Owners

Under the new employment status, employee-owners will give up some of their statutory employment rights and in return they will be given shares in their employing company of between £2,000 and £50,000. Any increase in value of these shares will not be subject to capital gains tax (CGT). 

Employee-owners will have all of the rights associated with employment as an employee except for:

• Unfair dismissal rights (apart from the automatically unfair reasons for dismissal and where the dismissal is based on discriminatory grounds).
• Rights to statutory 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.

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 still choose to offer more rights to their staff (e.g. the right to request flexible working or higher levels of contractual redundancy pay). 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 would benefit most from a flexible workforce. 

The consultation sets out the proposal in detail and asks for views on how the Government can implement it. This consultation is focused on both employment law and company law issues. HM Treasury will be consulting on the tax matters separately. 

The consultation will close on 8 November 2012. 

Legislation to bring in the new employee-owner contract will be introduced 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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