He claimed the owner-employee contract would be ideal for staff at fast-growing firms.
The TUC has claimed it's an "attack on workers rights".
In his speech this morning the Chancellor cheekily used the leftwing slogan, "workers of the world unite", to launch his new scheme.
The unveiling of "employee-owner" schemes, at a projected cost to the Exchequer of £100 million by 2017/18, was one of the few policy announcements of the speech.
The Chancellor told delegates: "Today we set out proposals for a radical change to employment law. It's a voluntary three-way deal. You the company: give your employees shares in the business. You the employee: replace your old rights of unfair dismissal and redundancy with new rights of ownership.
"And what will the Government do? We'll charge no capital gains tax at all on the profit you make on your shares. Zero percent capital gains tax for these new employee-owners.
"Get shares and become owners of the company you work for. Owners, workers, and the taxman, all in it together. Workers of the world unite."
Employees will receive between £2,000 and £50,000 in return for giving up their rights to bring a claim for unfair dismissal, redundancy, and the right to request flexible working and time off for training.
The rights employees would have to give up include:
Cover for unfair dismissal and redundancy
The right to request flexible working and time off for training
Mothers giving eight weeks' notice of the date they return from maternity leave. Instead they must give 16 weeks' notice
TUC general secretary Brendan Barber slammed the idea: "We deplore any attack on maternity provision or protection against unfair dismissal," he said.
"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."
He added: "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."
Labour shadow chief secretary to the Treasury Rachel Reeves said: "George Osborne's speech shows he is in complete denial about the failure of his plan."
John Cridland, CBI general director 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 schemes, which are mainly designed for fast-growing and mid-sized companies, will be available from April 2013. They will be voluntary, but only available for new employees.
