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Consultation on implementing Employee Owner status

The Government has issued a consultation paper on its proposal to create a new employment status which is intended to give businesses greater choice about the contracts they can offer to staff.

The paper states the Government is aware that businesses need flexibility and freedom to allow them to grow and take on staff.  In particular, the government perceives a need to remove the fear of being taken to employment tribunal which it believes is deterring businesses from hiring. 
Businesses are currently free to choose the best arrangement for their circumstances in relation to the type of contracts they offer; full-time, part-time or fixed-term employees, workers (including agency workers) or self-employed individuals.  The decision as to which of these categories is best will be based on flexibility, control and obligation.

The government believes that there is merit in creating a new employment status to give businesses greater choice about the contracts they can offer and ensure appropriate levels of protection are maintained.  Under this new status, employee owners will receive shares with a value between £2,000 and £50,000 which will be exempt from capital gains tax on disposal.  Employee owners will have the same rights as current employees excluding unfair dismissal (except where this is automatically unfair or relates to anti-discrimination law), certain rights to request flexible working and training, and statutory redundancy pay.  Individuals will also need to give longer notice to return from maternity leave or adoption leave.

Employers can choose whether or not to operate this new employment status.

The government intends that all types of shares will be eligible for use under this arrangement and that the opportunity should be available to companies of any size.

The consultation seeks views on how to implement the employee owner status in practical terms, and aims to improve understanding on the implications for employers, individuals, and the labour market in general.

The intention is to include the legislation in 2013.

However, it still appears that the shares will be liable to income tax on any discount on issue and will not qualify for EIS or for any approved scheme.



Date: 14th November, 2012
Author: Cathy Corns


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