From the TUC

Government bribes employees to give up employment rights

20 Mar 2013, by in Working Life

The Chancellor has announced that the first £2,000 of shares given to workers who become ’employee shareholders’ will be exempt from both national insurance and income tax.

Plans for a new ‘employee shareholder’ scheme were announced at the Conservative Party Conference. Under the scheme, employers will be able to offer employees at least £2,000 of shares in their company in exchange for giving up certain employment rights, including protection from unfair dismissal, the right to statutory redundancy pay, and the right to request flexible working and time to train. In addition, ‘employee shareholders’ will be required to give 16 weeks’ notice of their intention to return from maternity leave, while other employees are required to give eight.

The employee shareholder proposals have had a rocky political ride, being criticised sharply by organisations promoting employee ownership who fear (rightly) that they will give employee ownership more broadly a bad name, and also by business, with Justin King, the Chief Executive of Sainsbury’s, describing them as “not what we should be doing” and asking, “What do you think the population at large will think of businesses that want to trade employment rights for money?” The Government itself admitted that of the 209 responses to its very rushed consultation on the proposals, only “a very small number of responses welcome the scheme”. The TUC has condemned the proposals for allowing employees to trade valuable employment rights for potentially worthless shares and argued that the proposals would be likely to create tax loopholes.

George Osborne’s has clearly been warned that his new idea is likely to flop, but rather than drop his flawed initiative, he is trying to use tax incentives to make the new ‘employee shareholder status’ more financially attractive.

This tax incentive is forecast to cost the public purse £200 million over the next five years; £200 million spent on bribing hard working families to give up their hard won employment rights.