Employers reject George Osborne's plan to swap workers' rights for shares

George Osborne has been given a black eye on the eve of his autumn statement by employers almost universally rejecting his plan to offer workers company shares in return for abandoning many of their employment rights.

The chancellor plans to announce on Wednesday that he will press ahead with the proposal, with some small adjustments.

It was one of the centrepieces of Osborne's speech at the party conference in October but a government consultation has revealed his proposal has won the full support of fewer than five of the 209 organisations that responded.

Osborne had proposed new employees be exempt from unfair dismissal rights, redundancy pay and the right to request flexible working, and in return they would receive shares in a company between £2,000 and £50,000 exempt from capital gains tax. Access to maternity rights would also be curtailed.

The report of a 33-week consultation undertaken by the business department on his proposal states "a very small number of responses welcomed the scheme and suggested they would be interested in taking it up".

The business department was reluctant to quantify the number of responses that welcomed the proposal, but it is understood to be between two and five.

The report shows more than two-thirds said there would no benefits or only benefits to unscrupulous employers. The formal report of the government consultation says: "Almost all respondents who identified benefits added there were also costs involved."

Many employers' organisations, including the Engineering Employers Federation (EEF) and the Federation of Small Businesses, have dismissed the plans as irrelevant, presentational, niche or likely to lead to workers enjoying three different levels of employment rights in a single company.

The Chartered Institute of Personnel and Development said: "There is very little evidence as to why this policy is needed or what impact it will have."

The EEF said: "Our members have indicated they would not implement the new status."

The Federation of Small Businesses said the proposal was innovative but "the scheme is unlikely to be appropriate for many small businesses".

More than 80% of respondents said the proposal to remove employment rights would have little or no impact on recruitment and only 11% said it might have a positive impact.

This article was written by Patrick Wintour, for The Guardian on Tuesday 4th December 2012 20.44 Europe/London

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