New Employment Contracts announced by the Government

The Chancellor of the Exchequer, George Osborne, has announced plans for a new kind of employment contract called an employee-owner.

Under this type of contract, owner-employees would give up their rights around unfair dismissal, redundancy, the right to request flexible working and time off for training. Women would also have to give 16 weeks’ notice of their date of return from maternity leave, instead of the usual eight weeks. In return they will be given between £2,000 and £50,000 of shares in their company, which will be free from capital gains tax.

Legislation to bring in the new employee-owner 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.

The Institute of Directors has welcomed the proposals, and businesses of all sizes are likely to welcome the opportunity to buy off basic employment rights in exchange for £2,000 of shares.

However, there are a number of problems with the new contracts. Many employers may rather face an unfair dismissal claim than have ex-employees sitting on company shares. Worse than this, the exchange would not apparently block all claims, including discrimination,

and so employers could face claims from someone holding shares in the business. This in turn could see a rise in discrimination claims by claimants who are unable to use the usual route of unfair dismissal to pursue their rights.

For more information on the issues raised in this article or on employment law matters generally, please contact us on 01483 303636 or

Clare McDairmant, Solicitor, Just Employment Solicitors





Clare McDairmant, Solicitor, Just Employment Solicitors.

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