Government publishes response to employee-owners consultation

The Government has published its response to the consultation on employee-owner contracts, under which employers could offer shares to staff in exchange for sacrificing some of their employment rights.

The consultation was launched in October, after the Government outlined its proposals for the new contracts, under which a new tier of employment status would be created – that of employee owners – who would be handed shares of between £2,000 and £50,000 in return for giving up specified employment rights.

The Government has now published its response to the consultation, which sets out a number of modifications to its original proposals. These include:

  • renaming “employee-owner” contracts “employee-shareholder” contracts;
  • making it explicit that shares should be fully paid up and free to employee shareholders;
  • creating a power for the secretary of state to increase the minimum threshold of £2,000 on the value of shares that must be offered;
  • removing the upper limit on shares (of £50,000) to be an employee shareholder, stated in the Growth and Infrastructure Bill, although this limit will apply for the capital gains tax exemption;
  • allowing the rules to apply to non-UK registered companies and parent company shares; and
  • extending the requirement to give 16 weeks’ notice to return early from additional maternity or adoption leave to additional paternity leave.

The Government has said amendments will be made to the Growth and Infrastructure Bill to enable these changes. In addition, the Government will provide guidance on the employment law and tax consequences of employee-shareholder contracts.

For more information on the consultation, see XpertHR.

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