The chancellor of the exchequer, George Osborne has announced plans for a new employee-owner contract at the Conservative Party conference, which will enable business owners to offer staff an equity stake in the company, in exchange for giving up some employment rights.
Aimed at enabling a flexible workforce within small to medium-sized enterprises (SMEs) and start-ups, the contract will see employers offering staff between £2,000 and £50,000 of shares that are exempt from capital gains tax.
In return, employees will agree to give up their UK rights on unfair dismissal, redundancy, and the right to request flexible working and time off for training.
Working mothers will also be expected to provide 16 weeks’ notice of their return from maternity leave, rather than the usual eight.
Employee-owner status will be available to existing employees from April 2013 and business owners are to have the option of offering only the new contract to future staff.
The government will hold a consultation on the finer details of the legislation later this month, which will include a discussion of provisions to ensure that companies buy back shares at a reasonable price upon staff dismissal, rather than simply revoking them.
Osborne is hopeful that the new contract will increase staff interest and engagement within the company: "This idea is particularly suited to new businesses starting up and small and medium-sized firms,” he said. "Get shares and become owners of the company you work for. Owners, workers and the taxman, all in it together."
Susan Evans, employment partner at law firm Lester Aldridge LLP commented: “There will certainly be a lot of detail which will need to be worked out in the consultation over this proposal if the rights swap is to be effective and workable in practice – and if it is to be an attractive and viable option to the small and medium businesses it is targeted at.”