The head of a leading independent financial advisory firm has questioned whether Chancellor George Osborne’s “employment rights for shares” plan will actually hit the target and produce the intended results.
John Male, managing director of EFG-IFA, said he liked the idea of creating an incentive for employers and employees to share in success.
“It is a very difficult time and we need all the inspiration and innovation we can get.
“But I question whether the take up among the small firms and entrepreneurs we need to help in order to stimulate economic growth will be as strong as the Chancellor hopes,” he said.
Under Chancellor Osborne’s proposals employees will be able to opt for a new kind of contract in which they will be given between £2,000 and £50,000 of shares that ares exempt from Capital Gains Tax.
In exchange, they will give up their UK rights on unfair dismissal, redundancy and the right to request flexible working and time off for training.
Other changes include a requirement to give 16 weeks’ notice of a specific date for return from maternity leave, instead of the current eight weeks.
The new “owner-employee” status will be optional for existing employees, this new type of contract can be offered to new joiners both by established businesses and start-ups.
Mr Osborne said the legislation to bring in the new contracts will come later this year, after a short period of consultation, so that businesses can use the new employment contract from April 2013.
John Male said: “Mr Osborne made it clear that any size of company can use this new contract but that he particularly had in mind fast growing small and medium sized companies that want to create a flexible workforce.
“But when you get into tricky legal and HR areas, I wonder whether entrepreneurs and those driving fast growth small to medium sized businesses will consider it all too difficult and complicated.
“Employment law commentators have also pointed out that the employee will need to be persuaded to give up some fairly substantial rights such as those surrounding unfair dismissal and redundancy.
“On both counts, for employers and employees, will the administrative hassle and the rights voluntarily given up prove too complicated and something that is regarded as a distraction rather than an out and out benefit for both employee and employer?”
