Government opens consultation on employee owner scheme

The Government has launched a consultation setting out plans for ‘employee owners’ who sacrifice employment rights like the right to request flexible working in return for shares in their company.

The Government says that under the new employment status, employee owners will have a different set of employment rights and they will be given shares in the company of between £2,000 and £50,000. Any increase in value of these shares will not be subject to capital gains tax.

It state that employees taken on this way will have all of 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 have to give more notice to their employer of their intention to return from maternity or adoption leave early.


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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 Government says it will be “entirely voluntary” for the employer to offer the new status – and for an individual to choose to accept it.

An employer will be able to choose the new status and could still choose to offer more rights to their staff (e.g. the right to request flexible working or higher levels of contractual redundancy pay), according to the consultation paper.

Companies of any size will be able to use this new kind of contract, but the Government says it is principally intended for fast growing small and medium sized companies that would benefit most from a flexible workforce.

The consultation will close on 8 November and 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.



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