Employment law update: owner-employee contract
Last year saw Chancellor of the Exchequer George Osborne announce the introduction of a new type of employment contract, known as an owner-employee contract, now renamed an ‘employee-shareholder’ contract.
The government’s proposal contained in the Growth and Infrastructure Bill 2012-13 was considered by the House of Lords last Tuesday (8 January), where it was greatly criticised. The main concerns which were highlighted by the Lords were:
- Only five of 219 consultation responses welcomed the proposal;
- The likely increase in discrimination claims;
- The potential for tax avoidance;
- Issues regarding the valuation of shares;
- The problems employers may face with having two types of employee;
- Whether employers will actually use this type of contract.
Lord Monks commented: “First, I find it unethical that you can trade a statutory right for something in your contract in that way.” He went on to say: “I believe that it must be dismissed as a serious attempt to develop employee ownership: it is more a trashing of worker’s rights.”
Lord Monks later stated: “I believe that most employers will not touch this provision with a bargepole.”
The Bill is due to move forward to the Committee stage in the Lords on 23 January and it will be interesting to see what happens next.
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Posted on Jan 16th, 2013 by Lyons Davidson