Employment lawyers have warned the Government against rushing in proposals for a new form of employment contract, which would allow employees to 'trade in' certain employment rights in return for a stake in the companies they work for.
The so-called 'owner-employee contracts' or 'rights for shares' contracts were announced by chancellor George Osborne at the Conservative party conference in Birmingham last week.
Mr Osborne hopes that the new contract, due to be launched in time for April 2013, will incentivise staff by linking their fortunes more closely to that of their employer.
Under the contracts staff would be entitled to receive between £2,000 and £50,000 worth of shares, which Mr Osborne has confirmed will be exempt from capital gains tax.
The shares will be offered to employees in return for forfeiting key employment rights, including the right to claim unfair dismissal, the right to receive flexible working hours, the right to redundancy pay and an extension of the notice which those on maternity leave must give their employer before returning to work, which would rise from eight to 16 weeks.
The plans have been widely criticised; many point out that they are nothing new, and are in effect a rehash of existing share ownership schemes. Others have identified problems with the issuing of share capital in small businesses, which are notoriously difficult to value and could leave employees heavily out of pocket and without legal recourse if they are later dismissed.
Employment law experts have also identified potential problems with EU law. Many of the rights that form the subject of these new contracts are enshrined in European Law and many see an early legal challenge to the validity of owner-employee contracts potentially derailing their implementation.
The unions were quick to criticise the proposals. The TUC general secretary is Brendan Barber.
"We deplore any attack on maternity provision or protection against unfair dismissal," he said.
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