In his speech to the Conservative party conference yesterday, George Osborne outlined plans to allow businesses to offer employees between £2,000 and £50,000 of shares in return for agreeing to give up some of their UK employment rights.
A press notice on the Treasury website confirms that shares issued through the so-called “employee-owner” scheme will be exempt from capital gains tax. In exchange, employees will give up their 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 8.
Companies of any size will be able to use this new kind of contract, but it is principally intended for fast growing small and medium sized companies that want to create a flexible workforce.
According to the press notice, owner-employee status will be optional for existing employees, but companies will be able to choose to offer only this type of contract for new hires.
The government will consult on the details, including arrangements to ensure that if a worker leaves, the firm can buy back the shares “at a reasonable price”. Legislation to bring in the new owner-employee contract will come later this year so that companies can use the new type of contract from April 2013.
The proposals have drawn comments from some who support and some who oppose the Chancellor’s plans.
The Institute of Directors was swift to come out in favour of the scheme with its Director, Simon Walker, applauding the “innovative proposal on employee ownership, which could make a real difference to jobs and shareholding.”
Meanwhile, the general secretary of the GMB Union, Paul Kenny, dismissed the idea: “Slashing people’s employment rights under the guise of ownership schemes won’t create jobs and it won’t create growth. His attempts to dupe the electorate that he knows what he is doing have been rumbled. George Osborne has as much knowledge about economics as a stick of rhubarb.”
On October 9, 2012