The Chancellor of the Exchequer, George Osborne, has announced plans to introduce a new type of employment contract – an 'owner-employee' employment contract. ‘Owner-employees’ will receive between £2,000 and £50,000 worth of shares (which will be exempt from capital gains tax) in exchange for giving up certain rights, including redundancy rights, the right to claim unfair dismissal and the right to request flexible working or time off for training.  Owner-employees will also be required to give 16 weeks’ notice of their return from maternity leave, rather than the current 8 weeks.

The new ‘owner-employee’ status will be optional for existing employees, but new employees may be required to enter into this type of contract. 

The Government has suggested that this new type of contract is principally intended for fast growing small and medium sized companies, but any type or size of company will be able to use them.

The response to the announcement has been mixed, with many saying the proposals will have little impact. The TUC general secretary Brendan Barber said:

"We deplore any attack on maternity provision or protection against unfair dismissal, but these complex proposals do not look as if they will have very much impact, as few small businesses will want to tie themselves up in the tangle of red tape necessary to trigger these exemptions.

"This looks more to be said for effect than because it will make much difference, but we will be vigilant to ensure that they do not represent the thin end of a future anti-employee wedge."

Later this month the Government will consult on some of the details of the contract (including the proposed forfeiture provisions), with a view to the new type of contract being in use by April 2013.