New type of employment contract: employees give up employment rights for shares in co

SueC_2

paddyrg wrote: »

- if you have a stake in the business, you are not going to be that guy. There's nothing so depressing as working around someone who is just serving time with the least effort possible.

But there is a massive difference between having a 'financial stake' in the business and having a genuine say in how it is run and being able to exert any kind of control or leadership over it.

So Mr Employee surrenders his employment rights, remains at his existing position in the hierarchy, is powerless to materially affect his destiny, and has little right to recompense when things go bad.

Not exactly progress in my opinion.

zzzLazyDaisy

SueC wrote: »

So Mr Employee surrenders his employment rights, remains at his existing position in the hierarchy, is powerless to materially affect his destiny, and has little right to recompense when things go bad..

Exactly... Mr Employee surrenders his rights to redundancy pay, works his socks off, directors cream off the profits, eventually wind the company up, Mr Employee's shares are worthless and he is out on his ear with no redundancy pay and no money.

Employer starts up a new company and off we go again....

SueC_2

zzzLazyDaisy wrote: »

Exactly... Mr Employee surrenders his rights to redundancy pay, works his socks off, directors cream off the profits, eventually wind the company up, Mr Employee's shares are worthless and he is out on his ear with no redundancy pay and no money.

Employer starts up a new company and off we go again....

And add to that a state of general confusion with no-one being quite sure who has and hasn't opted out of their employment rights or why there appears to be different 'rules' for different employees - some of whom will doubtlessly not even understand what they have or haven't signed as they will simply have put a signature where asked to by their employer without comprehending the potential consequences. (I predict that these clauses will soon become buried in the depth of employment contracts, much like the Working Time Directive opt-out clauses, with people signing without even knowing that's what they've done).

As far as I'm concerned, the law should be the law, not something that you can choose (or be pushed) to opt out of for (possible) financial gain.

The more I think about it, the more preposterous it becomes.

paddyrg

This makes no difference to Phoenix companies or dishonest management - dishonest employers will not care about the law anyway. Redundancy (statutory) is something like 1 week for every year of continuous service capped at 13 weeks (I am happy to be corrected on this, but it is what a friend was advised). That's what's at stake - 3 months wages. A lot of money - thousands of pounds. But after 13+ yrs of continuous work for a company (and remember we are talking about 13+ years into the future from right now when you already know the score at signup) if you haven't saved a few quid...well that's rather up to you, isn't it? If the company has by definition been trading and growing for 13+ years, frankly those shares are going to be worth a whole heap more now.

I am not arguing that it is right for everyone, or should be compulsary, not by a long straw, but it also doesn't mark the end of the world, and those who go for it may benefit hugely for a fairly notional stake. If the company folds within 2 years, makes no difference anyway. This isn't a stick to beat the small man, this is a way to bridge the 'us and them' mentality that is quite clear from this thread. And guess what - if it makes it easier for startups to employ people, that means more jobs. More jobs means more productivity, fewer benefits, more tax revenue, more export revenue, healthier pound, frankly a whole heap of things it is hard to argue against.

zzzLazyDaisy

paddyrg wrote: »

This makes no difference to Phoenix companies or dishonest management - dishonest employers will not care about the law anyway. Redundancy (statutory) is something like 1 week for every year of continuous service capped at 13 weeks (I am happy to be corrected on this, but it is what a friend was advised). That's what's at stake - 3 months wages. A lot of money - thousands of pounds.

Actually the amount of statutory redundancy pay depends on age and length of service. The maximum is 29.5 weeks.

If the company goes bust the guy with employment rights gets full redundancy pay PLUS 12 weeks notice pay from the NI fund.

The guy who has given up his rights for shares gets nothing.

At the moment the proposal is that employers will be able to insist that new employees join the scheme, and that existing employees will retain their right to keep their statutory rights. But how long do you think it will be before unscrupulous employers are persuading/pressurising long serving employees to join the scheme?

paddyrg

Thanks for the correction on current statutory redundancy :-) I've been able to get to the direct.gov website now to clarify, and it seems it caps at 20yrs, with different weekly multipliers for different ages.

Someone aged 55 with 30yrs continuous service would benefit from a redundancy payout of £11k-odd - and that ignores the time value of money/inflation over 30 years - so really just a few grand upfront. Even a £20k payout for the company going bust as opposed to normal redundancies including extra NI etc (and let's face it, that's on the high side, probably more like £17k) we're still talking a few grand's worth of upfront compounded interest. Yes, a lot of money - a couple of years single person's pension/pension credit and not belittling that, however that's a pretty extreme case covering 6 different governments, a company employing you from the age of 25 - 55 with no break in an age with no 'job for life' anyway, and the company growing for 30+ years before going catastrophically bust. If the company didn't happen to go bust that year, the benefit of that shareholding would likely run to significantly more *CG TAX FREE*. In fact the dividends over the 30yrs likely make a huge dent in that figure no matter what.

I don't know about unscrupulous employers, and indeed I do think the scheme requires an eye keeping on it. Dodgy employers will also be using zero-hour contracts, pseudo-self-employed statuses, etc which this will not affect and are probably more ripe for abuse anyway to be honest.

What I see right now is before the details of implementation have been worked out by DWP/whoever, that there is an 'oooohhh them evil tories are robbing our babbies of their crust and going to send us all down t'workhouse' kneejerk reaction to what could actually be a very positive scheme. The reaction seems to assume an intrinsic evil on the part of all entrepreneurs and startups, whereas I am sure from your own experience is an extreme and untrue position. In fairness you'll have seen more of the distressing end of the employment relationship than I have, and I defer to your experience, just nobody here seems prepared to even hear the plan out or consider that it may have an upside.

I encourage anyone to head to the Small Biz forum here to get a taste for what real, everyday entrepreneurs and startups are like - just normal people trying to do their best to start a business. Not, as a rule, twirling their moustaches discussing how to abuse their valued workforce (followed with a 'bwa-ha-ha-ha-haaaa').

But here I am defending an outline policy based on no more information than those who shout it down. The devil will of course be in the detail, as will the upside. I just don't think it is fair to assume all employers will use it to beat the proles back into the dark satanic mills where there is a very decent potential upside to employees, to businesses and to the overall economy.

SueC_2

It's not just about unscrupulous employers though.

The smaller the company, the more vulnerable it is to the financial stability of its customers. No matter how well run and ethical the start up is, if one of its major customers goes belly up, then there's a high likelihood that the start up will follow suit - through no fault of its own.

Again, the employee who has signed away his redundancy rights walks away with diddly. And yes, if it's a start up and length of service is low, then the claim for redundancy will be of minimal value, but nevertheless it can be the difference between food on the table or not.

I'm not saying that there can't possibly be an upside, but I am concerned that many employees won't (either through lack of understanding/capability or lack of opportunity) think through the possible implications before signing where asked.

Notmyrealname

anamenottaken wrote: »

A lot of employees think agency workers receive a higher hourly rate than they do.

Though some contractors receive more, most temps do not. Even the right to equal pay with directly employed staff after 12 weeks doesn't put you on an equal footing because pensions are excluded.

I've done over a decades agency work since the early 1990's.

My brother was doing claim processing for a housing benefit office and was on three times what their permanent staff were...

Notmyrealname

MissSarah1972 wrote: »

If you work via an agency you aren't always on more £

You're doing it wrong if that is the case or you're doing a job anyone on the street can walk into with no training. For many years I did truck driving through agencies my basic rate was the overtime rate for many companies.