...exchange some of their UK employment rights...
October 8, 2012 9:47 AM Subscribe
"New Owner-employees will exchange some of their UK employment rights for rights of ownership in the form of shares in the business they work for, any gains on which will be exempt from capital gains tax."
"Under the new type of contract, employees will be given between £2,000 and £50,000 of shares that are exempt from capital gains tax. In exchange, they will give up their UK rights on unfair dismissal, redundancy, and the right to request flexible working and time off for training, and will be required provide 16 weeks’ notice of a firm date of return from maternity leave, instead of the usual 8."
[via]
"Under the new type of contract, employees will be given between £2,000 and £50,000 of shares that are exempt from capital gains tax. In exchange, they will give up their UK rights on unfair dismissal, redundancy, and the right to request flexible working and time off for training, and will be required provide 16 weeks’ notice of a firm date of return from maternity leave, instead of the usual 8."
[via]
In exchange, they will give up their UK rights on unfair dismissal, redundancy, and the right to request flexible working and time off for training, and will be required provide 16 weeks’ notice of a firm date of return from maternity leave, instead of the usual 8.
Right. So basically you can 'own' a section of a company that owns all your time and has the right to fire you for no good reason? Owner my eye.
Not to mention requiring people to somehow magically know how their last trimester is going to go months in advance.
Good grief I hate this government.
posted by Kit W at 9:54 AM on October 8, 2012 [14 favorites]
Right. So basically you can 'own' a section of a company that owns all your time and has the right to fire you for no good reason? Owner my eye.
Not to mention requiring people to somehow magically know how their last trimester is going to go months in advance.
Good grief I hate this government.
posted by Kit W at 9:54 AM on October 8, 2012 [14 favorites]
Huh. I have two questions: first, what problem facing workers is this intended to address? And second, if the recognized claim to fairness in termination is actually a right, how can it be waived?
posted by clockzero at 9:56 AM on October 8, 2012 [7 favorites]
posted by clockzero at 9:56 AM on October 8, 2012 [7 favorites]
The head of the U.K.'s largest union group, basically said that it's bad in principle but unlikely to be very important:
"We deplore any attack on maternity provision or protection against unfair dismissal, but these complex proposals do not look as if they will have very much impact as few small businesses will want to tie themselves up in the tangle of red tape necessary to trigger these exemptions."
Guardian article
posted by Perplexity at 9:59 AM on October 8, 2012
"We deplore any attack on maternity provision or protection against unfair dismissal, but these complex proposals do not look as if they will have very much impact as few small businesses will want to tie themselves up in the tangle of red tape necessary to trigger these exemptions."
Guardian article
posted by Perplexity at 9:59 AM on October 8, 2012
Two things:
1) Will courts even uphold this? It seems to be something that will generate endless litigation a few years down the line when somebody is fired for being gay, black, a woman, and so on.
2) If only new workers get these contracts, and they become pretty common, it's a surefire way of making people hold onto jobs they already have. Hello reduction in worker movement!
posted by Jehan at 10:00 AM on October 8, 2012
1) Will courts even uphold this? It seems to be something that will generate endless litigation a few years down the line when somebody is fired for being gay, black, a woman, and so on.
2) If only new workers get these contracts, and they become pretty common, it's a surefire way of making people hold onto jobs they already have. Hello reduction in worker movement!
posted by Jehan at 10:00 AM on October 8, 2012
Haven't you heard clockzero, we are lazy and useless. Also stupid, but I couldn't find the CBI citation.
posted by marienbad at 10:01 AM on October 8, 2012
posted by marienbad at 10:01 AM on October 8, 2012
In general, this seems somewhat positive, but the details are incredibly important here. Are the shares of the same class as other owners of the firm? Do the shares have voting rights for selecting board members or other control over the management? Are the shares required to receive the same distributions and dividends as other share classes? In a publicly traded company, can they be sold at any time? The hiring company being allowed to buy the shares back at a "reasonable price" at the end of employment sounds incredibly ominous, does the employee get to choose to hold on to them? If it turns out that these shares are illiquid, voteless, and profitless, what the hell is the point?
Working near to Silicon Valley, I see how employee equity is both a good and bad thing; worthless equity is sometimes dangled as a carrot to exploit naive programmers, but sometimes it also works out well. If the regulations are correct, the equity won't be worthless, and it may be something that actually benefits employees. Capitalism would work much better if everybody in the system is actually a capitalist to some degree, rather than just a cog.
posted by Llama-Lime at 10:02 AM on October 8, 2012 [4 favorites]
Working near to Silicon Valley, I see how employee equity is both a good and bad thing; worthless equity is sometimes dangled as a carrot to exploit naive programmers, but sometimes it also works out well. If the regulations are correct, the equity won't be worthless, and it may be something that actually benefits employees. Capitalism would work much better if everybody in the system is actually a capitalist to some degree, rather than just a cog.
posted by Llama-Lime at 10:02 AM on October 8, 2012 [4 favorites]
Who in his right mind would want to work for, or own shares in, a company that does this?
posted by DreamerFi at 10:03 AM on October 8, 2012 [1 favorite]
posted by DreamerFi at 10:03 AM on October 8, 2012 [1 favorite]
Hah. If Google had something like this when it was a startup we would now be moaning about the 2%.
posted by chavenet at 10:05 AM on October 8, 2012
posted by chavenet at 10:05 AM on October 8, 2012
Isn't this merely an opening gambit in the bid to end pensions in the UK and replace them with stock equity?
posted by jamjam at 10:07 AM on October 8, 2012 [6 favorites]
posted by jamjam at 10:07 AM on October 8, 2012 [6 favorites]
So from my cursory reading of this it looks like employee rights under this contract will change from being a great deal better than those in the US to only somewhat better.
posted by steamynachos at 10:08 AM on October 8, 2012
posted by steamynachos at 10:08 AM on October 8, 2012
"The Government consultation on the owner-employee contract will include the details of restrictions on forfeiture provisions to ensure that if an owner-employee leaves or is dismissed, the company is not able simply to take the shares back but is able to buy them back at a reasonable price. "
'reasonable price' is an interesting choice of words there; I'm guessing it's not going to be the same thing as 'fair market value', unless the stock price has cratered.
Also this looks to me like it'll be abused as a tax loophole by the rich as well as a way of screwing over the workers. Unless the capital gains exemption isn't absolute, people will be finding ways of playing with valuations and corporate structure in order to generate huge paper gains in the tax exempt shares.
posted by Grimgrin at 10:10 AM on October 8, 2012 [3 favorites]
'reasonable price' is an interesting choice of words there; I'm guessing it's not going to be the same thing as 'fair market value', unless the stock price has cratered.
Also this looks to me like it'll be abused as a tax loophole by the rich as well as a way of screwing over the workers. Unless the capital gains exemption isn't absolute, people will be finding ways of playing with valuations and corporate structure in order to generate huge paper gains in the tax exempt shares.
posted by Grimgrin at 10:10 AM on October 8, 2012 [3 favorites]
This invites another circlejerk about evil Tories, and so on, and after the Beecroft report we clearly have to keep an eye on them. But it's pretty clear that you can't have the same employment protections for an enormous multinational company and three guys over a chip-shop. If you have ten thousand employees, you can balance these things out statistically, but if there are only a handful of people, a company which is behaving with complete decency can be put under enormous strain on the roll of a dice. Not to mention the differing resources for small and large companies to manage compliance. In principle, giving people equity in the business would seem to be a reasonable way to trade these things off. That's not to say that I trust the process to be managed well, or fairly.
posted by Marlinspike at 10:18 AM on October 8, 2012 [1 favorite]
posted by Marlinspike at 10:18 AM on October 8, 2012 [1 favorite]
Remember, this is merely a 'proposal' at this point. This is the first 'trial balloon.'
posted by Galadhwen at 10:18 AM on October 8, 2012 [1 favorite]
posted by Galadhwen at 10:18 AM on October 8, 2012 [1 favorite]
From this article linked in marienbad's comment: The five MPs - who are all members of the Free Enterprise Group of Tory MPs - say the UK needs to reward a culture of "graft, risk and effort" if it is to compete with fast-growing nations.
Er...does "graft" mean something different in the UK than it does here? Or was someone being jawdroppingly honest about their hopes for their career?
posted by dilettante at 10:20 AM on October 8, 2012 [2 favorites]
Er...does "graft" mean something different in the UK than it does here? Or was someone being jawdroppingly honest about their hopes for their career?
posted by dilettante at 10:20 AM on October 8, 2012 [2 favorites]
The devil is in the details here. The idea of giving up some rights as an employee to get some rewards as an owner is not, in and of itself bad. The question becomes "what rights do they lose, what privileges do they gain, and what becomes of those privileges when they stop being partial employee-owners?" I meant that last in the sense of all cases -- no longer a partial employee, no longer a partial owner, or both.
(more)
While normally I dislike "look at the source, it's obviously bad", there is a history here. So, I'm not willing to call it a good idea yet. Yes, a stopped clock is right twice a day. It's wrong the rest of the day -- and wrong is the way to bet on a stopped clock.
posted by eriko at 10:23 AM on October 8, 2012 [2 favorites]
(more)
While normally I dislike "look at the source, it's obviously bad", there is a history here. So, I'm not willing to call it a good idea yet. Yes, a stopped clock is right twice a day. It's wrong the rest of the day -- and wrong is the way to bet on a stopped clock.
posted by eriko at 10:23 AM on October 8, 2012 [2 favorites]
So from my cursory reading of this it looks like employee rights under this contract will change from being a great deal better than those in the US to only somewhat better.
posted by steamynachos at 6:08 PM on October 8 [+] [!]
We must not allow an exploitation gap! At this rate, the US will beat us to the bottom by a mile!
dilettante, in the UK it means work (usually termed hard graft, i.e. hard work).
posted by Drexen at 10:28 AM on October 8, 2012 [1 favorite]
posted by steamynachos at 6:08 PM on October 8 [+] [!]
We must not allow an exploitation gap! At this rate, the US will beat us to the bottom by a mile!
dilettante, in the UK it means work (usually termed hard graft, i.e. hard work).
posted by Drexen at 10:28 AM on October 8, 2012 [1 favorite]
This invites another circlejerk about evil Tories, and so on, and after the Beecroft report we clearly have to keep an eye on them. But it's pretty clear that you can't have the same employment protections for an enormous multinational company and three guys over a chip-shop. If you have ten thousand employees, you can balance these things out statistically, but if there are only a handful of people, a company which is behaving with complete decency can be put under enormous strain on the roll of a dice. Not to mention the differing resources for small and large companies to manage compliance. In principle, giving people equity in the business would seem to be a reasonable way to trade these things off. That's not to say that I trust the process to be managed well, or fairly.Employee protections don't kick in until after a certain amount of time in post. A small business owner is much more likely to see and know all about an employee before that time is reached, because they work more closely with them. They have time enough to get rid if they think the employee is no good.
Er...does "graft" mean something different in the UK than it does here? Or was someone being jawdroppingly honest about their hopes for their career?"Graft" means toil, labor, hard work.
posted by Jehan at 10:29 AM on October 8, 2012 [1 favorite]
It just looks like a bait and switch to me.
You start by getting people to give up some rights for lots of shares and then gradually it's more rights, less shares and eventually (when all workers have taken this option) they just say, "hey, no one has these rights anyway, let's stop encumbering companies with this giving shares away burden" and all of a sudden you have no rights, no shares and BAM! full on feudalism.
I know this is overly dramatic, crazy talk. I know that. But it's still a move in completely the wrong direction.
Give workers more rights AND more ownership and everyone comes out better.
posted by Just this guy, y'know at 10:30 AM on October 8, 2012 [16 favorites]
You start by getting people to give up some rights for lots of shares and then gradually it's more rights, less shares and eventually (when all workers have taken this option) they just say, "hey, no one has these rights anyway, let's stop encumbering companies with this giving shares away burden" and all of a sudden you have no rights, no shares and BAM! full on feudalism.
I know this is overly dramatic, crazy talk. I know that. But it's still a move in completely the wrong direction.
Give workers more rights AND more ownership and everyone comes out better.
posted by Just this guy, y'know at 10:30 AM on October 8, 2012 [16 favorites]
Capitalism would work much better if everybody in the system is actually a capitalist to some degree, rather than just a cog.
Well, you are assuming that Capitalism is suppose to benefit everyone, yes. I do not believe this is how Capitalism has traditionally worked, nor how Capitalists view it.
I wonder if the purpose of this plan is to reduce capital gains taxes on people who already own substantial equity in companies as well as disenfranchising workers.
Give workers more rights AND more ownership and everyone comes out better.
Well, except the people who buy the people who propose the laws....
posted by GenjiandProust at 10:33 AM on October 8, 2012 [2 favorites]
Well, you are assuming that Capitalism is suppose to benefit everyone, yes. I do not believe this is how Capitalism has traditionally worked, nor how Capitalists view it.
I wonder if the purpose of this plan is to reduce capital gains taxes on people who already own substantial equity in companies as well as disenfranchising workers.
Give workers more rights AND more ownership and everyone comes out better.
Well, except the people who buy the people who propose the laws....
posted by GenjiandProust at 10:33 AM on October 8, 2012 [2 favorites]
Is there a more complete breakdown of the proposal somewhere? There just isn't enough meat on this to know what the real story is.
posted by JPD at 10:33 AM on October 8, 2012 [1 favorite]
posted by JPD at 10:33 AM on October 8, 2012 [1 favorite]
Give workers more rights AND more ownership and everyone comes out better.
Well, except the people who buy the people who propose the laws....
I very purposefully said better rather than richer. Because you're entirely right, the economic warlords would probably come out poorer, but I want to suggest that being richer isn't necessarily better. They'd still be at the top of the curve, but the curve would be much shallower.
Richard Wilkinson and Kate Pickett make this argument far better than I can.
But then again, it's not for certain that they would be poorer. Make all the poor people richer and they buy more stuff, claim fewer benefits, produce more, learn more, invent more and the whole world gets richer. (I don't have the science to back this argument up, I just like it)
posted by Just this guy, y'know at 10:43 AM on October 8, 2012 [1 favorite]
Well, except the people who buy the people who propose the laws....
I very purposefully said better rather than richer. Because you're entirely right, the economic warlords would probably come out poorer, but I want to suggest that being richer isn't necessarily better. They'd still be at the top of the curve, but the curve would be much shallower.
Richard Wilkinson and Kate Pickett make this argument far better than I can.
But then again, it's not for certain that they would be poorer. Make all the poor people richer and they buy more stuff, claim fewer benefits, produce more, learn more, invent more and the whole world gets richer. (I don't have the science to back this argument up, I just like it)
posted by Just this guy, y'know at 10:43 AM on October 8, 2012 [1 favorite]
Just this guy, that was my thought as well. Leaving aside the question of how valuable these shares would actually turn out to be in the end -- especially if you get fired under your new lack of protections, and the employer is in charge of buying them back -- I just can't see the supposed gains being passed on to the employee at anything like a fair rate of exchange compared to what they're losing. Bait and switch is right; the shares are just colourful flag to be waved while real, hard-won rights are yanked away.
I'm seriously shocked at the amount of eltisit, anti-workforce bile that's been festering away in the tory party and is now starting to ooze into the open. Sickening.
posted by Drexen at 10:45 AM on October 8, 2012 [4 favorites]
I'm seriously shocked at the amount of eltisit, anti-workforce bile that's been festering away in the tory party and is now starting to ooze into the open. Sickening.
posted by Drexen at 10:45 AM on October 8, 2012 [4 favorites]
Presumably you can't offer the shares unless you agree a way to value them or offer up some sort of legal protection in the case of disputes surrounding the valuation. Same goes for the value of the business at the time of the grant.
I mean lots of industries have these sort of mechanisms, the new twist here is that you get to eliminate a pool of worker protections in exchange for the equity.
posted by JPD at 10:50 AM on October 8, 2012
I mean lots of industries have these sort of mechanisms, the new twist here is that you get to eliminate a pool of worker protections in exchange for the equity.
posted by JPD at 10:50 AM on October 8, 2012
How much is 150 years of fighting for labour rights worth? Somewhere between £2,000 and £50,000.
posted by daveje at 10:51 AM on October 8, 2012 [20 favorites]
posted by daveje at 10:51 AM on October 8, 2012 [20 favorites]
The whole thing's obvious bollocks, but it's quite clever as a piece of propaganda/social control.
Remember the Thatcher invention of 'share owning democracy'? In reality this meant just selling off nationalised industries, for the long term benefit of big international capital while the ordinary guy made 200 quid, but it got sold like it was opening up capitalism etc.
So now this seems to be a propaganda exercise where ordinary workers can all feel like they're getting cool Silicon Valley-style 'startup' 'options' and 'vesting' and be like that Napster guy played by Justin Timberlake.
posted by colie at 10:55 AM on October 8, 2012 [1 favorite]
Remember the Thatcher invention of 'share owning democracy'? In reality this meant just selling off nationalised industries, for the long term benefit of big international capital while the ordinary guy made 200 quid, but it got sold like it was opening up capitalism etc.
So now this seems to be a propaganda exercise where ordinary workers can all feel like they're getting cool Silicon Valley-style 'startup' 'options' and 'vesting' and be like that Napster guy played by Justin Timberlake.
posted by colie at 10:55 AM on October 8, 2012 [1 favorite]
Chavenet: Google did, in fact, do this, and continues to do it. The main difference is that google did not require you to waive any of your rights.
Any company can do this, give their employees the ability toarticate in the equity of the business. Largely and historically it tends to work out well, largely because it aligns the incentives of all of the agents: when the business does well, so do the employees. Taking away rights is not necessary to reap the benefits, and in fact, probably reduces some of the beneficial incentive alignment.
posted by Freen at 11:10 AM on October 8, 2012 [4 favorites]
Any company can do this, give their employees the ability toarticate in the equity of the business. Largely and historically it tends to work out well, largely because it aligns the incentives of all of the agents: when the business does well, so do the employees. Taking away rights is not necessary to reap the benefits, and in fact, probably reduces some of the beneficial incentive alignment.
posted by Freen at 11:10 AM on October 8, 2012 [4 favorites]
Personally, I think workers ought to own the businesses that they work for and keep all of their current rights.
Nice to see that a right-wing government with really no mandate at all, holding power by the slenderest of compromises, is once again clearly preparing to ram through radical social engineering.
When will people learn that if you give the right an inch, they will take a mile? (And then blame you for being divisive.)
posted by lucien_reeve at 11:36 AM on October 8, 2012 [16 favorites]
Nice to see that a right-wing government with really no mandate at all, holding power by the slenderest of compromises, is once again clearly preparing to ram through radical social engineering.
When will people learn that if you give the right an inch, they will take a mile? (And then blame you for being divisive.)
posted by lucien_reeve at 11:36 AM on October 8, 2012 [16 favorites]
This is all a question about details for me: I tend to think that workers owning a (voting) share of their employment tends to benefit both the employer and the employee relationship by reminding them that they're in it together, but there are plenty of ways to set this up so it's fucking terrible.
posted by klangklangston at 11:51 AM on October 8, 2012 [2 favorites]
posted by klangklangston at 11:51 AM on October 8, 2012 [2 favorites]
Trying to put a positive spin on it, against my better instincts ("everything is worse with tories"), there is one category of workers for whom this is probably a good deal: young male startup monkeys signing on with a new dot-com. Their expectation of employment tenure is minimal (they probably think there's a 50/50 chance the company will implode within 12 years), they've got high value skills that mean they can find more work within weeks if they are fired, and they aren't planning on getting pregnant (because: male). It's a brogrammer's charter, in other words (tax free equity)!
I suspect this idea has its origin in some lobbyists from silicon roundabout bending Georgie's ear, asking him to promote the entrepreneurial spirit among their work force. Such a shame that the entire work-force desn't consist of 22-year-old risk-friendly male high-skill professionals ...
posted by cstross at 12:06 PM on October 8, 2012
I suspect this idea has its origin in some lobbyists from silicon roundabout bending Georgie's ear, asking him to promote the entrepreneurial spirit among their work force. Such a shame that the entire work-force desn't consist of 22-year-old risk-friendly male high-skill professionals ...
posted by cstross at 12:06 PM on October 8, 2012
But it's pretty clear that you can't have the same employment protections for an enormous multinational company and three guys over a chip-shop.
The Domino's Pizza franchise in the midlands that used trafficked human slaves to make their pies qualified as a small business.
posted by srboisvert at 12:07 PM on October 8, 2012 [3 favorites]
The Domino's Pizza franchise in the midlands that used trafficked human slaves to make their pies qualified as a small business.
posted by srboisvert at 12:07 PM on October 8, 2012 [3 favorites]
What occurs to me to ask is, how long will it take such shares to vest? Do you get them as soon as you sign on, in which case you can give notice after a month and keep them? Or do you have to work for $EMPLOYER for, say, 24 months? In which case, what if they fire you at 23 months?
No, I'm not cynical or anything ...
posted by cstross at 12:07 PM on October 8, 2012 [1 favorite]
No, I'm not cynical or anything ...
posted by cstross at 12:07 PM on October 8, 2012 [1 favorite]
It's fucking terrible.
As of three years ago, the average cost of redundancies was over £16,000. The average cost of unfair dismissal is around £14,000.
Partly it's due to the fact that my formative years were spent as a Scot during Thatcher's time in office, but I have a deep mistrust of any form of labour legislation carried out by the Tories. The aim of the Thatcher government was to abolish the whole idea of an organised working class, and to roll back all the achievements of the labour movement. This is just more of the same, carried out by another bunch of southern posh boys. Just ask yourself: who is this idea supposed to benefit? Not employees, that's for sure. This is more class warfare, just dressed up better than usual.
There's a good reason why, in most sentences I utter on the subject, that the word 'Tory' is usually followed by the word 'scum'.
posted by daveje at 12:09 PM on October 8, 2012 [7 favorites]
As of three years ago, the average cost of redundancies was over £16,000. The average cost of unfair dismissal is around £14,000.
Partly it's due to the fact that my formative years were spent as a Scot during Thatcher's time in office, but I have a deep mistrust of any form of labour legislation carried out by the Tories. The aim of the Thatcher government was to abolish the whole idea of an organised working class, and to roll back all the achievements of the labour movement. This is just more of the same, carried out by another bunch of southern posh boys. Just ask yourself: who is this idea supposed to benefit? Not employees, that's for sure. This is more class warfare, just dressed up better than usual.
There's a good reason why, in most sentences I utter on the subject, that the word 'Tory' is usually followed by the word 'scum'.
posted by daveje at 12:09 PM on October 8, 2012 [7 favorites]
Suckers, we get to give up all of these things in the US already without the hassle of having to own anything.
posted by adamdschneider at 12:16 PM on October 8, 2012 [11 favorites]
posted by adamdschneider at 12:16 PM on October 8, 2012 [11 favorites]
Dividend and Conquer.
posted by srboisvert at 12:48 PM on October 8, 2012 [5 favorites]
posted by srboisvert at 12:48 PM on October 8, 2012 [5 favorites]
Employee protections don't kick in until after a certain amount of time in post. A small business owner is much more likely to see and know all about an employee before that time is reached, because they work more closely with them. They have time enough to get rid if they think the employee is no good.
Fair point, although that's unfair in its own way. It encourages a 'good egg' style of employment. Someone who with a nudge and a wink can be trusted.
And, of course, it's not necessarily an issue of the worker behaving badly, maternity being the obvious example. Another way around that case would be having government rather than small business pay for maternity leave. I'd suggest pursuing either option would be better than the status quo, although obviously they come from opposite ends of the ideological spectrum.
posted by Marlinspike at 1:14 PM on October 8, 2012
Fair point, although that's unfair in its own way. It encourages a 'good egg' style of employment. Someone who with a nudge and a wink can be trusted.
And, of course, it's not necessarily an issue of the worker behaving badly, maternity being the obvious example. Another way around that case would be having government rather than small business pay for maternity leave. I'd suggest pursuing either option would be better than the status quo, although obviously they come from opposite ends of the ideological spectrum.
posted by Marlinspike at 1:14 PM on October 8, 2012
I very purposefully said better rather than richer. Because you're entirely right, the economic warlords would probably come out poorer, but I want to suggest that being richer isn't necessarily better. They'd still be at the top of the curve, but the curve would be much shallower.
But, with modern Capitalism, better = richer. This seems to be a trap that is now inescapable within the current system. Profit and accumulation is the only metric by which people can rank value. Of course, this is a terrible system, since it pretty much has to divide every transaction into a winner and a loser, and,, coupled with an intense desire for short-term gains over long term planning, is showing all sorts of crazy outcomes, like, say, trying to get people to sell their social safety net for a one-time cash but out.
In some ways, this is the direct opposite of this thread on an ill=planned college funding scheme....
posted by GenjiandProust at 1:40 PM on October 8, 2012 [2 favorites]
But, with modern Capitalism, better = richer. This seems to be a trap that is now inescapable within the current system. Profit and accumulation is the only metric by which people can rank value. Of course, this is a terrible system, since it pretty much has to divide every transaction into a winner and a loser, and,, coupled with an intense desire for short-term gains over long term planning, is showing all sorts of crazy outcomes, like, say, trying to get people to sell their social safety net for a one-time cash but out.
In some ways, this is the direct opposite of this thread on an ill=planned college funding scheme....
posted by GenjiandProust at 1:40 PM on October 8, 2012 [2 favorites]
And, of course, it's not necessarily an issue of the worker behaving badly, maternity being the obvious example. Another way around that case would be having government rather than small business pay for maternity leave. I'd suggest pursuing either option would be better than the status quo, although obviously they come from opposite ends of the ideological spectrum.The government does pay for maternity leave. The business pays the employee SMP, then the HMRC refunds that cost between 92 and 100% of the total. HMRC will also advance SMP to small businesses that can't cover the costs themselves while also paying for a temp.
posted by Jehan at 1:44 PM on October 8, 2012 [2 favorites]
New Statesman: Osborne's "employee-owner" plan is Beecroft through the back-door
There is, though, one last twist to the story. Dan Davies, of Crooked Timber, has been tweeting about the other implication of offering up to £50,000 shares tax free: if you're thinking of starting up a private firm, it could let you get away with not paying much tax at all.posted by ennui.bz at 1:55 PM on October 8, 2012 [2 favorites]
The founders of a company rarely need much employee protection; and since they are also the ones who choose how much the shares are "worth", it might be extremely easy to end up owning large proportions of a new company with permanent tax-free status. A similar dodge was used by Mitt Romney; his retirement savings, which could only accept $450,000 in nominal shares during his years at Bain Capital, are now worth over $21m. When you say how much a company is worth, limits don't count for much.
The government does pay for maternity leave. The business pays the employee SMP, then the HMRC refunds that cost between 92 and 100% of the total. HMRC will also advance SMP to small businesses that can't cover the costs themselves while also paying for a temp.
Thanks for the clarification. I was obviously misinformed.
posted by Marlinspike at 1:56 PM on October 8, 2012
Thanks for the clarification. I was obviously misinformed.
posted by Marlinspike at 1:56 PM on October 8, 2012
But it's pretty clear that you can't have the same employment protections for an enormous multinational company and three guys over a chip-shop.
Umm, yes you can, as most civilised countries have managed for decades.
And it's not the three guys over a chip shop employers that are driving this sort of legislation.
posted by MartinWisse at 2:38 PM on October 8, 2012 [2 favorites]
Umm, yes you can, as most civilised countries have managed for decades.
And it's not the three guys over a chip shop employers that are driving this sort of legislation.
posted by MartinWisse at 2:38 PM on October 8, 2012 [2 favorites]
Ironically this sort of legislation makes it impossible for the three chip shop employees to maintain these labor protections even if the chip shop owner wanted them to.
If the protections don't apply to everyone w/out opt-outs, those who choose to maintain them are at a labor cost disadvantage.
posted by JPD at 2:41 PM on October 8, 2012 [1 favorite]
If the protections don't apply to everyone w/out opt-outs, those who choose to maintain them are at a labor cost disadvantage.
posted by JPD at 2:41 PM on October 8, 2012 [1 favorite]
The founders of a company rarely need much employee protection; and since they are also the ones who choose how much the shares are "worth", it might be extremely easy to end up owning large proportions of a new company with permanent tax-free status.That was my first thought, also. A company that starts out being worth two grand when the shares are dolled out and ends up being worth a couple of million tax free sounds incredibly attractive. Forget about the scamming-the-employees aspect, I'd be quite happy with the scamming-the-HMRC bit.
posted by Leon at 2:41 PM on October 8, 2012 [1 favorite]
Trying to put a positive spin on it, against my better instincts ("everything is worse with tories"), there is one category of workers for whom this is probably a good deal: young male startup monkeys signing on with a new dot-com.
No, not really. For a start, it's actually worse than the normal sort of exploitative Silicon Valley startup deal, where you work far too long for far too little for that elusive chance to become a dotcom millionaire, but not while "voluntarily" giving up some of the rights that protect you (well, in Europe that is) against the worst exploitation.
posted by MartinWisse at 2:44 PM on October 8, 2012 [2 favorites]
No, not really. For a start, it's actually worse than the normal sort of exploitative Silicon Valley startup deal, where you work far too long for far too little for that elusive chance to become a dotcom millionaire, but not while "voluntarily" giving up some of the rights that protect you (well, in Europe that is) against the worst exploitation.
posted by MartinWisse at 2:44 PM on October 8, 2012 [2 favorites]
Thanks for the clarification. I was obviously misinformed.No worries.
I've been pretty misinformed on lots of things just ask JPD.
posted by Jehan at 3:02 PM on October 8, 2012
A company that starts out being worth two grand when the shares are dolled out and ends up being worth a couple of million tax free sounds incredibly attractive. Forget about the scamming-the-employees aspect, I'd be quite happy with the scamming-the-HMRC bit.
I would be a little surprised if this isn't already done by owning the shares offshore or something like that. I guess this just makes it easier to use that cash to buy a stupid house in the UK rather than in Spain.
posted by JPD at 3:03 PM on October 8, 2012
I would be a little surprised if this isn't already done by owning the shares offshore or something like that. I guess this just makes it easier to use that cash to buy a stupid house in the UK rather than in Spain.
posted by JPD at 3:03 PM on October 8, 2012
I'm assuming the shares will turn out to be worthless and a con?
posted by Artw at 4:00 PM on October 8, 2012
posted by Artw at 4:00 PM on October 8, 2012
Hah. If Google had something like this when it was a startup we would now be moaning about the 2%.First of all, google actually did give people stock options, it's totally standard for a startup. The catch is that 90% of startups fail. But people who got in on the ground floor at google made tons of money. I remember reading about how Google's first masseuse was a millionaire now.
And beyond that, 2%? Do you think Google had three million employees when it was a startup? That's how many people make up 1% of the population.
----
Anyway, this "plan" is a complete ripoff for the employees. Sure you get to "own" 0.01% of the company, or whatever, in exchange for being able to be fired. But this would be so easy to game it would be ridiculous. Just use "Hollywood" accounting to ensure that the company never makes an actual profit, rather all the excess money ends up going towards executive compensation. The employees would trade labor rights in exchange for something that can be 'lost' by the management at any time.
posted by delmoi at 10:37 PM on October 8, 2012 [2 favorites]
I've worked as employee #3 at a tech start-up, in huge industrial corporations and in SMEs. I've been involved in redundancy from both sides of the table. The current employee statutory rights package involves a lot of work from the employer, is easy to get wrong (with expensive consequences) even by professional HR, and makes recruitment and reorganisation difficult and time-consuming. It enforces compromise.
And all this is a good thing. A company is not exclusively about shareholder value: it is an organisation which claims the greater part of people's lives, and offers the greater part of their freedoms. If you don't want the responsibilities of running that - and yes, that means dealing with people who can be crass, greedy, manipulative and difficult - then don't take the job on.
A good, well-run company has no problems with employee rights that can't be handled. A highly committed, motivated workforce won't care about their rights either, excepting in the knowledge that if things go wrong there's a safety net of fairness to catch them. Believe me, that doesn't reduce people's motivations. Excitement and involvement beat fear and uncertainty.
A badly-run company... is a badly-run company. That's where you NEED those employee safety features.
In short: this stinks of fuck and buggery.
posted by Devonian at 1:43 AM on October 9, 2012 [4 favorites]
And all this is a good thing. A company is not exclusively about shareholder value: it is an organisation which claims the greater part of people's lives, and offers the greater part of their freedoms. If you don't want the responsibilities of running that - and yes, that means dealing with people who can be crass, greedy, manipulative and difficult - then don't take the job on.
A good, well-run company has no problems with employee rights that can't be handled. A highly committed, motivated workforce won't care about their rights either, excepting in the knowledge that if things go wrong there's a safety net of fairness to catch them. Believe me, that doesn't reduce people's motivations. Excitement and involvement beat fear and uncertainty.
A badly-run company... is a badly-run company. That's where you NEED those employee safety features.
In short: this stinks of fuck and buggery.
posted by Devonian at 1:43 AM on October 9, 2012 [4 favorites]
Naked class warfare.
posted by Ted Maul at 2:51 AM on October 9, 2012 [2 favorites]
posted by Ted Maul at 2:51 AM on October 9, 2012 [2 favorites]
It's perhaps worth noting that Adrian Beecroft, who lurks in the background of these proposals, had a case for unfair dismissal go against him, which cost his company £150,000.
The underlying problem right now is demand, not supply, and these proposals do absolutely nothing to fix the demand issue. It's another example of right-wingers using an economic crisis to attack worker's rights for their own profit.
posted by daveje at 2:55 AM on October 9, 2012 [3 favorites]
The underlying problem right now is demand, not supply, and these proposals do absolutely nothing to fix the demand issue. It's another example of right-wingers using an economic crisis to attack worker's rights for their own profit.
posted by daveje at 2:55 AM on October 9, 2012 [3 favorites]
I'm a little surprised (and no doubt Gideon is pleased) that the coverage of Osborne's speech has focused on this one point to the exclusion of the swingeing benefit cuts that were also proposed. Housing benefit for under-25's will be severely restricted, and (in addition to the existing household cap on total benefits) there will be no automatic increase in benefits for extra children.
As Osborne later told the Tory faithful: "How can we justify giving flats to young people who have never worked, when working people twice their age are still living with their parents because they can't afford their first home?
"How can we justify a system where people in work have to consider the full financial costs of having another child, whilst those who are out of work don't?"
Why not just sterilise the poor and be done with it? When you look at the thoroughness and shamelessness of the assault on the (working and non-working) poor and the young, I don't even think I'd be surprised if the next budget included proposals for workhouses and pre-school chimneysweeps.
posted by Jakey at 3:30 AM on October 9, 2012
As Osborne later told the Tory faithful: "How can we justify giving flats to young people who have never worked, when working people twice their age are still living with their parents because they can't afford their first home?
"How can we justify a system where people in work have to consider the full financial costs of having another child, whilst those who are out of work don't?"
Why not just sterilise the poor and be done with it? When you look at the thoroughness and shamelessness of the assault on the (working and non-working) poor and the young, I don't even think I'd be surprised if the next budget included proposals for workhouses and pre-school chimneysweeps.
posted by Jakey at 3:30 AM on October 9, 2012
Good point, Jakey. Jesus christ, he's loathsome. "Our drive to over-inflate house prices and make the basic costs of living and childcare prohibitively expensive haven't reduced everyone in the country to utter misery yet! Look, there's some over there who aren't totally abject! I'll not stand for this!"
posted by Drexen at 4:28 AM on October 9, 2012 [1 favorite]
posted by Drexen at 4:28 AM on October 9, 2012 [1 favorite]
Sometimes I get really annoyed with the Tory policies if I listen to their publicity, but then I remember that everything that they do is designed to benefit their mates at the expense of the taxpayer and the health and welfare of the majority of the public. Then it makes sense, and I acquiesce into a state of calmness. Angry, but calm.
If they really were trying to cut down on unnecessary payments, they could have a look at executive pay.
posted by asok at 6:42 AM on October 9, 2012 [1 favorite]
If they really were trying to cut down on unnecessary payments, they could have a look at executive pay.
posted by asok at 6:42 AM on October 9, 2012 [1 favorite]
Anyway, this "plan" is a complete ripoff for the employees. Sure you get to "own" 0.01% of the company, or whatever, in exchange for being able to be fired. But this would be so easy to game it would be ridiculous. Just use "Hollywood" accounting to ensure that the company never makes an actual profit, rather all the excess money ends up going towards executive compensation.
Not just executive compensation. This stuff is easy:
1) create a holding company, preferably in a tax haven ;
2) ensure that the holding company keeps a controlling stake in the UK Plc. (this could be made even easier if you manage to get the shareholder-employees to delegate their voting rights to a less-than-independent entity) ;
3) create a transfer-pricing structure that funnels all and any profits from the UK Plc to the holding company (management fees, IP rights, etc., anything pricey and difficult to value will do) ;
4) laugh from your tropical paradise at the "owner-employees" of the UK Plc (and, accessorily, at other minority shareholders and the taxman).
And you know the beauty of all this? That if you are a large, multinational company, you are almost certainly already doing it!
I'd like to know the details on how the voting rights of the "owner-employee" shares will be handled, because if there's the remotest chance that these rights end up in the hands of the management, there's going to be a mass orgasm at the executive boards of the Footsie 100...
posted by Skeptic at 7:24 AM on October 9, 2012
Not just executive compensation. This stuff is easy:
1) create a holding company, preferably in a tax haven ;
2) ensure that the holding company keeps a controlling stake in the UK Plc. (this could be made even easier if you manage to get the shareholder-employees to delegate their voting rights to a less-than-independent entity) ;
3) create a transfer-pricing structure that funnels all and any profits from the UK Plc to the holding company (management fees, IP rights, etc., anything pricey and difficult to value will do) ;
4) laugh from your tropical paradise at the "owner-employees" of the UK Plc (and, accessorily, at other minority shareholders and the taxman).
And you know the beauty of all this? That if you are a large, multinational company, you are almost certainly already doing it!
I'd like to know the details on how the voting rights of the "owner-employee" shares will be handled, because if there's the remotest chance that these rights end up in the hands of the management, there's going to be a mass orgasm at the executive boards of the Footsie 100...
posted by Skeptic at 7:24 AM on October 9, 2012
But it's pretty clear that you can't have the same employment protections for an enormous multinational company and three guys over a chip-shop.
Employment law considers the proportionality of a response when considering fairness of a dismissal or redundancy. The fact that the business needs of chip shops and multinationals may be different is already built in to the system.
But this will likely never happen anyway. Many Tories are just terrified of losing core support to the right (i.e. UKIP) in local and European elections between now and the general election. The right wing is being appeased with lots of juicy sounding policy, but I don't think most of it is ever expected to see the light of day. I don't think Clegg is quite stupid enough to fall on his sword for clearly unworkable policy many in his party will hate. If I'm wrong he deserves everything he gets and more. If I'm right most of this stuff probably won't even make it into a prospective Tory manifesto.
posted by howfar at 9:08 PM on October 9, 2012
Employment law considers the proportionality of a response when considering fairness of a dismissal or redundancy. The fact that the business needs of chip shops and multinationals may be different is already built in to the system.
But this will likely never happen anyway. Many Tories are just terrified of losing core support to the right (i.e. UKIP) in local and European elections between now and the general election. The right wing is being appeased with lots of juicy sounding policy, but I don't think most of it is ever expected to see the light of day. I don't think Clegg is quite stupid enough to fall on his sword for clearly unworkable policy many in his party will hate. If I'm wrong he deserves everything he gets and more. If I'm right most of this stuff probably won't even make it into a prospective Tory manifesto.
posted by howfar at 9:08 PM on October 9, 2012
« Older Just how gay is Seattle? | A Bend in the River Newer »
This thread has been archived and is closed to new comments
posted by marienbad at 9:48 AM on October 8, 2012 [7 favorites]