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Thursday, 18 October 2012 15:56

Rights ownership exchange

Written by  Philip Hyland
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The Chancellor has announced that it is being proposed that employees will be allowed to give up some statutory rights in the workplace in return for ownership of the business.

Whilst I can see the attraction of this in principle, in practice it will be devilishly difficult to make work properly.In particular I can see resistance from owners not wanting to give up some ownership to workers. If anything the trend in recent years has been for ownership to be tightly and narrowly held (see Venture Capital and Private Equity business model.)

Practitioners will be aware that some of most difficult employee terminations are those where employees are leaving a privately owned business where they have a shareholding. The terms of departure can be very tricky as valuing a privately owned business is expensive and complex with no agreed method of valuation. Sometimes a valuation can cost more than the shares are worth.

Quite where this proposal leaves the employees of John Lewis, Waitrose and the Co-Op is anyone's guess but presumably their statutory employment rights are embedded.

If the proposal is to work a shareholders agreement will be a must. My concern is that this may avoid Tribunal disputes but there may be an increase in shareholders disputes.

Philip Hyland

Philip Hyland

Philip Hyland
Principal
philip@pjhlaw.co.uk

Website: www.pjhlaw.co.uk E-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it
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