The government has published a consultation document on its recently announced proposal to introduce a new status of "employee owner".
In its initial announcement earlier this month, the government indicated that employees would be able to waive certain statutory employment rights, (namely unfair dismissal (other than automatically unfair dismissal), the right to receive a statutory redundancy payment and the right to request flexible working/time off for training), in exchange for shares in the employing company, (of between £2,000 to £50,000 in value, and which will be exempt from capital gains tax).
The consultation focuses on implementation of the proposal "in practical terms" and "the implications for employers, individuals and the labour market in general". It does not address tax issues in any detail. Issues on which views are sought include:
- how shares should be valued, including at the point at which the employer buys them back ie when the employee leaves?
- what level of advice should individuals and employers receive before entering into the new form of "employee owner" contract? and
- what impact, if any, will the proposal have on employment tribunal claims eg for discrimination?
The consultation period is short - it closes on 8 November 2012. We will report again when final details are announced. The government has said that it will enact the proposal via a clause in the Growth and Infrastructure Bill, which is currently going through Parliament and expected to take effect in April 2013.