Employee Ownership - Engaging or Alienating?

At London Registrars (http://www.london-registrars.co.uk/) we offer company secretarial services, company formations, company compliance advice and implementation as well as company secretarial audit services and a whole host of business critical support solutions. And all of our specialists, from paralegals to accountants and from bookkeepers to administrators, not only care about our clients but care about our company and as a team that works so closely together we are lucky to have such talented and dedicated staff. 

A key part of any successful business is the productivity and retention of its employees. Staff that are engaged positively with their remit, their colleagues and with the company overall are far more likely to add significantly to the success of the company and its clients. But of course not all companies are as fortunate and many find that staff turnover and the subsequent re-hiring and training costs, not to mention the overall productivity of the employees, are a real and negative influence on revenue generation. So to boost overall economic growth the government has announced measures to incentivise employees.

George Osbourne’s recent announcement of his employee ownership scheme has been heralded by some as a welcome and positive move which is designed to engage employees more closely with their employers and thereby be more proactive, productive and committed to their company and its success. Employee ownership has been on the increase recently; businesses offering the option to its workforce grew by 10% in the last 12 months alone. Owning stock is an obvious incentive for staff to work hard. The better the company performs the higher the value of the employee’s holding. And it’s an effective tool for staff retention too. Many share schemes require the individual to hold onto the shares for a specific time period so that they can’t sell their holding in the year they receive them. Often their holding won’t be vestable for 3 years, creating a monetary imperative to stay at the firm and increase productivity.

But it’s not a one way deal. The Chancellor of the Exchequer’s "radical change to employment law" is a scheme whereby from April 2013, companies will have the option of  offering their staff between GBP 2,000 and GBP 50,000 in company shares that are free from capital gains tax. But crucially this will be in return for the forfeiture of important employee rights such as unfair dismissal, the right to statutory redundancy payments, the statutory right to request flexible working or time off to train. Not only that but any takers of the proposal will have to give 16 weeks’ notice of their intent to return to work from maternity or paternity leave, twice the amount of time other staff will be required to give.

As a provider of company secretary services and related support, at London Registrars (http://www.london-registrars.co.uk/) we think that the initiative may well be of interest to start-up companies and more entrepreneurial firms but at a time when many staff mistrust big business, the question is, will this really engage people or simply alienate them further?

Editor’s Note: London Registrars (http://www.london-registrars.co.uk/) is represented by the search engine advertising and digital marketing specialists Jumping Spider Media. Please direct all press queries to Louise Byrne. Email: louise@jumpingspidermedia.co.uk or call: +44 (0)20 3070 1959 / +34 952 783 637.