The price of rights?

October 11th, 2012

The Tory assault on employment rights continues apace. Despite the lack of appetite shown for the root and branch reforms they wish to pursue, the Tories remain determined to cut through what they perceive to be red tape. That is whether it exists or not.

George Osborne’s latest initiative announced at the Conservative party conference this week proposes that companies offer up to £50,000 in tax free shares if employees sign away their rights to claim unfair dismissal, flexible working or maternity pay. This is the latest in a line of initiatives that seeks to unburden small and medium sized businesses and thereby free them up to create jobs. Applying Osborne’s logic this should lead to an economic renaissance that will deliver the Tories a second term in office but with a comfortable majority.

Leaving aside for a moment that the economic ills of this country are mostly lagging demand rather than supply, is the idea a good one?

Whilst the devil is in the detail, there are some issues which should cause real concern. The first is the proposal that from April 2013, all new employees can be forced to sign these contracts. This will create a hierarchy of rights between new employees and established workers. Further, you can expect that it will disproportionately hit new entrants to the workplace (mostly young people) and jobseekers (including those returning to the workplace after parental leave). These groups undoubtedly will feel disempowered to argue over whether to accept a job under the terms of these new contracts. Something that should be of concern to all as these rights can be exchanged for as little as £2,000 in tax free shares.

Surely this is all compensated for by the greater say that individual workers will have in the direction of the company? In most instances the share ownership offered and the power to take decisions affecting the company’s profitability and direction will remain separate. While you may have an interest in the company’s future under the scheme, you are not given power to realise those choices you feel are best. In any event, the John Lewis co-operative structure which allows employee participation does not involve employees having to forgo any of their rights.

Ah, but the system will resolve the need for recourse to an employment tribunal? Sean Jones QC pointed out on twitter that it would probably lead to a mass of complex shareholder disputes in the High Court. Many companies that opt into this scheme may not have been floated on the stock exchange so  evaluating the worth of any share options could be just as litigious as fighting an unfair dismissal claim. There are also myriad issues about the right of companies to request that shares are sold back to them and timing of the valuation of the shares among others.

The main rub of all of this potential disruption? That businesses don’t seem that keen. John Cridland, director general of the Confederation of British Industry, said: “In some of Britain’s cutting-edge entrepreneurial companies, the option of share ownership may be attractive to workers, rather than some of their employment rights. But I think this is a niche idea and not relevant to all businesses.”

However, as a Labour supporter there is another thing that irritates: the lack of a strong Labour attack on this matter, which has become a totem for Tory ideology. It is right that we focus on jobs but I would argue that we need more. We need to ensure that workers have adequate protection at work against bad treatment and that can only be done if they have recourse to redress. Dignity at work for employees and employers is about more than a living wage, it is about rights, specifically employment rights.