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  • Published in Analysis

The government is trying to sneak a major change to employment law through parliament, hidden in a Bill about infrastructure development. Paul Hartley reports

Millionaire Tory backer Adrian Beecroft

The Growth and Infrastructure Bill, which is currently being reviewed by a committee of MPs before it passes back to the floor of the House to be voted on, ostensibly enables the planning application process to be sped up. It allows developers to bypass local authorities that sit for too long on planning applications.

But scan down the Bill’s contents page and, after 22 clauses on local authority planning regulations, you will find a clause that has little to do with planning permission:

"Clause 23 amends the Employment Rights Act 1996 to create a new employment status of ‘employee-owner’. An ‘employee-owner’ has fewer employment rights than an employee in return for shares of a value between £2,000 and £50,000 in the employer's company.

The clause excludes the following rights from the owner-employee status: unfair dismissal rights (except for automatically unfair reasons or for dismissal on the grounds of discrimination); the right to statutory redundancy pay; the statutory right to request flexible working and certain statutory rights in relation to requesting time of for training; and requires employee-owners to give 16 weeks’ notice before returning early from maternity leave or adoption leave."

The Growth and Infrastructure Bill is a Trojan horse. Clause 23 will allow companies to buy workers out of unfair dismissal rights, redundancy pay and mandatory training rights.

Beecroft through the back door

With good reason, the Bill has been called “Beecroft through the back door”. Adrian Beecroft, who has donated £593,000 to the Tories since David Cameron became Prime Minister, published a report in May recommending a number of massive reductions to employment rights.

The most controversial of his proposals was to give companies the ability to sack workers at will. At the time, Vince Cable accepted the majority of the report’s recommendations, but rejected the most controversial, headline proposal. Clause 23 of the Growth and Infrastructure Bill resuscitates the “fire at will” proposal of the Beecroft report.

The clause will create a class of shareholding employees with no statutory right to redundancy pay, flexible working or training. The share ownership aspect of the clause is cover for the reduction of employee rights. If the Government truly intended to create an empowered army of worker-shareholders, the Nuttall review, endorsed by BIS Ministers and the unions, recently set out a series of proposals that would increase share owners among workers without requiring them to give up any rights.

The proposal is being sold as a voluntary arrangement between an employer and an employee. In reality, as Alex Hern points out in the New Statesman, "any company can chose to offer only that type of contract for new hires."

And what company would not do so, when for just £2,000 worth of shares - which will confer no powers on their holders as no company would voluntarily grant voting rights to its work force - they get to pocket the saving from hiring employees with far fewer rights than at present?

Considering that most people do not have the luxury but to take any job that is offered them - especially given the present state of the labour market - it is mendacious to suggest, as the government is doing, that a low-paid employee is entering into a voluntary contract with an employer that only offers such shares-for-rights jobs.

Insecurity and fear

Giving evidence to the Bill Committee on Tuesday, Sarah Veale of the TUC said that the proposal is:

“‘voluntary’, in quotes, because the reality of an employment relationship is that the employer has more power than the employee, and our fear is that people will be under duress to accept the job because they are desperate. If they are not given proper advice, they may walk into this without realising what they are sacrificing.

For people who are already employed, there are very serious issues about suddenly changing the terms of their contract, which could be done through bullying or all sorts of threats about what will happen if they do not go along with it.”

It is clear the government has put together the proposal in a hurry without any real consideration of what its effects on employees, companies and the economy will be. A three-week consultation on the proposal was allowed before the Bill was drafted.

As Sarah Jackson, chief executive of Working Families, points out, that compares badly to the 10 years that were taken to assemble evidence for flexible working legislation.

Indeed, although the Government claim that the clause is necessary to boost growth, even business leaders say it will have little economic impact. The CBI said:

“Employee-owner status may be of mutual benefit to some businesses and their employees, but it is a niche idea and will not impact the vast majority of businesses. If the government wants to boost job-rich growth by making it less risky for firms to take on new staff then the focus should be more radical reform of employment tribunals.”

Myths that hide the truth

Two myths will be rolled out if the clause gets publicly debated – and by hiding it at the end of a Bill about planning regulations, the Government is hoping that it will not be. The first is that the proposal is about empowering employees. It is not. The clause stipulates nothing about employee empowerment, it only lists the rights that the employee will no longer have.

The clause does not state that the shares will have to confer rights such as voting powers on the owner and therefore no rights will be conferred. If the Government really had any intention of empowering employees by increasing share ownership it would have used the Nuttall proposals, not recycled Beecroft.

The second myth is that the arrangements will be voluntary. They will not be. Current employees will have to be offered a choice to move to minimum-rights contracts, but new employees will not have to be offered that choice.

The Government hope that this clause will pass under the radar, but we must make sure that the Bill is not allowed to pass as it stands.

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