New employment contract announced by George Osborne
On the 8th of October this year, the Chancellor of the Exchequer, George Osborne announced a new type of employment contract, called the employee-owner contract.
The purpose of the new contract is to enable a more flexible workforce, by removing a significant amount of an employee’s working rights in exchange for shares in the company. Although existing employees are safe from the new contract unless they choose to take it, recruiters will be able to specify that they will only hire new recruits on this contract.
Although never explicitly stated by Osborne or any of the other architects of the scheme, it appears to be an attempt to boost the economy by increasing the output of workers. The scheme will act as a carrot and stick approach to boosting employee’s work ethic and productivity.
The carrot to working harder will be that their rewards from working will be directly related to the success of the company, pushing them to work harder and achieve more as this will have a direct effect on their earnings.
The stick is that if they fail to achieve what is required of them, then they can be fired or made redundant with no right to appeal the decision. Thus job security will be significantly lowered and the drive to work hard and retain their employment will be increased.
In a way, this places employees closer to the state that company directors find themselves in. If a company director fails to achieve and the company goes bust, that’s the end of the line for the business. Then as the director has ownership their efforts are directly proportional to their work done.
BPM Maintenance is a small business in Bath and a property maintenance company offering plumbing services, roofing services, electrical services and a bevy of other trades to Bath, Bristol, Somerset and Wiltshire.