Shares-for-rights scheme voted back in

British businesses could soon be allowed to offer employees shares in exchange for reduced employment rights after MPs voted back in a controversial ‘shares-for-rights’ scheme.

Under the initiative, employers will be able to swap some employment rights, such as the right to redundancy pay, to claim unfair dismissal and to request training and flexible working patterns, for at least £2,000 of shares.

The scheme, announced by the Chancellor, George Osborne, in the Autumn Statement, was defeated by the House of Lords last month but reinstated this week when the Commons considered amendments to the Growth and Infrastructure Bill.

Michael Fallon, the Business Minister, said the shares-for-rights scheme would be entirely voluntary, but some are sceptical about this position given the state of the UK jobs market. In a statement the Institute of Employment Rights said:

“If a vacancy is advertised for an employee-owner, who would be required to sign up for the shares-for-rights scheme, many jobseekers would be under huge pressure to take on the role regardless.”

Shadow Business Secretary Chuka Umunna described the scheme as an “ill-thought-out and bad idea”.

“This is supposed to be a ‘growth’ Bill,” he said. “No evidence whatever appears to have been adduced by the Government to show how this measure would boost growth.”

IBB’s Employment Team provides advice on the employment aspects of all major business decisions. To contact a member of the team for advice, call us on 01895 207892 or email employment@ibblaw.co.uk