In George Osborne’s 2012 speech at the Tory party conference he put forward a shares for rights proposal where employee’s could give up employment rights such as unfair dismissal, statutory redundancy pay and flexible working time and in return they would gain shares in the company worth between £2,000 and £50,000. This was included with a promise that any profits on the shares would not be charged for capital gains tax. When it was announced it was one of the rare occasions when every side in Parliament from Tory lords to Labour MP’s attacked the policy.
Somehow despite being rejected twice by the House of Lords (it is very rare to be rejected twice, especially with the second rejection at even greater majority) it came back for a third time and as the law stands, had to be passed through. This only seems to have been achieved due to it being a pet project of the Chancellor. So from September 2013 an employer could potentially offer shares to an employee to remove his employment rights.
So unless anything changes between now and September 2013, Employers could start offering contracts in which signing away of rights is a requirement when being offered a job with a company. Having said that, legal advice paid for by the employer is required before they can sign anything.
However a Financial times report seems to suggest that very few companies have inquired about these plans.[1] The report goes on to say that the Business Department had received four inquiries regarding the plan whilst HMRC had only received two inquiries about the venture. So a grand total of six inquiries about the Chancellors jewel in the crown policy that he laid out at the Tory party conference.
This scheme is bad news for businesses and bad news for employees, it is unlikely to encourage growth and indeed may hinder it. Employee’s rights are there for a reason, to protect them from ruthless or just plain bad employers. It’s all well and good to be given £2000 in shares when the goings are good, but if the company starts to go under and the employee is dismissed there is almost no recourse for them and the shares will be worthless.
If as an employee you are offered a contract in which they try to sign away your rights do not hesitate to contact us on 020 3923 0888 and we will advise you further.