A Flexible Model for Efficient Employee Participation in UK Companies

Journal of Corporate Law Studies (2020) 20(2), 453-493

52 Pages Posted: 16 Apr 2020 Last revised: 21 Nov 2020

Date Written: February 17, 2020

Abstract

Corporate contractarian literature dismisses employee participation as inefficient on the grounds that, if it were efficient, it would be voluntarily adopted widely. We argue that the scarcity of employee participation in the UK can be attributed to shareholder short-termism and behavioural biases and, therefore, that the question of its efficiency remains open for companies that want to explore this possibility.

We thus propose a flexible approach that UK companies can follow to implement employee participation. Our approach takes into account the broader UK institutional framework by creating adaptable and long-term solutions for both listed and large private companies. We argue that the most pragmatic way to encourage efficient employee participation is through the introduction of formal employee advisory panels and, in the longer term, the proliferation of employee share ownership schemes coupled with special rights to appoint a number of directors in tandem with the size of employee share ownership.

Keywords: corporate governance, employee participation, employee share ownership schemes, hybrid governance, codetermination, employee advisory panels

JEL Classification: K22, K31, G30, G34

Suggested Citation

Sergakis, Konstantinos and Kokkinis, Andreas, A Flexible Model for Efficient Employee Participation in UK Companies (February 17, 2020). Journal of Corporate Law Studies (2020) 20(2), 453-493 , Available at SSRN: https://ssrn.com/abstract=3539443 or http://dx.doi.org/10.2139/ssrn.3539443

Konstantinos Sergakis

University of Glasgow ( email )

Stair Building
5 - 8 The Square
Glasgow, Scotland G12 8QQ
United Kingdom

Andreas Kokkinis (Contact Author)

University of Birmingham ( email )

Edgbaston, Birmingham B15 2TT
United Kingdom

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