Chancellor of Exchequer announces plans for employee-owner employment contract.
George Osborne MP has announced that there will be a new type of employment contract in the UK that will see the introduction of ‘employee-owners’.
HM Treasury states that the new employee-owners will exchange some of their UK employment rights of ownership in the form of shares in the business they work for, with any gains being exempt from capital gains tax.
Between £2,000 ($3,200/€2,500) and £50,000 ($80,000/€62,000) of shares that are exempt from tax will be given to employees, who in return will give up their UK rights on fair dismissal, redundancy, and the right to request flexible working and time off for training. They will also be required to provide 16 weeks’ notice of a firm date of return from maternity leave, rather than the usual eight weeks notice required.
The new kind of contract will be for use by companies of any size, but is specifically aimed at fast-growing SMBs wanting to create a flexible workforce. While existing employees will have the option of adopting the employee-owner status, companies will be able to choose to offer on this new type of contract when recruiting new employees, but will still be able to insert more generous employment conditions into the contract if they wish.
The new type of contract is expected to be available for use by companies from April 2013, with the Government planning to consult on some of the contract’s details by the end of 2012.