9 October: In response to proposals announced by George Osborne yesterday, which would allow new owner-employees to exchange some of their UK employment rights for rights of ownership in the form of shares in the business they work for, the Chartered Institute of Personnel and Development (CIPD) is urging business and Government to look again at the weak evidence base for watering down employment rights.
Mike Emmott, employee relations adviser at the CIPD, comments: The UK has one of the least regulated labour markets in the world and there is little evidence to suggest that employment regulation is preventing small businesses from taking people on. In fact, according to the Governments own research, unfair dismissal doesnt even figure in the list of top ten regulations discouraging them from recruiting staff. Employees have little to gain by substituting their fundamental rights for uncertain financial gain and employers have little to gain by creating a two tier labour market.
It is far from clear how attractive the offer to give up employment rights in return for shares will be to prospective employees of small firms. More important, it is highly doubtful whether inviting employees to sign away basic employment rights will deliver the motivated, driven, high performing workforce that small firms need. Existing, highly successful mutually owned firms do not thrive on employee ownership alone, but on the high trust, high engagement, all-pulling-in-the-same-direction cultures they have. Employee ownership works best where it is accompanied by great management, rather than enhanced job insecurity.
