Government Launches Consultation on “Employee Owner” Status
The Government has now published its consultation for the implementation of “Employee Owner Status” employees, a change to employment law that will allow employees to give up some rights in exchange for shares valued between £2,000 & £50,000.
The consultation is only open for three weeks – the deadline for responses is 8 November 2012 – with the draft legislation (the relevant section is 23, introducing a new section 205A to the Employment Rights Act 1996) expected to come into force, and applying only in England & Wales, from April 2013.
Employees that are treated as “employee owner” will waive their rights to:
- request to undertake study or training;
- make the current range of applications for flexible working – some rights are provided under the EU Parental Leave Directive, and these will remain (the anticipated requirement being that this application has to be made within four weeks of an employee’s return to work), while the wider rights provided under section 80F of the Employment Rights Act won’t be available;
- not be unfairly dismissed;
- a redundancy payment;
and will be required to give more notice (16 weeks instead of the current 8 weeks) if they want to return early from maternity leave or adoption leave.
Employees that make an application for time-off to train or flexible working could, apparently, be dismissed fairly.
Employee owners will still have the right to bring an unfair dismissal claim for a dismissal due to discrimination, exercising a right where health & safety applied, or asserting another current right – including taking action to secure the minimum wage, or a refusal to work Sundays – and there remains the possibility that there will be an increase in unfair dismissal claims under these headings if employees feel that they have been treated unfairly.
Overall, the proposals don’t appear to be viewed as an improvement for employers or employees, and given in practice they could cause an array of new complications for employers, particularly as (at least in its current draft) the legislation doesn’t appear to fully realise the benefits the Government intend them to – a dismissal would be unfair if it fell within such a definition under Part 10 of the Employment Rights Act, and that means if an employee proposed to apply for Flexible Working, or applied for the right in good faith (not understanding that being a employee owner meant they weren’t entitled to the right), any subsequent dismissal could potentially be unfair.
Employers interested in these proposals are advised to contact us for more advice & information before they make plans. And bear in mind the above is based on the draft legislation – this is likely to be amended as it goes through Parliament. And before 8 November, reply to the consultation.