Government announces new type of "owner-employee" contract of employment

The Government has announced plans for a new type of "owner-employee" contract of employment under which employees will be given shares in exchange for waiving certain employment rights. 

Individuals employed on owner-employee contracts will be given between £2,000 to £50,000 of shares that are exempt from capital gains tax in exchange for forfeiting their statutory rights in relation to: unfair dismissal; redundancy; the right to make a flexible working request; and the right to request time off in relation to training. Individuals engaged under such contracts will also be required to provide their employers with extended notice (16, rather than eight, weeks) of when they intend to return from maternity leave. 

Employers of any size may recruit employees using owner-employee contracts but the Government has stated that the contracts are "principally intended for fast growing small and medium-sized companies that want to create a flexible workforce". Owner-employee status will be optional for existing employees. 

The Government has stated that it will consult on some of the details of the owner-employee contract shortly and legislation will be brought into force to allow employers to use this type of contract from April 2013. 


The XpertHR employment law manual explains the current law on determining employment status, unfair dismissal, redundancy rights and pregnancy and maternity leave