Nuttall Review of Employee Ownership

The Deputy Prime Minister, Nick Clegg, has confirmed today that it will act on the recommendations put forward in Graeme Nuttall's Review of Employee Ownership. 

Graeme Nuttall, a partner at Field Fisher Waterhouse and the leading expert in employee ownership structures and legal issues, was commissioned by the Deputy Prime Minister in January 2012 to examine how to promote employee ownership in the private sector and spread the benefits into the wider economy. 

The Nuttall Review, published today, sets out 28 recommendations. Perhaps the most significant, from an employment law point of view, is the recommendation that the Government introduce a statutory Right to Request employee ownership.  

The Deputy Prime Minister confirmed that the Government will issue a call for evidence on how this Right to Request could work this week. This will examine what the minimum number of employees needed to make a request should be; what fair grounds for turning a request down could be; whether requests should be allowed at any time and, crucially, whether the best way to achieve this is through a new statutory right or other mechanism. The Minister for Employment Relations, Norman Lamb, has also stated that he is looking forward to working out the detail of the Right to Request, whilst keeping it "light touch and workable for employers". 

The fact that the Government has commissioned and, in initial comments, supports the findings of the Nuttall Review confirms the widening appreciation of and interest in promoting employees taking ownership in and control of the businesses for which they work.  Evidence that employee owned businesses not only are happier places for their employees but that they may perform better than their competitors, particularly during economic downturns, lends the report further momentum. 

Recently we have advised on a number of path finding public sector mutualisation programmes, which while generally enormously positive, have included situations in which, despite best intentions, employees and employers have come to the point of litigation over disputed employee ownership proposals. If official guidance from ACAS had been available or official recognition given through a Right to Request this would have provided a much clearer basis for the employee ownership proposals to be discussed.  Other Rights to Request have worked well and have generally encouraged informal discussions rather than triggered reliance on the statutory procedure.

The Government will respond formally to the Nuttall Review in the autumn, setting out an action plan for implementing its recommendations.