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Your money or your Rights? the debate on employee ownership

Would greater employee ownership in exchange for employment rights create a more motivated or de-motivated workforce? Emma takes a look at this complex debate.

PRLog - Oct. 18, 2012 - NORTHAMPTON, U.K. -- This week George Osborne made an announcement at the Conservative party conference supporting the growth of “employee ownership”.  The proposal certainly caught the public’s attention but the reaction has been mixed.

Perhaps, predictably there has been an immediate polarisation of views from some business quarters and the unions.  Some business owners welcomed the announcement whilst the unions have interpreted this as an attack on workers rights.  But between the two camps there’s been a lot of debate about how this could affect the individual employee and whether or not it would actually have any positive impact on economic growth.

George Osborne said, “Employees will be given between £2,000 and £50,000 of shares that are 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, and will be required to provide 16 weeks’ notice of a firm date of return from maternity leave, instead of the usual 8."

An important detail is that this new type of contract is being proposed and offered on a voluntary basis for current employees.  No one is being forced in to this, although I’m sure there may be instances where there’s a certain element of ‘coercion’, especially when it comes to new hires.  But the point is that on the whole, people will be able to weigh up the option of shares versus employment rights.

Figures like Iain Hasdell, the Chief Executive of the Employee Ownership Association, have come out in support of George Osborne but questioned the wisdom of putting up employee rights as a bargaining tool saying, “barriers to growing employee ownership are not the rights of workers”.  His contemporary in the USA, Corey Rosen, goes one step further saying “no rational person should give up employment rights to get a capital gains tax break on several thousand pounds”.

So perhaps people will see beyond the relatively short gain of shares and ultimately choose the longer-term security of employment rights? But on the other hand some may view a financial stake in their company as an empowering and motivating element of their work.  This question sparked an interesting debate about employee engagement, an issue close to the heart of many of our clients.

I’ve had the opportunity to speak to many professionals and academics working in the business and HR sector and it is the perceived wisdom that genuine employee engagement is crucial to an organisation's success.  An engaged, motivated and committed workforce can be the silver bullet.

So would George Osborne’s proposal create a more motivated or de-motivated workforce? Ann Francke, chief executive of Chartered Management Institute (CMI) has said, "I believe it's a good positive message he's sending out. You've got to remember that employee engagement is an extremely powerful motivator and employee ownership can be behind this. Through this scheme we could see an inherent shift in employee engagement culture and that can only be a good thing."

However, it’s also largely understood that employee engagement is not as simple as offering financial incentives. Amongst other things, it’s also about having a supportive employer, perhaps reflected in offers of flexible working and good maternity leave.  So where does this leave the “employee ownership” idea? Will it really be the answer that people are looking for? Or will it simply be “a niche idea” as described by CBI director-general John Cridland?


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Source:m3sm UK LTD
Phone:01604 652006
Location:Northampton - Northamptonshire - United Kingdom
Industry:Business, Marketing
Tags:employee rights, communications management, contracts of employment
Last Updated:Oct 18, 2012
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