It states that the idea will only introduce more red tape and confusion, and its complexities will scare off small businesses.
The Coalition however, seems determined to implement the changes despite the negative responses coming in from various groups.
The Growth and Infrastructure Bill, in which the proposals to implement employee shareholder status are contained, is currently before the House of Lords, and in a letter to all members of the House, Law Society President, Lucy Scott-Moncrieff, has called for the proposals to be removed from the Bill altogether.
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The Law Society has said that it is worried that small businesses, who it says is the main target audience for this proposal, will be put off by complex tax, company law requirements and extra costs.
In her letter, Scott-Moncrieff criticised the Government for not undertaking an adequate assessment of the proposal’s likely costs and consequences, noting that the restricted period of consultation prevented constructive engagement with stakeholders.
She said:
“It is unrealistic to provide interested parties with only three weeks within which to respond to a consultation on what are complex issues covering a number of areas of law.
“The new status will cause substantial confusion for employers at the beginning, but particularly on the termination of an employee’s contract. There is potential for costly litigation on a range of complex issues which are likely to arise when an employee leaves, which runs counter to the Government’s stated aim of supporting small and medium sized enterprises through simpler regulation.”
Highlighting the contradictions in Government policy brought in with the Bill, Scott-Moncrieff said:
“The decision to restrict employee shareholders access to maternity rights and flexible working also conflicts with the Government’s commitment to family friendly policies.
“The proposals are likely to have a discriminatory impact as employers may not be aware of the interaction between the rights being sacrificed and those rights governed by domestic legislation, which still apply to them. Employers would have to take this into consideration in order to avoid allegations of indirect sex discrimination.”
