Plans have been announced for a new type of employment contract whereby employees may waive their employment rights for unfair dismissal and redundancy in return for "owner employee" status and any gains on their shares will be exempt from capital gains tax for up to £50,000 worth of shares of their employer company. Companies of all sizes will be able to use the contracts which are intended to come into effect from April 2013. There has been much debate in the press about the details of the proposed scheme and how the forfeiture provisions would work if the 'owner employee' leaves or is dismissed. Questions will remain unanswered until the draft legislation has been disclosed and many practical issues will require to be managed, not least of which are the valuation of these shares, income tax liabilities, voting rights and what the EU will have to say about the waiver.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
