Financial & Legal News

New Owner-Employment Contracts announced

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The Chancellor of the Exchequer, George Osborne, has announced the introduction of a new type of employment contract, known as an 'owner-employee' contract.

In his speech to the Conservative Party conference the Chancellor said under this new type of contract, employees would give up their UK rights on unfair dismissal, redundancy, and the right to request flexible working and time off for training, and will be required to provide 16 weeks' notice of a firm date of return from maternity leave, instead of the usual 8. In return, they are given between £2,000 and £50,000 worth of shares that are exempt from capital gains tax.

Legislation to bring in the new owner-employee contract will come later this year so that companies can use the new type of contract from April 2013. Later this month the Government will consult on, among other things, the details of restrictions on forfeiture provisions to ensure that the company can buy back the shares at a reasonable price if an owner-employee leaves or is dismissed.

The Government will legislate later this year to enable companies to use the new owner-employee contracts from April 2013 – presumably via the Enterprise and Regulatory Reform Bill.

Thanks to Daniel Barnett and IDS for the gist of this article.

Please note that the information and opinions contained in this article are not intended to be comprehensive, nor to provide legal advice. No responsibility for its accuracy or correctness is assumed by Pearson Solicitors and Financial Advisers Ltd or any of its members or employees. Professional legal advice should be obtained before taking, or refraining from taking, any action as a result of this article.

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