GOVT’S EMPLOYEE SHAREHOLDER SCHEME IS YET ANOTHER TORY LIB DEM CON

Clause 25 of the Growth and Infrastructure Bill creates a new ‘employee shareholder’ employment status. Employee shareholders would be given £2,000 or more in shares, exempt from capital gains tax, but would forfeit a number of employment rights, including:

• protection against unfair dismissal;

• the right to request flexible working;

• the right to request time to train;

• certain parental leave rights; and

• the right to statutory redundancy pay.

The government argues that the measure will promote growth by encouraging small, fast growing businesses to hire new employees, suggesting that the risks and administrative burdens of doing so will be minimised. The government’s case does not stand up to scrutiny:

• it has become clear that there are no real economic benefits to the proposal: in practice, small businesses which hired employee shareholders would not reduce risks or administrative costs;

• against this, the ‘tax planning’ loophole the measure introduces has a definite and potentially very high cost to the Exchequer;

• the measure will erode employee-employer trust and set back work to promote the growth of true employee ownership in the UK;

• the proposal will undermine work to realise the economic benefits of flexible working, which rests on the government communicating effectively the strong case for flexible working to businesses; and

• the proposal is not family friendly and is likely to encourage discrimination.

MISOGYNISTIC?

The employee shareholder status will not be voluntary for many. Those who are unemployed on Jobseekers Allowance are obliged to accept reasonable offers of employment or face financial sanctions. Many others who are seeking work but not receiving a benefit will feel obliged to accept an employee shareholder role. There will therefore be people who have no real choice but to accept an employee shareholder contract.

The Fawcett Society highlighted in its consultation response that women are likely to be disproportionately affected by this policy:

• women, particularly those with caring responsibilities, comprise the group most likely to exercise the specific rights that are part of the employee shareholder status;

• women who rely more heavily on part-time employment to balance work against caring responsibilities will find it more difficult to take up the employee shareholder status and are more likely to be discriminated against in the recruitment process, either by being pressured by employers to take up the status as a condition of their job offer, or being disregarded due to the likelihood they will wish exercise excluded rights; and

• framing maternity provision and flexible working as ‘red tape’ may further entrench pregnancy discrimination against women in the workplace. Maternity rights and employment regulation that enables parents to balance work and family responsibilities have been key drivers in giving women greater access to work and an independent income.

The Fourth Work Life Balance Survey shows that 50% of women, compared with 27% of men, had taken up part-time working in the last 12 months. Similarly, tables in the survey show that 48% of men with dependent children take up flexible working options compared with 59% of women with dependent children, and when deciding whether to work for an employer, the survey found that 53% of women consider the availability of flexible working to be important or very important, compared with only 31% of men.

The Government responded to concerns that its proposal had unfairly targeted the maternity leave return to work notice by setting it at 16 weeks, whilst leaving the notice period associated with additional paternity leave unchanged, by adding the 16 week requirement to APL for employee shareholders. Whilst the Fawcett Society agrees there should be consistency and equality in terms of notice periods for both men and women taking parental leave, it believes the requirement for giving notice to return from such leave should remain at eight weeks.

The Equality and Human Rights Commission has expressed concerns that the employee shareholder proposal will encourage discrimination that will falls within the provisions of the Equality Act 2010. That Act was designed to ensure consideration of equality issues in the policy development process precisely so that the government can identify and avoid instances in which its policies will result in discrimination. It is irresponsible for the government to propose, or Parliament to pass, legislation that knowingly fosters discrimination.

Limiting the right to request flexible working for employee shareholders is likely to prove unhelpful to both those employees and their employers. Parents exercising their rights to parental leave or the right to request flexible working need the assurance that they will not suffer detriment as a result of exercising those rights.

Employers, many of whom already find the overlap between flexible working and equality legislation difficult, will need to check which workers have which rights. It would be easy, for example, to turn down a request from a mother for flexible working and fail to consider any potential indirect sex discrimination claim. As the EHRC has highlighted, removing parental leave and flexible working rights is likely to encourage more tribunal claims through discrimination law, increasing costs to employers.