Workers' rights will be eroded by Chancellor's new ‘owner-employee’ contract


The Chancellor of the Exchequer plans to introduce a new employment scheme in which workers will be forced to give up their employment rights.

Employment Rights Law

Under the proposed owner-employee contract, employers can insist on workers relinquishing their UK rights on unfair dismissal, redundancy and the right to request flexible working hours. Workers will also no longer be able to ask for time off for training and will have to give 16 weeks' notice of a date of return from maternity leave instead of the usual 8.

In exchange, workers are to receive company shares worth between £2,000 and £50,000. According to Mr Osborne, who announced the scheme at the Conservative Party conference in Birmingham, there will be no capital gains tax on the profits from the shares, so it will be "owners, workers and the taxman all in it together" but of course, there’s no guarantee that share value will increase during the course of an individual’s employment.

Simpson Millar LLP opposes the proposals and believes that tampering with people’s fundamental rights at work will prove more trouble than it’s worth for small and medium-sized business at whom the proposals are aimed. Withdrawing workers’ fundamental rights is short-sighted and is unlikely to lead to what the Treasury calls a "flexible workforce".

While the so called ‘owner-employee’ contracts will be optional for existing employees, start-up and established companies can choose to offer the contract to new hires. Simpson Millar LLP believes that such contracts may impact adversely on businesses with lower staff morale and productivity. Companies offering owner employee contracts for new hires may also find it difficult to attract the best people to their business. "A healthy, productive employment relationship is like a two way street. Companies looking to encourage loyalty and flexibility among the workforce will recognise that observing workers’ fundamental rights is an essential ingredient to that relationship", said Simpson Millar LLP.

"Owning shares is no substitute for job security and good working conditions - if the share price plummets – a situation over which workers are unlikely to have any control – they're potentially left high and dry, working for an ailing company with virtually none of the precious employment rights so hard-won by trades unions over the last few decades."

The government says it will shortly consult on some details of the proposals and aims to bring the owner-employee legislation into force later this year, enabling companies to adopt it from April 2013.

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