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Employee owner plans to boost growth set out


BIS Department for Business Innovation and Skills - Expert Author

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18 October 2012 -  Department for Business, Innovation and Skills

A consultation setting out plans for a new employment status called an ‘employee owner’ was published today, by Business Minister Jo Swinson. The move follows the Chancellor’s announcement on 8 October and will provide companies with a new option to increase the flexibility of how they hire people and help their companies grow.

Under the new employment status, employee owners will have a different set of employment rights and they will be given shares in the company of between £2,000 and £50,000. Any increase in value of these shares will not be subject to capital gains tax.

Employees taken on this way will have all of the rights associated with other employees except for:

• unfair dismissal rights (apart from automatically unfair reasons and where dismissal is based on discriminatory grounds),

• rights to redundancy pay,

• certain statutory rights to request training

• the statutory right to request flexible working

• employee owners will have to give more notice to their employer of their intention to return from maternity or adoption leave early.

Business Minister, Jo Swinson, said:

”We know that engaged employees are more productive and motivated. This scheme increases the options for business and brings greater flexibility to companies and employees in determining their employment relationship.

“By responding to the flexible needs of fast growing companies, it will help them take people on, providing a real incentive for employers and employees.”

It will be entirely voluntary for the employer to offer the new status – and for an individual to choose to accept it.

An employer will be able to choose the new status and still choose to offer more rights to their staff (e.g. the right to request flexible working or higher levels of contractual redundancy pay).

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 would benefit most from a flexible workforce.

The consultation sets out the proposal in detail and asks for views on how the government can implement it. This consultation is focused on both employment law and company law issues. The Treasury will be consulting on the tax matters separately.

The consultation will close on 8 November 2012. Legislation to bring in the new employee owner contract will be introduced today via the Growth and Infrastructure Bill, with the aim of companies being able to offer the new type of contract from April 2013.

Notes 1. Anyone wanting to find out more about the proposals and submit their views should visit

2. The Growth and Infrastructure Bill sets out a comprehensive series of reforms aimed at supporting businesses, developers, and first time buyers by slashing red tape that delays or discourages business investment, development or job creation.

3. The Government's economic policy objective is to achieve 'strong, sustainable and balanced growth that is more evenly shared across the country and between industries'. It set four ambitions in the ‘Plan for Growth’ (PDF 1.7MB), published at Budget 2011:

• To create the most competitive tax system in the G20

• To make the UK the best place in Europe to start, finance and grow a business

• To encourage investment and exports as a route to a more balanced economy

• To create a more educated workforce that is the most flexible in Europe

Work is underway across Government to achieve these ambitions, including progress on more than 250 measures as part of the Growth Review. Developing an Industrial Strategy gives new impetus to this work by providing businesses, investors and the public with more clarity about the long-term direction in which the Government wants the economy to travel.

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Article Published/Sorted/Amended on Scopulus 2012-10-22 10:27:29 in Employee Articles

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