Osborne offers workers shares for giving up employment rights

George Osborne, the chancellor, has announced plans to allow businesses to offer workers £2,000 to £50,000 in shares on condition that they give up employment rights.

The rights given up would include unfair dismissal, redundancy, and the right to request flexible working or time off for training. Women on maternity leave would have to give firms 16 weeks’ notice of their return to the workplace, instead of the current eight.

In return, workers who accepted an ‘owner-employee’ contract would be exempt from paying capital gains tax on their shares.

A BIS spokesman said, after Osborne launched the scheme at the Conservative Party conference yesterday, that the move would apply to “companies of any size”.

Owner-employee status would be optional for existing employees but firms could “choose to offer only this new type of contract for new hires”.

The spokesman said a consultation would be launched later this month so the new contracts could be offered from April 2013.

Owner-employees receiving full CGT relief on the shares awarded as part of their contract would remain eligible for existing employee share ownership schemes.

“Companies recruiting owner-employees will continue to have the option of inserting more generous employment conditions into the employment contracts if they want to,” the spokesman added.

Philip Henson, joint head of employment law at DKLM in Shoreditch, said unscrupulous employers could simply give their employees a small amount of non-voting shares, such as £2,000, and then send “those lambs to the slaughter as and when they choose”.

Henson said that “unless they can tie their dismissal to a protected characteristic under the Equality Act 2010” or another strand of employment law, they might be without a remedy.

“This has a very, very low chance of becoming law,” he said. “I don’t think it would work in practice.

“It might work for micro-businesses but for the larger companies, it’s not going to be a runner at all.”