The Government has opened a consultation on its proposed "employee-owner" status, designed to "give businesses greater choice about the contracts they can offer individuals", while ensuring that "appropriate levels of protection" are maintained.
Under the proposals, the Employment Rights Act 1996 would be amended to create a third tier of employment status: employee owners, who would receive shares of between £2,000 and £50,000, exempt from capital gains tax, in return for giving up specified employment rights.
Employee owners would not have the "ordinary" unfair dismissal protection after two years' continuous service. However, they would be protected from being dismissed for nearly all of the automatically unfair reasons, such as making a protected disclosure. Employee owners would also retain protection against discrimination, including in relation to dismissal.
Employee owners would be unable to make statutory requests to work flexibly or in relation to study or training, and would not be protected against dismissal for making either of these statutory requests, except in relation to a flexible working request on return from parental leave, in accordance with the minimum EU requirement. The relevant EU Directive is silent on how long parents should have after returning from parental leave to make a flexible working request, and the Government proposes to restrict this to four weeks.
Employee owners would not be eligible for statutory redundancy pay, and would also have to give 16 weeks' notice to return early from maternity or adoption leave, as compared with eight weeks for employees.
The Government intends that all types of shares will be eligible for use under the employee-owner arrangement, which it expects will be a contractual one between the employer and employee owner. The employer would be allowed to place restrictions on the shares, and could use a contractual clause requiring the employee to surrender the shares on termination, although the employer would be required to buy back the shares at a reasonable value.
The consultation, designed in particular to "ensure there are no unintended consequences" as a result of the proposals, closes on 8 November 2012.
Government announces new type of "employee owner" contract of employment Read XpertHR's coverage of the Government announcement on its employee owner proposals.
Automatically unfair reasons for dismissal Refresh yourself on when a dismissal will be automatically unfair with the XpertHR quick reference section.