The government’s employee ownership scheme has been blocked in the House of Lords.
The scheme, which was announced by Chancellor George Osborne in October 2012, would allow employees to give up some employment rights in return for shares in their employer. It was defeated by 232 votes to 178.
The scheme was aimed at helping organisations offer staff a new employee-owner contract, which would have allowed them to give between £2,000 and £50,000 of shares in the company to their staff.
In return, employees would be expected to give up some employment rights, such as the right to ask for flexible working opportunities, unfair dismissal and the right to redundancy pay.
In the House of Lords on 20 March, Lord Pannick, a barrister and cross-bench peer who opposed the legislation, said: “The worse the job market for employment, the more willing the applicant will be to give up his or her employment rights in order to take the job, and the worse the job market, the greater the employee’s need for these basic protections against unfair dismissal and redundancy.”
This follows the 2013 Budget, on 20 March, in which the government announced that it will be investing £50 million annually from 2014-2015 to incentivise the employee ownership sector, as well as announcements that the first £2,000 of share value that any employee receives under the new status will be free from income tax and national insurance (NI) contributions, and that the government will fund capital gains tax (CGT) relief on the shares.
