Social enterprise stock market

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Stock market for social enterprise

Every cloud has a silver lining, as the saying goes and with the worrying economic conditions and uncertain times for all, there is a growing impetus for social responsibility and a more responsible capitalism, which will only benefit social enterprise.

As one indication, albeit with a modest start, is the recent announcement that the world’s first stock exchange solely for social enterprises is being started in London utilising dormant bank account funds, with an initial investment of £850,000.00. It will be called the Social Stock Exchange (SSE). The idea behind the exchange is that social enterprises will have their own market for seeking external investment.

It will be interesting to see the detail of the rules for companies wishing to join the exchange and those which may relate to external investors, since the worst thing that could happen is an abuse of this novel system by companies seeking to list on the exchange or of companies which are run well for social purposes being then controlled by shareholders solely motivated by profit. It will also be interesting to see how much interest is generated by the new exchange and what will be the position for charities, which are already closely regulated but many of whom are suffering from funding issues due to the economic downturn.

Discretionary bonuses – a legal, social and political hot potato

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Discretionary bonuses

The issue of entitlements to bonuses is always an interesting area in employment law. As with many employment law related matters, what a contract says is not necessarily definitive and extraneous facts and past practice are often important considerations, but this does not negate from the fact that it is vital, from an employer’s perspective, to have a well and carefully  worded clause in the contract of employment.

In addition, employers need to be wary of non-contractual related claims when it comes to bonuses, such as the potential for discrimination claims, so decisions and the underlying rationale for decisions should be carefully thought out and fully documented when deciding on discretionary employee rewards, just as in many other employment related decisions.

The bonus issue is particularly relevant this year as it appears that banks, under unprecedented pressure due to the general public anger at the so-called fat cat culture, are apparently likely to award a far higher number of “zero bonuses” in 2011. Senior banking employees often expect to receive what amounts to the majority of their pay each year at bonus time, so this is  a big issue and a political one, with the argument being that banks have caused a lot of the economic problems affecting the general population so should share in the necessary austerity. This approach creates legal risks that such decisions will be challenged by employees, notwithstanding that many may have clauses in their contracts providing that any bonus is discretionary.

Senior employees in banks are likely to argue that even though such clauses favour the employer, custom and practice and in all likelihood a previous established history in the employment relationship is that a bonus is an important, expected and paid part of their remuneration each year and as such, whilst there may be an element of discretion, this should not mean, in reality, an entitlement of the employer bank to pay nothing as bonus.

One option for employers is to pay a very modest bonus rather than nothing, as this makes it harder for an employee to challenge.