My Lords, I cannot match the advocacy of either the noble Lord, Lord Forsyth, or the noble Lord, Lord Pannick, but I feel that there is a saddening negativity towards these proposals. I am glad that everyone agrees.
A lot of the issues raised in this House have been addressed—in particular, the concern, which I completely supported, that it would be a nonsense if people were
forced to give up the ability to claim their jobseeker’s allowances if they turned down the offer of an employee shareholder job. That is the most important issue of the lot. But there are other important issues where the proposals have been improved. I see the situation in the context of a half-way house between self-employment and standard, typical, large-corporation employment.
An interesting survey has been published by the RSA which finds that more than 30% of people in their 20s now want to be entrepreneurs, self-employed individuals who will have no protection rights whatever. In terms of giving up rights, there are three important areas, including unfair dismissal rights—which are not given up as regards improper grounds such as discrimination—rights to statutory redundancy pay, and certain rights to request flexible working hours and time to train. People retain a whole lot of other employment rights and the issue is not, by a long chalk, about giving up all your employment rights.
Of the concessions that have come from the Commons, the most important is that the Secretary of State will have power to regulate the buy back of shares. That does not amount to legal advice, which would be nice, but it does afford a protection there. I suggest that, in practice, what will happen if any businesses embrace these schemes is that there will be the usual sort of standard formula. If there is a buy back by the company, then there will be a prescribed price earnings multiple, or such like, on which to value them. That will unfold as time passes.
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A new right has also been introduced for employees not to suffer detriment if they refuse to agree to an employee shareholder contract. This means that if an employee has been overlooked for promotion or disadvantaged in any other way because of that refusal, they can present a claim to an employment tribunal. If this happens to a self-employed individual they have absolutely no protection. A new unfair dismissal right was created to ensure that if an employee was sacked because they had refused to accept an employee shareholder contract, this would be regarded as automatically unfair and they could present a claim for unfair dismissal to an employment tribunal.
Other practical issues came up in this House concerning whether shares would be fully paid. It is quite important that shares awarded to employee shareholders now must be fully paid, so that a situation could not arise where, if the shares were not fully paid, an employee shareholder would be liable for a balance relating to the value of the shares.
Employee shareholders cannot be asked to provide any other form of consideration apart from agreeing to become an employee shareholder for the shares issues to them under the scheme. The upper limit has been effectively increased, although I repeat the point I made twice before, which is that I think the limit of only £2,000 at which the shares granted become a taxable benefit is too low. To return to my reference to the RSA survey, this scheme typically is for people who are high risk-takers working for smaller companies and who do not feel the need for the protection.