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Employee-owners 'a niche idea', says CBI

A Government proposal for a new kind of employment contract has been labelled 'a niche idea' by the Confederation of British Industry (CBI).

The plans will allow employee-owners to exchange some of their UK employment rights on areas including unfair dismissal and redundancy, for rights of ownership in the form of shares that are exempt from capital gains tax.

Between £2,000 and £50,000 in shares will be offered via the new type of contract, and participants will also lose the right to request flexible working and time off for training, and will have to provide 16 weeks' notice of return after maternity leave, instead of the usual eight.

But the CBI claims that the initiative will not be relevant to all businesses, director-general at the CBI John Cridland said: "In some of Britain's cutting-edge entrepreneurial companies, the option of share ownership may be attractive to workers, rather than some of their employment rights. But I think this is a niche idea and not relevant to all businesses."

The Chartered Institute of Personnel and Development (CIPD) also hit back at the proposals claiming that employees have little to gain by substituting 'fundamental' rights. Commenting, Mike Emmott, employee relations adviser at the CIPD said:

"It is far from clear how attractive the offer to give up employment rights in return for shares will be to prospective employees of small firms. More important, it is highly doubtful whether inviting employees to sign away basic employment rights will deliver the motivated, driven, high performing workforce that small firms need. Existing, highly successful mutually owned firms do not thrive on employee ownership alone, but on the high trust, high engagement, all-pulling-in-the-same-direction cultures they have. Employee ownership works best where it is accompanied by great management, rather than enhanced job insecurity."