The Chancellor of the Exchequer, George Osborne has announced plans for a new type of employment contract called an owner-employee.

According to the proposal, companies of any size can partake in the new scheme; however it is predominantly intended for fast growing small and medium sized businesses that want to create a flexible workforce.

It has been suggested that the new contract will see employees given between £2,000 and £50,000 of shares that are exempt from capital gains tax, and in exchange will give up rights on certain aspects.

If the scheme comes to fruition, employees will give up their UK rights on unfair dismissal, redundancy, and the right to request flexible working and time off for training. Also, employees will be required to provide 16 weeks’ notice of a firm date of return from maternity leave, instead of the usual eight.

It has been proposed that the legislation to bring in the new employee-owner contract will come later this year so that companies could use the new type of contract from April 2013.

Employee-owner status will be optional for existing employees, but both established companies and new start-ups could choose to offer only this new type of contract for new hires under these latest plans.

TUC General Secretary, Brendan Barber has responded to the news, saying:

“We deplore any attack on maternity provision or protection against unfair dismissal.

“But these complex proposals do not look as if they will have very much impact, as few small businesses will want to tie themselves up in the tangle of red tape necessary to trigger these exemptions.

“This looks more to be said for effect than because it will make much difference, but we will be vigilant to ensure that they do not represent the thin end of a future anti-employee wedge.”