.png)
.png)
The chancellor of the Exchequer, George Osborne, has announced plans for a new employment contract that will see workers giving up some employment rights in return for capital gains tax-free shares.
Companies of any size will be able to take part with what will be known as an owner-employee arrangement, but it is principally intended for fast-growing small and medium-sized enterprises that wish to create a flexible workforce, said Osborne.
Employees will be given between £2,000 and £50,000 of shares that are exempt from capital gains tax (CGT) but still liable to income tax and National Insurance.
In exchange, they will give up their UK rights on unfair dismissal, redundancy, and requests for flexible working and time off for training. They will also be required to provide 16 weeks’ notice of a firm date of return from maternity leave, instead of the usual eight.
Owner-employee status will be optional for existing members of staff, but both established companies and start-ups can choose to offer only the new type of contract for new hires.
Companies recruiting owner-employee workers will continue to have the option of inserting more generous employment conditions into contracts if they wish.
Legislation to bring in the arrangement will come later this year, and firms will be able to take part from April 2013. The government will consult on some details later this month.
Owner-employee workers receiving full CGT relief on shares awarded as part of their contract will still be eligible for existing employee share ownership schemes, such as the enterprise management incentive. However, an HM Treasury spokesperson confirmed to Taxation that tax and NIC would still be due on the original grant of the shares, meaning that employees would need to find cash up front to meet this liability.
