Solutions

Implement an employee right to own

Implement an employee right to own

Co-operatise existing businesses to accelerate new models of ownership and increase the volume of the co-operative sector in the UK.

Scaling democratic, inclusive forms of ownership is crucial to achieving a step-change in the size of the co-operative economy. Without this, private capital will remain the privileged actor within the firm and growing returns to capital will increase inequality.

Two steps to democratise capital at scale are:

Promote co-operative or more democratic options at the point of business transition
A core strategy of a new Co-operative Development Agency should be to persuade business owners at the end of their careers to build greater democracy and take steps towards co-operatising the businesses they are seeking to pass on.

Introduce a right to own to support employee buyouts and the co-operatisation of existing business
New legislation should be introduced that would give employees a statutory right to request’ employee ownership during business succession. To support this, an early warning’ resource should be introduced, informing workforces in advance of insolvency or disposal of a viable business. There should be a variety of ways for employees to purchase part or all of a business including:

  • Share capital purchases made via savings or redundancy payments.
  • Advances of up to three years of their cash transfer-based and employer portions of their unemployment insurance benefits.
  • Debt capital financing from either the co-operative fund within the National Investment Bank for large businesses, or co-op development funds for medium to small firms based on the projections of future revenue and/​or collateral offered through the assets acquired from the target business.

Policy in practice

Projects that demonstrate the benefits or may be helped by polices like this.

  • Space4
    Space4 is a co-working space for social enterprises and worker co-operatives in the digital tech sector.
  • Schools’ Energy Co-operative
    Schools’ Energy Co-operative has installed solar panels on schools across the country, working with a network of local groups.
  • Riverford Organics
    Riverford switched to employee ownership to protect its values and independence in 2018.
  • Equal Care Co-op
    Co-op matches those seeking care with care workers and professionally trained volunteers.
  • The Larder
    This workers' co-operative connects local growers with businesses in the fightback against food poverty.
  • Suma Wholefoods
    Suma, Europe’s largest equal-pay co-op, recently celebrated its 40th birthday.
  • Richer Sounds
    Founder Julian Richer transferred 60% of his shares into a John Lewis-style trust.
  • YnNi Teg
    YnNi Teg develops and builds renewable energy generators in Wales, funded by community shares.
  • Novograf
    Former owners sold leading signage company to its workforce.
  • Aardman
    Founders of UK’s biggest animation company handed 75% share to employees to ‘safeguard independence’.