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Square deal or raw deal?

30 November 2012 / Sarah Johnson
Issue: 7540 / Categories: Features , Employment
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Sarah Johnson concludes that the devil will be in the detail of employee owner contracts

Plans for the creation of a completely new kind of employment arrangement, the employee owner contract, were announced recently by the Chancellor of the Exchequer, George Osborne.

Consultation on the proposals ended on 8 November 2012. The government aims to provide a response within three months of that date. Rather ominously, the consultation says that the government wishes “to ensure there are no unintended consequences” of the new rules. The plan is to allow companies to use the new contracts from April 2013.

Under employee owner contracts, employees will surrender some of their employment rights in exchange for shares in the business they work for, worth between £2,000 and £50,000.
Employee owner contracts will be available alongside standard employment, worker (including agency worker) or self-employed contracts. The Employment Rights Act 1996 will be amended to create this new kind of employment status.

The government suggests that the new status ensures companies can reduce the risks of employment tribunal

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