Plan to swap employment rights for shares slated

George Osborne: wants staff to give up various employment rights. Picture: AP
George Osborne: wants staff to give up various employment rights. Picture: AP
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CHANCELLOR George Osborne’s plans to see workers swap employment rights for company shares have come under attack by a firm of accountants that is in the process of becoming employee-owned.

Accord Energy Solutions has said there is “no way” it will take up Osborne’s shares-for-rights scheme even though it will this week begin transferring the majority of the company to employee ownership.

The firm adds its voice to mounting criticism of plans which employment law experts have described as “socially regressive and deeply problematic”. The employee swap scheme is scheduled to come into effect in April.

Alan Spence, co-founder and director of Accord, said the proposals run contrary to everything he and his partners believe is best for their business. The scheme could even undermine the benefits Accord has reaped in the form of trebling its turnover during the past year.

“At the very worst we might see a situation where potential employees don’t want to join a company because they think it is one of these new employee-ownership places, and they are suspicious of the company’s motives,” Spence said. “It is going to be difficult for us to get the message over that that is not what we are. If you have this government initiative bubbling away in the background, it is going to confuse the situation considerably.”

Set up in Aberdeen in 2010, Accord specialises in assessing the value of oil and gas as it is pumped through platforms, pipelines and terminals.

Spence and his co-founders – James Arthur and Phil Stockton – aimed from the outset to create an employee-owned business. Staff currently have 7 per cent of the equity through share incentive plans, with the aim of raising that to 20 per cent.

However, the big move comes this week when Accord begins the process of transferring 51 per cent of the business into an employee trust scheme that will share dividends and profits among staff. Current profits are being used to purchase shares from directors with the goal of reaching the 51 per cent threshold within three years.

The government says removing rights around unfair dismissal, flexible working and maternity leave will allow growing SMEs to hire additional staff. In exchange, new employees will get between £2,000 and £50,000 worth of shares in the company.

During the past year, Accord has nearly trebled both turnover and employment, to £3.2m and 25 respectively. Spence said that growth looked set to continue.

He argued that giving staff significant ownership creates a superior business model, but that openness would be undermined if workers were required to give up key employment protection.

In a response to the government’s consultation on the employee-owner scheme, the Institute of Employment Rights last week described the proposals as “unnecessary, harmful to workers’ rights, marred with legal pitfalls and possibly contrary to EU law”. The report’s authors added it was likely there would be ­little long-term financial ­benefit for companies.

“There is scant evidence that reforms such as this have any positive impact whatsoever, whether they be economic or ethical,” the report stated.

Critics have also complained about the speed at which the changes are being introduced.