08 October 2012
The Chancellor of the Exchequer, the Right Honourable
George Osborne MP, has today announced plans for a new kind
of employment contract called an owner-employee.
New owner-employees will exchange some of their UK
employment rights for rights of ownership in the form of
shares in the business they work for, any gains on which
will be exempt from capital gains tax.
Companies of any size will be able to use this new kind of
contract, but it is principally intended for fast growing
small and medium sized companies that want to create a
Under the new type of contract, employees will be given
between £2,000 and £50,000 of shares that are exempt from
capital gains tax. In exchange, they will give up
their UK rights on unfair dismissal, redundancy, and the
right to request flexible working and time off for
training, and will be required provide 16 weeks' notice of
a firm date of return from maternity leave, instead of the
Owner-employee status will be optional for existing
employees, but both established companies and new start-ups
can choose to offer only this new type of contract for new
hires. Companies recruiting owner-employees will continue
to have the option of inserting more generous employment
conditions into the employment contract if they want to.
Legislation to bring in the new owner-employee contract
will come later this year so that companies can use the new
type of contract from April 2013. The Government will
consult on some details of the contract later this month.
Notes for editors
1. Owner-employees receiving full capital gains tax
relief on the shares awarded as part of their contract will
still be eligible for existing employee share ownership
schemes such as the Enterprise Management Incentive.
2. The Government consultation on the owner-employee
contract will include the details of restrictions on
forfeiture provisions to ensure that if an owner-employee
leaves or is dismissed, the company is not able simply to
take the shares back but is able to buy them back at a