Despite an almost overwhelming lack of support from UK businesses and the broader community, the UK Government has decided to push ahead with a novel employee share-ownership scheme.
In the Government’s Autumn budget statement, the Chancellor announced proposals to see employees who accept a stake in their employer’s business stripped of significant employment rights.
Although details of the scheme remain to be published and consulted on, the proposal is that employees who are given at least £2,000 worth of shares in their employer’s business will give up their UK rights of
- unfair dismissal
- redundancy
- to request flexible working; and
- time off for training.
In addition, such employees who take maternity leave will be required to provide 16 weeks’ notice of a firm date of return from maternity leave, instead of the usual eight.
The shares awarded to employees will be exempt from capital gains tax.
Companies of any size will be able to use this new kind of contract, but the UK Government expects that it will primarily be taken up by fast growing small and medium sized companies that want to create a flexible workforce.
It remains to be seen how the scheme will apply (if at all) to businesses that are not operated through a corporate structure (and therefore have no shares).
Importantly, employee-owner status will be optional for existing employees, but both established companies and start-ups will be allowed to force the scheme on new hires.
The UK Government has said that it will publish the terms of the proposed legislation before the end of the 2012 year, with the intention that the new scheme becomes live from April 2013.