George Osborne recently announced proposals for a new type of “owner-employee” contract of employment. Currently, there are two statuses of employment under the Employments Rights Act 1996 – these are “Employee” and “Worker”. Under the new proposals, the act would be amended to create a third tier of employment status: “Employee Owners”.
Employee Owners would receive shares of between £2,000 and £50,000 and be exempt from capital gains tax, in return for giving up specified employment rights.
What does this mean for businesses?
Employee Owners will have the same rights as ordinary employees with some exceptions. Some examples of changes are listed below:
• Whilst Employee Owners forfeit their right to claim unfair dismissal, they will still be able to claim where the reason for dismissal is automatically unfair.
• Employee owners will not be entitled to a statutory redundancy payment;
• The right to return early from maternity leave, currently set at 8 weeks, is extended to 16 weeks for Employee owners