
I know the party is short of resources in policy and communications, but this should not be rocket science!
What Duncan said – address his points and I’ll likely be in favour.
Rights are inalienable and cannot be sold. Basic tenet of liberalism, Vince… not a happy bunny.
This will be voluntary in the same way that signing out from the working time directive is voluntary – either you “volunteer” or you don’t get the job (or if you’re an existing employee, get passed over for promotion and constructively dismissed and then have to get a NEW job in which you will be expected to “volunteer”). The idea that employers will respect their employees and not try to fleece them is purest fantasy, and the legal minefield this will create will keep lawyers fat for a very long time.
I predict, IF this comes in, that within six months business leaders will be complaining about the amount of red tape it causes…
As Tracey has highlighted, key phrase in Treasury/BIS press release is : “Employee-owner status will be optional for existing employees, but both established companies and new start-ups can choose to offer only this new type of contract for new hires. ”
When a job is advertised, and I go and apply, and my future employer says sign this contract if you want the job, does that make me one of Vince’s “volunteers”?
What if I say to them – no I don’t want your shares, give me the other contract with the redundancy rights, they will say fair dos, here you go, and I get the job?
I think Vince’s post here is one of the poorest bits of communication I’ve seen – its full of ambiguous phrases and vague promises that it will only be used rarely.
Having said that – if this really is voluntary – and an employee is offered a choice of contracts with no discrimination after his/her choice, then I would probably go along with this.
This would appear to offer another huge opportunity for tax avoidance. Pile all the friends and family of the owner into the scheme and the sky would seem to be the limit – well up to £50,000 each anyway.
I’ll bet the Tories are rubbing their hands at another one they’ve gotten over on us.
Either I have misunderstood the scheme so far or Vince is here making a worrying rhetorical slip. a “voluntary scheme” should be a scheme for which people must volunteer, yet as I understood this scheme it is one for which companies can volunteer, and then require all their new employees to participate in, whether they like it or not.
Vince, you should be on the side of the people, not businesses, and voluntary can only mean voluntary for employees, not employers. Sorry, but if you mean voluntary for businesses you must make that clear or I can only assume you are of the view that “corporations are people too”, which, though legally accurate at least, is a belief best left to the Conservative right and not taken up by any modern Liberal.
Well done Vince! I think you may have managed to destroy your chance of leading the party in just four paragraphs. An impressive feat by any account.
Vince – this post is unconvincing in the extreme. Two points – according to you it will be “entirely voluntary and cannot be forced upon employees” but the Treasury press release states quite clearly that “both established companies and new start-ups can choose to offer ONLY this new type of contract for new hires” (my caps). Second – you complacently say “it is not something intended for most ordinary businesses around the country.” And how are you going to police that? Looks to me like any business can choose to do it once you’ve introduced it and there would be nothing to stop them, however strongly you might think “it isn’t intended”. Besides all that – one small further detail – it’s completely morally wrong and no Liberal should be going anywhere near it. We all assumed it was the usual Tory conference froth, and are appalled that you are backing it.
The issue is that we know the Tories have been itching to get a “freedom to sack anyone you like for no reason” policy through. Whatever safeguards might be in place, anything other than outright opposition to this from the LibDems will be seen as us signing up for it, that will be the headlines in the newsappers, that will be what is written on the Labour election literature.
Our party just can’t afford to keep doing this. We have been written up very unfairly, what we have achieved to moderate the Tories has been almost universally ignored by anyone outside our party and not a Tory. However, that’s the environment we’re working in, we have to be aware of that, and not give anything away by supposing our opponents to the left will be reasonable and say “Jolly good job, you LibDems” even if we think we have done a jolly good job.
Not that I’m at all convinced either by what Vince writes. There may be protection in the smallprint, but I can certainly see this meaning “freedom to sack anyone you like for no reason” coming through the backdoor. E.g. what’s to stop any company closing down and opening up again as a new “freedom to sack anyone you like for no reason” company?
It’s a big “no” from me. Shares in a company which is not publicly traded are worth whatever those in charge of the company scheme, typically the bosses, care to value them at. So workers are expected to trade clear rights for something which is really worth only the paper it’s printed on.
If a company is any good, it doesn’t need to remove workers rights because it will pick the right workers, and they will work hard to make the company a success.
It’s not voluntary if it’s the only contract you’re given when you’re offered a job (and those shares in a failing company aren’t going to look much good in comparison to a the redundancy payment you might otherwise have expected).
Thank you, Vince Cable, for taking the trouble to respond to the concerns raised on this website.
However, the concern remains that this scheme could be used to bully employees into accepting the removal of their statutory employment rights, to their grave disadvantage. A manager could come to an employee with, “Look, we can’t afford to keep you on, we’re going to have to let you go. Well, there is one possibility, would you like to take shares in the company?” How many employees put in that position would have the strength to refuse and then take the company to an employment tribunal?
Are there any proposed safeguards to prevent such abuse?
Furthermore, it would be useful to know how the shares would be traded. Obviously if the shares are traded on a market, the situation is clear. However, most companies that would consider using this scheme would be pre-IPO. How would the employee access the value locked up in the shares should they need to?
” it is principally intended for fast growing small and medium sized companies that want to create a flexible workforce.” [ http://www.hm-treasury.gov.uk/press_91_12.htm ]
Please Vince explain how this measure will achieve this from the employee’s perspective?
When I worked for web startups during the dot-com boom, I always ensured I got paid cash rather than in shares as I knew that the majority would never get to market and it would also be a long haul before any made a profit. (I also ensured that I never left anything personal at the office overnight as it is very annoying to turn up the following morning and find the receivers have taken ownership of the premises and are denying access …)
Also Vince answers to the following questions are necessary:
1. Is the monetary amount of shares given a one off on signing, an annual limit, a total value limit?
2. Are these shares new shares (ie. enlargement of share capital – which devalues the holdings of existing shareholders) or existing shares?
3. Will these shares be subject to income tax at time of award, as at present?
4. Will the (inevitable) losses from such shares be accepted as capital gains losses that can be used to offset other capital gains?
5. Why is this scheme so good compared to existing ESOP arrangements?
6. Please conform the statement “if an employee-owner leaves or is dismissed, the company is not able simply to take the shares back but is able to buy them back at a reasonable price.” that the intention is for these shares to be locked and not freely trade-able.
I can only conclude that with the ” they will give up their UK rights on unfair dismissal, redundancy …” that this is actually a wheeze by the UK government to avoid it’s obligations to these employees …
No Vince if you really want to motivate people in such companies the government needs to underwrite more not less. From my experience, the government support package should be available to companies that:
1. Make timely NI and Tax payments, plus a small per employee premium (eg. 1~2% on NI) – The rationale for this is that many small companies liquidate before paying taxes deducted from employee’s to HMRC. Whilst HMRC are ‘relaxed’ about PAYE, non-payment of NI means that the (ex)employee looses credits for benefits and pensions …
2. The company operates an ESOP, which are an established vehicle for employee-share-ownership with well known rules about share transactions and employee-owner representation.
The contents of the government support package can give the employer most of the benefits whilst ensuring that the employee doesn’t loose out. What this means is that as a potential employee, I would be trading some job security (but it’s a fast growing business so actually there is no such thing as job security), but would receive a higher level of benefit from the government if things go wrong. If things go well then we all win, I get shares that are actually worth something and the government gets the associated tax revenues from a profitable business and the share transactions that go with it.
What virtually everyone else has said – when are we going to stop rolling over to have our tummies tickled by the Tories and then rewriting history as if it was what we agreed with all along?! The last lines of the Growth motion (part that I DID agree with!) clearly states that any change to employment law must be evidence based ….. er right. I have asked for this to be on FPC agenda later, but it appears yet again our leadership have misjudged the mood of the party. To be honest, I don’t care if they are inalienable human rights or employment rights – they have been hard fought for to protect the weak from the strong, the hard working from the unscrupulous, the poor who created the wealth from the rich who think it is their birthright. There really Is no excuse Vince – I really would have expected better from you.
You have got this one wrong Vince. The employee may appear to have a choice but in the real world employers will make it very difficult for those employees who do not surrender their employment rights. As one of the fourteen trade unionists who was sacked for being in a union at GCHQ part of the changes was being paid £1,000.00 (taxable) for having their right to go to an industrial tribunal removed. The majority gave in because they were frightened they would lose their jobs, the same will apply with this new attack on workers.
I’m getting to the stage where I am seriously considering resigning from the Party and it’s this kind of surrender to the Tories hostility to employees which might just tip me into leaving thenParty.
>>Terry said: As others have said no good employer should ever ask an employee to trade away employment rights<<
Make that 'would'.
As an employer (before I retired) I can't think of any way I would ever ask this of employees. The effect on morale would be devastating. Normally with SMEs the deal is that shares can only be sold to other shareholders, and they must be sold at some accountant-derived price (generally low), or given up, when the employment ends. So this is a no-win situation for the employee unless the company is close to being sold or floated, when the real capital gains happen.
In practice this will become yet another tax dodge. Exactly the sort of thing we are supposed to be getting rid of.
Bonkers. And disappointing that we are agreeing to this.
We need a more compliant and grateful workforce if we are ever going to get Foxxconn to open factories in the UK. Those iPhones don’t make themselves! Give it 3 years…
If we could amend this so that new employees wouldn’t be forced to “take it or leave it” (in a time where many would be forced to take as new vacancies are so few), then I can see this working.
I think we need some clarity of where we stand on this policy for new employees.
Discussions between employer and employee are not negotiations between equals in the current market. They are even less equal if it is someone looking for a job, maybe under pressure to get off benefits, and there are few jobs available. You can bet that a lot of employers will take advantage of this and many of them will be the sort who prefer their employees not to have rights. As a party we have supported employees having shares in the company that employs them but nowhere does it say that they should lose their employee rights in return. Sorry, Vince, I have been a huge admirer in the past but you’ve lost me on this one.
Can the Lib Dems in the Cabinet actually agree to this without the approval of the rest of the Party? I thought the Lib Dems were a Democratic Party but your leaders seem to do the exact opposite of what you all believe in -and your whole party gets hammered in the local elections as a result. Those in the Cabinet will move on to a nice seat in the Lords no doubt or a job in Europe., post-2015.
If rights can be bought and sold, what price my right to vote? I’m putting it up for auction: any bids?
Seriously, ‘though its not worth much: i live in a safe Tory seat
Vince says ‘Even for those who volunteer for the proposed contracts, some key protections like those against discrimination will remain as well as the wide range of reasons for unfair dismissal, like refusing Sunday work.’ Yet the government press release specifically states they will lose ‘their UK rights on unfair dismissal, redundancy, and the right to request flexible working and time off for training,’ And there’s certainly nothing voluntary about it if all companies, established or start-up, can choose to offer it only to new hires. This is one of those hotch potch deals which ticks a number of boxes to make it look like it achieves Lib Dem goals of employee ownership and yet allows the Tories to achieve their real objectives by the back door. It’s all in the small print.
Workplace rights have been hard-fought for and no circumstances on earth to justify whittling them away in exchange for financial bribes. So you can imagine how disappointed I to read Vince Cable defending George Osborne’s plan to roll back the centuries of worker protection.
Forfeiting workplace rights on a “voluntary” basis looks like very much like the thin end of the wedge. Once you start hacking away at rights a precedent is set to go further, as many Tories no doubt dream of doing.
As for the scheme being voluntary; the hard reality is that many hard-worked employees, fearful of losing their jobs in the next downsizing, will take up any offer to curry favour with their bosses and dodge an ever-lengthening dole queue.
David Mitchell, writing in yesterday’s Observer, put it another way:
“You don’t need those pesky rights,” the chancellor seems to be saying. “You don’t need cover against unfair dismissal or redundancy – that’s for the sort of loser who gets unfairly dismissed or made redundant. That’s not you, you don’t need flexible working rights – you want to get on. You just need money, a stake in the company. Come over to the other side – join the strong: the shareholders, the rights withholders.”
Pressure on staff – especially in non-unionised workplaces – could be enough to persuade them to hand over their rights when they would otherwise refuse to do so given a genuine choice. And we’re not even talking explicit pressure; just a rumour that Human Resources like the idea, and that they’re also looking to make savings, would be sufficient to kick-in staff self-preservation strategies.
Cable claims that “this is categorically not a case of us allowing no-fault dismissal”. We will have to see how no-fault dismissal compares to unfair dismissal in legal terms, but even if Osborne’s scheme absolutely rules out any forfeiting of rights to action against unfair sackings the very fact that the Government is heading down this road will surely mean this is next workers right to face the firing squad.
It is exactly the sort of assault on workers that many feared this generation of Eton and Oxbridge-education Thatcherite neo-Cons would drive forward in a pure Conservative majority Government, but precisely the opposite we expected from their Lib Dem partners. If Lib Dems are the brakes on the worst Tory tendencies it appears as if the brakes have failed on this occasion.
Labour laws – and those health and safety laws much maligned by the Right – took shape in the 19th Century as the ordinary working man and woman’s defence against blatant exploitation of the capitalist class. David Lloyd George’s Liberals have a proud tradition in this field with the Trades Disputes Act 1906, the Old Age Pensions Act 1908 and much more. Osborne’s plan to roll back workplace rights runs contrary to this proud Liberal legacy of workplace fairness.
With structural employment predicted to remain high for the next decade as the economic slump bumps along the bottom threatening to turn into a triple-drip recession, and as the Chancellor calls for an additional £10 billion in extra welfare cuts, we are living in an age when the average man and woman is not so much being squeezed as ground into the dirt.
Those lucky enough to have jobs are living in fear, and many employers are exploiting this. It is in this context that we must view the Osborne plan to shave away workers rights, just as Thatcher went to war against the unions in the early 1980s. Past and present Tories are following the same path of stripping away employees protection, be it workers collective power or collective rights.
It’s not like there’s a logical argument for it. As Simon Caulkin pointed out in The Guardian, there is no evidence that reducing worker rights boosts economic performance:
The notion that UK workers need less protection is simply wrong. The UK is already near the bottom of the OECD’s employment protection league. UK employees work longer hours, are more likely to work part time and get proportionally half the employment benefits of the average. In any case, there is nothing in the OECD figures to show a correlation between low employment protection and high economic performance. Rather, the reverse: greater protection seems to go with better economic performance.
Let’s not forget that the Government have already announced new charges to take out an employment tribunal from £160 to £950, yet another prong of the fork stabbing workers in the hind-quarters.
Add to that plans to significantly weaken whistle-blower protection in the Enterprise and Regulatory Reform Bill with a new ‘public interest’ test and a full picture emerges of the rich and powerful applying the screws on workers against a background high unemployment and fear.
Leaving aside the question of unfair dismissal what other rights are in the frame? The Independent reported this month:
From April next year, companies will be able to offer existing staff between £2,000 and £50,000 in tax-free shares if they surrender their rights to claim unfair dismissal, to redundancy pay, to request flexible working and time off for training. Women on maternity leave would have to give 16 weeks’ notice of returning to work, rather than eight weeks as at present. In return, these workers would not pay capital gains tax on any rise in the value of the shares when they sold them.
New firms could make such contracts compulsory. People working for existing firms could not be forced to sign them – but new recruits could be made to, under legislation to be rushed through Parliament. Workers who gave up their employment rights would not be able to change their minds and exercise them in future unless their employer agreed.
The Government may have backtracked on the compulsory element but it is still horrifying that valuable rights like redundancy pay, flexible working, training and maternity rights could be given away in exchange for shares that may be worthless if the firm collapses – as many do. And what about protection against claims of racism, sexism etc? I fear for the worst.
The Osborne’s announcement looks like a watered-down Beecroft snuck in through the back door. Workers rights should be sacrosanct and, as Caulkin argues, need to be strengthened rather than thrown away. Instead of backing Osborne, Vince Cable would do well to summon up the spirit of Liberals past and draw a red line in the sand and declare that the centuries of blood, sweat and tears that led to our present labour laws have not be in vain.
We Lib Dems must say ‘no’ to privilege and exploitation and ‘yes’ to upholding our rights for ordinary working people.
A complete own goal and a gift to the Labour party if this goes through.. The back of a fag packet defence by Vince is frankly very poor and doesn’t even come close to addressing the many valid concerns raised in these posts. One of three things is going on….
a. There is a very naive assumption about this proposal and the way it will work in practice. or
b. This is a behind the scenes deal with the Tories to stop the original proposals or
c. Its just really a sign of how far the party has come in its rush towards economic liberalism.
Dreadful stuff. Either Vince or the government web site is wrong so clarity is required. But generally just appalling that the coalition want to be able to remove workers rights in this way.
I am surprised and disappointed by Vince’s comments. Worker share ownership should be encouraged, incentivised or even compelled in my opinion. Not at the expense of employee rights though. I attended a “Start your own business/self employment” course on the day this was reported in the newspapers. Not one person in the room supported this impractical and unfair Tory policy!
It’s not voluntary for new employees. It feels like the thin end of the wedge for a Conservative attack on worker’s rights and should be resisted. There are so many unanswered questions about the scheme and how it will work in practice, But even if it was clearer I would be opposed. It gives too much power to an employer who wants to bully staff.
Phyllis, the party will be consulted. This is why we are bringing members attention to it so we have a strong case to provide to our ministers for consideration to amend the proposal in order to protect workers rights.
Mr Cable, if as you say the proposal is not supposed to be for most companies, but just a few new business, could you specify how this will be ensured in the actual legislation?
Tracy,
Oh right thanks. It just sounds to me like Vince has already made up his mind on this and the party is being softened up.
Give up years of potential redundancy pay for shares given an alleged value of £2k that can only be sold back to the company? In return you get relief on CGT (presuming your £2,000 generates you capital gains of more than £10,600.00, presumably!) You don’t have to have the alleged immense brainpower of David Laws or the much-vaunted ancient wisdom of Vince Cable to see what a foolish idea this is. Any unscrupulous employer will be able to see that by pressurising existing employees into accepting such a sign-away shortly before redundancies are made, the employer could save himself a small fortune. Any employees who refuse to sign up to such a change can be given “The Treatment” until they agree to sign up. New employees who refuse to sign up will never get out of the dole queues. A cornerstone of this proposal is the aspirant’s myth that somehow owning shares gives people a “stake in society” and the chance of the life of a rentier. Of course, it doesn’t. A worker is invariably better off having cash to spend or save rather than a share in a company that he does not have any control over, may be about to go bust and that may have a vested interest in dumping him in order to get the shares back. Railtrack shares, anyone? Mirror Group, perhaps? It’s like people who think they are now landed gentry because they own their own house or think they are James Bond because they have a BMW 1-series outside their Bovis Home. Those examples are just amusing. This new proposal is quite terrifying.
Tracy
What I don’t understand is how Vince can be so completely out of tune on this with the rest of the party. This proposal is totally contrary to everything Lib Dems -and all right thinking people – believe in. Why is Vince, a Lib Dem, supporting it???
As Ed Shepherd mentions above shares are already free of capital gains unless you make more than £10k in one year.
No surprise that this was mooted by a private equity guy.
At the moment when companies go into administration the biggest cost is employees, who are top of the pile in terms of rights to money, and the lowest cost is shareholders who lose everything. What better news for the PE “industry” then workers trading their rights to redundancy in exchange for worthless shares.
I want to add my voice to all those above who oppose this policy and have pointed out the inconsistency in Cable’s description of the proposals. Removing from employees redundancy rights and protection from unfair dismissal will make it easy for unscrupulous employers (they do exist) to get away with unlawful discrimination. And this is traded away in return for shares which employers can make worthless whenever it suits them.
It is reassuring to see the overwhelming response here is against the proposals, but it worries me that Cable’s intervention appears to be tacitly supporting the policy. Is this an attempt to soften opposition to what is already a done deal?
Benjamin Franklin said They who would give up an essential liberty for temporary security, deserve neither liberty nor security. And if we as a party encourage them to do so then frankly we deserve oblivion.
The details of this scheme have not yet been agreed so it is too early to really judge its significance in reducing employment rights. However those who criticise the proposal should bear in mind that it is unlikely that employment rights relating to discrimination or H&S can be given up as they are covered by EU legislation rather than purely UK legislation. (This is why there are no limits to financial compensation for discrimination claims but unfair dismissal claims are limited to £85K.) In essence therefore we are talking about unfair dismissal rights and redundancy payments. However, these only apply after two years service so in practice the employer can already dismiss an employee whose face, for whatever reason, does not fit, with little financial cost. If the employee has been employed for more than two years the chances are that he/she has built up a good relationship with the employer so dismissal is much less likely. Moreover statutory redundancy payments are set so low that in the early years of employment the employer is unlikely to save much money by offering shares as an alternative to having to make a redundancy payment at some indefinite point of time in the future. In these circumstances it seems most unlikely that many companies would bother to make use of the new scheme, and only potential employees who saw real future financial rewards through share ownership would consider taking a job with those companies that did so.
I believe that the scheme is just a meaningless piece of red meat thrown out by the Chancellor to some rather naive Tory right-wingers, and as such Liberal Democrats should not worry too much about it. There are much more important battles to be fought within the Coalition.
A big Thank You to 99% of the correspondents. As someone hanging by a thread to the party you restore my faith in the innate wisdom and decency of LibDemmers. Maybe it is time that a way was found for Vince to move to where his heart really is, the Treasury, so that someone from the party who does understand business can rescue BIS.
As we live in a world where all employers act with honour and within the spirit of the law, and would never put pressure on employees to do things they don’t want to, I can’t see what the fuss is about … Oh … Hang on …
I don’t feel the need to say much as it’s all been said by everyone else, but just to add my usually loyalist voice to the chorus of complaint – this sounds about as voluntary as a police officer saying “would you mind accompanying me to the station”. As others have pointed out, the 48-hour opt out was supposed to be “voluntary” but I did some office temping as a student and believe me there was nothing voluntary about it.
I really would have expected better from Vince.
Graham
I believe that the scheme is just a meaningless piece of red meat thrown out by the Chancellor to some rather naive Tory right-wingers, and as such Liberal Democrats should not worry too much about it. There are much more important battles to be fought within the Coalition.
Sorry, but no. Whatever sophisticated arguments may be drawn up to suggest it is not what it seems, the public perception will be as people have interpreted it here. Take student loans – there’s a valid argument that actually the concessions we’ve received are enough to make the system in reality a rather better graduate tax than Labour were proposing – labelling it as “fees” and “loan” is ” just a meaningless piece of red meat”. Well, how successful have we been in getting that point across?
I think the point that Vince is making about surviving protections is about anti-discrimination law. I presume this would still apply to any dismissal as it applies to decisions like promotion, agreement to holiday dates requested, approval of early retirement or anything to do with how someone is treated at work or in applying for work. For example, you could not sign away your right to take action in law against a dismissal which appeared to be on grounds of race.
Granted that I want to sign such a deal, what right has anyone else to stop me?
@Simon Banks
One potential problem is that if employers can sack an employee or make them redundant without a reason, it becomes difficult (impossible?) to demonstrate that any such dismissal was based upon discrimination.
When it comes to employee ownership I think it needs to be entirely Co-operative/Partnership/Mutual or not at all. To me, both the Proposal by Osborne and the Response by Vince seem a bit half-hearted.
24 hours on and I am sure most of us are looking forward to Vince’s more considered reply to the concerns that have continued to flow. Any chance of a reply, Vince?
@ad – I don’t think anyone here is trying to stop you if you want to, the concern here is about people who do not want to being forced to.
@Phyllis Why is Vince supporting it? Good question. Your guess is as good as mine and we are trying to get to the bottom of it.
@Peter Watson It’s not quite a done deal yet. Consultancy on it is coming up. But I’m guess it will be over quickly so we are trying to get the message through now, before it’s too late. I haven’t yet met anyone in favour of this proposal.
@Graham It’s not just about unfair dismissal and redundancy. You lose the right to flexible working (parents and disabled), restrictions to maternity leave, and god knows what else will be slipped into it.
Besides which…
“Generally speaking if you were appointed to your job on or before 5 April 2012 you must have been continuously employed for at least one year or more to enjoy the statutory right not to be unfairly dismissed. If you were appointed on or after 6 April 2012 the requirement is of continuous employment for two years. However, if you are able to bring yourself into certain categories of automatically unfair dismissal, this requirement does not apply. We can advice you on your specific situation.”
“The law protects employees in a number of different ways and it will automatically be unfair for your employer to dismiss you for certain reasons.”
http://www.workerclaims.co.uk/dismissal-claims-losing-your-job/unfair-dismissal-claim/?gclid=CKmW-66nhbMCFSXHtAodwmIASQ
So not so black and white on the unfair dismissal claim!
“only potential employees who saw real future financial rewards through share ownership would consider taking a job with those companies that did so”
So, we have an abundance of jobs to choose from do we? We get offered a job from a company with the share ownership scheme, but we don’t have to accept it do we? Because there are so many jobs around and we can pick and choose. Get real!
This is laughable – I expected to read Vinces View – he doesn’t express a view.
@Missamole – Everyone seems to be objecting to anyone being allowed to offer such a deal in the first place. So they are trying to stop me from accepting it.
Unless you can suggest a way in which I can accept a deal which no one is legally able to offer?
Peter: There’s some truth in that point, but Employment Tribunals for some time have demanded the respondent show a credible reason for dismissing or appointing A rather than B or for treating B’s minor misdeeds more harshly than A’s. If they can’t provide one, the assumption is made that discrimination has occurred. So I wouldn’t be too worried about the weaker position of the complainants in discrimination cases before tribunal. After all, reasons can usually be manufactured including having to make people redundant because of a feared downturn followed by a surge of optimism and appointing new people.
I’d be more worried that if jobs are more insecure, people won’t realise discrimination might have occurred, or (despite the law’s quite strong provisions on “victimisation”) it may be harder to get sympathetic witnesses. All that, of course, is precisely what many Tories want.
@Ad there is no reason why you could not enter into a contract with your employer by which they give you some non-voting, non transferable shares or indeterminate value and you promise not to exercise your employment rights. It may be an unusual situation but it would only ever go to court if you broke your side of the deal, and I’m sure you would never do that so why not give it a go?
@Simon Banks
I accept your points, but my concern is that without protection from unfair dismissal (or regulated redundancy), under the proposals employers may simply dismiss an employee without giving a reason – or give an unfair one that is still legal! At least at the moment employers must offer an excuse for fair dismissal which can be challenged in an employment tribunal, and employers must demonstrate that they have indeed treated employee A and employee B equally and fairly. It is not clear that the new proposals offer any such protection and I do believe that they will make unlawful discrimination easier than it is now.
Dear Vince, this policy is the butt of much workplace humour. Sadly the huge benefits of our green and constitutional reform policies are lost on many voters, however, we support such Tory dogma-inspired industrial relations rubbish at our peril. This proposal is neither Liberal nor Democratic.
With so many ordinary union and non-union workers already sacrificing pay and conditions in order to maintain their own and their colleagues jobs, to be offered a handful of shares to give up remaining workplace rights beggars belief. But what is totally incomprehensible is that Vince Cable (of all people) is supporting it!
If we are seen to support this policy my belief is that, in the workplace, it will be the equivalent of Student Fees. I am proud to augue for cooperatives, for workers having shares in the businesses in which they work, for independent works councils etc. but ideas resulting in the removal of (half decent) terms and conditions of employment does not sound much like progressive politics to me. British workers are already much cheaper to dispose of than continental colleagues. This would only serve to seal our position.
@Ad. OK, you have made your point. Several times. Yes, in a free society you are personally free to sell your soul for a handful of silver. The Liberal Democrats however exist to spread freedom and power – and to fight its abuse!
48 hours and counting….still no further response to a stack of concerns. Perhaps we will see something of more substance in Tim Gordon’s weekly briefing. It would be better coming from Vince.
@Tracy. There is no right to flexible working. There is merely a right to request flexible working. If an employer can show that flexible working is impractical, then the employee has no right to demand it. In many really small companies flexible working may well be impossible, and it is precisely these companies which are most likely to offer shares in return for reduced employment rights.
With regards to the availability of jobs, the UK suffers from major skills shortages so those with the right skills can still bargain hard with any potential employer. However if you’re just a run of the mill potential employee, with little more to offer than dozens of others, then your employments rights are pretty worthless during your first two years of employment, except in so far as they derive from EU directives, from which the new scheme is unlikely to be able to derogate. Moreover automatically unfair dismissals often come under this category. Indeed it would be a brave employer who sought to remove rights potentially derived from EU directives, given the costs involved in defending such cases.
If nothing is said about this further by Vince and the proposal gets into law the party can no longer claim its moral high ground on rights for the individual. Are there no limits on what we will agree to in government? This just gives ammunition to the “vote libdems get Tory policies argument” and depressingly it’s getting very hard to refute.
This is probably the daftest idea that ever came from that Pandora’s Box of daft ideas – the Dave and George Media Machine. It is totally irrelevant to SME’s, won’t mean anything to employers, and is clearly the potty idea of somebody who has never lived in the real world. Why it even gets discussed is beyond belief. I suppose Vince has to react, but giving it legitimacy by so doing is ridiculous! Anyway, what is happening in the inner echelons of Westminster is fully revealed in the book ‘The Government’s Top Salesman Tells All.’ Dave and George’s last ditch attempt to save the economy.
Vince there’s a better way to encourage employers to hire. Shift the burden of taxation away from the payroll tax aka employers’ NI contributions. And take a look at Business Rates.
The most disappointing thing about this issue is the complete silence from our party leadership as other than the usual spin emails from party HQ and this dreadful response from Vince which has not addresed the concerns of the membership we’ve heard absolutely nothing. It’s all well and good the leadership saying ‘we are listening’ as Nick Clegg did during his tour this summer and also saying ‘don’t worry, you can trust us, we know what we are doing’ to any critics when in my opinion, they clearly don’t get it as they continue to ignore the views expressed by the membership at conference plus they also appear to have no understanding of the feeling amongst the membership on this issue.