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Employee-Owner Contracts: The Employment Law Perspective

Posted on October 12, 2012

Employment lawyers throughout the country were left gasping in astonishment this week following the recent announcement by the Chancellor, George Osborne, at the Conservative Party Conference of a new breed of employment contract, Employee Owner. 
 
By a strange quirk of fate this announcement is made in the very same week as Fox and Partners becomes the first employee owned law firm in the UK. We are specialists in the field of employment and equality law and we have fully embraced employee ownership as an ethical and principled business model which enhances the employment rights of all staff. We have engaged in lengthy consultation and have reassured our staff that they will have greater involvement in the future of the business and share in our success. Our approach has been to embed employment rights, fairness and equality within our business plan. For us it is not an either or option.
 
It never dawned on us that our staff should be asked to trade off their hard won employment rights. The statutory right to protection from unfair dismissal was introduced only as recently as the 1970s to allow employees greater access to justice. Without the regulatory framework which has arisen through statute and case law during the past forty years our workplaces would be fraught with greater difficulty and uncertainty. Rolling back these protections is short sighted and ill informed. It would also lead to a two tier workforce undermining the ability of all staff in a workplace to be treated equally and afforded the same protection. The government has already doubled the qualifying period to two years before employees can complain of unfair dismissal. The proposal that an employee should agree to give up such rights, either at interview or when signing this new contract, for the promise of shares sometime in the future reintroduces a power imbalance and uncertainty, which can only destabilise not strengthen businesses.
 
Further an erosion of maternity rights and flexible working provisions has to be resisted at all costs if we seriously wish to improve equality in the workplace. Will the working life of a part-time female employee with childcare responsibilities be enhanced by the knowledge that she may qualify for a monetary uplift sometime in the future while she worries herself sick every day about being sacked if her child is ill or if she cannot provide an ideal work life balance every day of the week? It is far from clear which employees would opt for this new contract and what pressures may be brought to bear by unscrupulous employers. Wouldn't it be better all round to foster a culture in our businesses which involves and values all employees and which encourages all employers to treat their staff with respect thus diminishing the prospect of unfair dismissal cases?
 
Besides which, building a business is a long term project. Shares increase in value over a long period of sustained growth and development. As a small business we know the difficulties and the challenges of staffing, retention, recruitment and the challenges of cash flow.  But this is not the answer. Methinks this was dreamt up in the backroom of George's office after a particularly demanding and stressful day. Our advice to the Chancellor is to take a step back, take a deep breath and have greater aspirations for all employees and businesses in the UK. We need to raise the bar not lower the tone, dilute employment rights and end up with fragmented and inferior contracts and divided working places. Employee ownership is a bold step forward, not a cheap trade-off.

Carol Fox
Fox and Partners
T: 0131 652 7360 W:www.foxandpartners.co.uk
 
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