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Clause 23 - Employee owners

Part of Growth and Infrastructure Bill – in a Public Bill Committee at 12:30 pm on 6th December 2012.

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Photo of Ian Murray Ian Murray Shadow Minister (Business, Innovation and Skills) 12:30 pm, 6th December 2012

We have tabled this key set of amendments to tease out whether the new employee ownership scheme will be voluntary. In his introduction to the first set of amendments, the Minister—with all due respect—might have been wearing rose-tinted glasses in respect of whether the scheme would remain voluntary. There are several instances whereby it can be demonstrated that the scheme will not be voluntary.

Amendment 106 would ensure that an employee who is taking on the status of employee ownership receives the best possible advice. It is important that it is given by a trade union representative, a workplace representative or, indeed, a legal representative, and is paid for by the company. I am delighted by the amendments tabled by the right hon. Member for Hazel Grove, which the Opposition thoroughly endorse. I am sure that he will speak to them later, but it is important that, if the scheme were shown not to be voluntary, the consequences of such action will be dealt with through the proper channels such as unfair dismissal or constructive dismissal proceedings. The Government have changed many rules in respect of unfair dismissal measures under the Enterprise and Regulatory Reform Bill, but if it can be shown that there is a problem with the scheme not being seen to be voluntary, we want such a position to be dealt with.

When the Chancellor announced the scheme in October, everyone questioned how the Government could possibly ensure that the scheme would be voluntary. That is not clear under the Bill. Many of those who have written to the Committee have said that they do not know how it could possibly be enshrined in statute that such a scheme would remain voluntary. While we are against the proposal, which is bad for employees and also potentially bad for business, if the Government are adamant and want to  push forward the measure, they must make sure that employees throughout the United Kingdom have protection so that the scheme is genuinely voluntary.

The Confederation of British Industry has called the scheme a niche and does not consider that many businesses will use it. The Minister will be pleased that we are friends of the CBI and Canary Wharf this morning. Ultimately, companies will decide if they want to use the scheme and, judging by the response to the Government’s consultation, the chance of that is slim to none. Businesses will be able to offer the new type of contract as an option to existing employees but, as drafted, the Bill does not make it clear if they will be able to force that on new recruits.

Ministers have been at pains to stress that the proposal will be completely voluntary. However, upon its announcement, a Treasury source told the political news website, PoliticsHome, that employers

“would be able to specify that rights would be traded for shares in job descriptions, effectively making the scheme mandatory for some positions.”

Yet again, we see that BIS and the Treasury are at odds about what will be delivered by the proposal.