Employee Share Ownership for New Employee-Owners

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George Osborne, Chancellor of the Exchequer, announced Government plans for a new type of employment contract which will be known as an owner-employee contract whereby employee-owners will forgo some of the employment rights in return for shares in the business on which there will be no capital gains tax. Companies of all sizes will be eligible to use this new type of contract but it is primarily aimed for fast growing small to medium sized businesses who are looking to build a more flexible workforce. A consultation process is expected to commence later this month on the detail of the proposal but it is anticipated that this new contract will be in use from April, 2013. Employees will receive between £2,000 and £50,000 of shares in return for giving up their UK rights on unfair dismissal, redundancy, time off for training, the right to request flexible working and will be obliged to give 16 weeks’ notice of their return from maternity leave rather than the current 8 weeks’ notice. The new contract will be optional for existing employees but any company can choose to offer only this type of contract for new recruits to the business. The devil will be in the detail….

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