The government has managed to scrape through its plans to create a new type of employee who will be bereft of their basis employment rights in exchange for share holdings in a company.

Under the proposals a new owner-employee contract could be offered by employers to staff, giving them shares worth between £2,000 and £50,000.

In return they would lose rights including unfair dismissal, redundancy, training rights and the right to flexible working.

Any company proposing to ask employees to abandon their employment rights in return for shares will be required to provide free independent legal advice for them covering such areas as what employment rights will be lost and their voting and dividend rights.  This will be given irrespective of whether or not they choose to take up their new shareholder status and employees will have 7 days to decide whether or not to proceed with the offer.

There is concern amongst some employers of being associated with a scheme which removes the basic employment rights of its employees and is viewed by others as a massive tax avoidance scheme.  Indeed, the Office for Budget Responsibility has warned that the new shares scheme could lose the Government £1 billion in revenues due to loss of capital gains tax.

Whether this scheme will cut red tape and help businesses in the current sea of economic uncertainty…only time will tell.  What is for certain is that employers will need to spend time and money in seeking advice from HR and legal experts to ensure any proposed schemes are implemented within the framework set out.

Our blog contains regular news and updates on the world of HR Consulting.

By Bruce Ramshaw

Principal Consultant


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