The employee ownership scheme, announced by chancellor George Osborne at last year's Conservative Party Conference, allows workers to trade employment rights for shares in a company.
In return for company shares of between £2,000 and £50,000, an employee will give up their statutory rights over unfair dismissal, redundancy and requests for flexible working and time off for studying or training.
Anyone can now apply to be an "employee shareholder", although employers cannot force employees to change employment status.
Jacqueline McCluskey, a partner in HBJ Gateley's employment team, said this legislation could be a "big pull" factor for growing SMEs seeking experienced employees.
"[SMEs] will be able to use this as a marketing tool to high-level professionals who might not otherwise choose to work with a small company but can see future success in the business," said McCluskey.
"High earners are unlikely to be put off by the loss of some of their employment rights and will be attracted by the opportunity to have a share in a small or medium-sized company with big potential."
Expensive gimmick
The TUC has labelled the scheme as an "expensive gimmick" and said it will strip staff of basic employment rights.
"At best the scheme will be completely ignored and consigned to Parliament's pointless policies hall of shame," said TUC general secretary Frances O'Grady.
Several employment lawyers have told HR magazine they expect take-up to be "extremely low".
Riverview Chambers employment specialist Gary Morton told HR magazine the scheme puts "huge swathes" of jobs at greater risk.
"The implementation of this legislation is taking Britain back towards pre-1963, before statutory employment rights were introduced," said Morton.
Rights given up as an employee shareholder:
- Most unfair dismissal rights
- Rights to statutory redundancy pay
- The statutory right to request flexible working
- Some rights to request time off for training
