Employee shares

The government has published a consultation on controversial plans for its ‘employee owner’ scheme – widely dubbed as a charter to swap employee rights for shares. The consultation will close on 8 November 2012.

The move follows the Chancellor’s announcement about the proposed new scheme on 8 October. It aims to empower companies with the option to increase the flexibility of hiring and firing as their businesses grow.

Under the new type of contract, employees will be given between £2,000 and £50,000 of shares that are exempt from capital gains tax. In exchange, they will give up their UK rights on unfair dismissal, redundancy, and the right to request flexible working and time off for training, and will be required to provide 16 weeks’ notice of a firm date of return from maternity leave, instead of the usual eight.

Owner-employee status will be optional for existing employees, but both established companies and new start-ups can choose to offer only this new type of contract for new hires. Companies recruiting owner-employees will continue to have the option of inserting more generous employment conditions into the employment contract if they want to.

Business minister, Jo Swinson, said:

‘We know that engaged employees are more productive and motivated. This scheme increases the options for business and brings greater flexibility to companies and employees in determining their employment relationship.’

‘By responding to the flexible needs of fast growing companies, it will help them take people on, providing a real incentive for employers and employees.’

Legislation to bring in the new employee owner contract was introduced today (18 October) through the Growth and Infrastructure Bill. If approved, companies can offer the new contract from April 2013.

The consultation sets out the proposal in detail and asks for views on how the government can implement it. It is focused on both employment and company law issues. The Treasury will consult on the tax matters separately.

Legislation to bring in the new employee owner contract will be introduced today via the Growth and Infrastructure Bill, with the aim of companies being able to offer the new type of contract from April 2013.