Government finalising its plans for 'employee owner' scheme
The Government is now finalising its plans to introduce a new employment status next April in which some workers will be able to become ‘employee owners’.
The scheme was announced by Chancellor George Osborne on 8th October. The Department for Business, Innovation and Skills (BIS) is now conducting a consultation on the plans which are designed to increase flexibility for companies when hiring people.
Under the new status, employees can trade some of their employment rights for company shares worth between £2,000 and £50,000. The shares will be exempt from Capital Gains Tax if they increase in value.
BIS says that employees taken on in this way will have all the rights associated with other employees except for:
- unfair dismissal rights (apart from automatically unfair reasons and where dismissal is based on discriminatory grounds)
- rights to redundancy pay
- certain statutory rights to request training
- the statutory right to request flexible working
Employee owners will also have to give more notice to their employer of their intention to return from maternity or adoption leave early.
The scheme will be voluntary for both employers and employees. Employers will also be able to offer the new status and provide more rights to their staff if they wish.
The new contracts can be offered by all companies, but it’s mainly intended for fast growing small and medium sized enterprises that would benefit most from a flexible workforce.
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.”
The consultation focuses on both employment and company law. The Treasury is consulting separately on the tax issues raised.
The new contract status is being introduced as part of the Growth and Infrastructure Bill.
Please contact Sarah Liddiard if you would like more information about the issues raised in this article or any aspect of employment law and company law.