The proposed employee-owner scheme is set to offer employees the opportunity to take between £2,000 and £50,000 worth of shares in the company they work for - but you'll have to be willing to give up some of your employee rights. The scheme was announced by George Osborne at the start of the week and consultation will begin later this month with a possible commencement date as early as April 2013.
Under the proposed plans employees would receive shares worth between £2,000-£50,000 with Capital Gains Tax exemption. In return the employee would sign away certain rights - include the right to request flexible working or time off to train, the ability to sue for being mistreated, redundancy entitlements and the current eight weeks notice of return from maternity leave would be extended to 16 weeks. The scheme would be voluntary for current staff but compulsary for new hires and start up firms.
"Currently, under the law employees have to seek independent legal advice before they are able to 'waive' their employment rights," comments Leon Deakin, an Associate at law firm Thomas Eggar. "I presume this will continue to be the case, which begs the question: who pays for this advice prior to the employee starting? Probably the employer! Alternatively, the law will be changed, which leaves employees vulnerable to signing away their rights without fully understanding the impact of that decision. Given the desperation out there in the job market this is far from ideal."
James Hall, Associate in the Employment Team at Charles Russell LLP, also has reservations, commenting: "At the moment these alternative contracts have only been outlined in rough form, leaving many quesions unanswered. The status of the shares is a key aspect that needs further clarification, particularly as to whether they would need to be given or purchased and whether they would carry voting rights in line with being a true 'owner'. Depending on how the legislation is drafted there may be ample scope for any such voting rights to be limited leaving the 'real owners' in charge of the company, despite the sacrifices made by the 'employee-owners'.