Osborne outlined the plans yesterday during his keynote speech at the Conservative Party Conference in Birmingham. He said it will be aimed at small, fast-growing companies and believed thousands of workers would be taken on as "employee owners".
Osborne said the contract would be voluntary on both sides and would see employees given between £2,000 and £50,000 of shares that would be exempt from capital gains tax. In exchange, they would give up their UK employment rights on unfair dismissal, redundancy, and the right to request flexible working and time off for training, and would be required to provide 16 weeks' notice of a firm date of return from maternity leave, instead of the usual eight.
Ann Francke, chief executive of Chartered Management Institute (CMI) told HR magazine: "I believe it's a good positive message he's sending out. You've got to remember that employee engagement is an extremely powerful motivator and employee ownership can be behind this.
"Through this scheme we could see an inherent shift in employee engagement culture and that can only be a good thing."
Labour's Ian Murray MP, shadow business minister, said: "George Osborne's announcement of shares for workers rights will allow rogue employers to hire and fire at will on the basis that the share ownership of the company will cost a lot less than any tribunal or redundancy payments.
"It is a barking idea, that you own your company and give up all your rights. It allows an employer to turn around and say, 'You're pregnant, don't come in on Monday.'"
Paul Kenny, general secretary of the GMB union, said: "Slashing people's employment rights under the guise of ownership schemes won't create jobs and it won't create growth.
"His attempts to dupe the electorate that he knows what he is doing have been rumbled. George Osborne has as much knowledge of economics as a stick of rhubarb."
TUC general secretary, Brendan Barber, said: "This looks more like it's been 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 driven by the Beecroft report."
Sarah Jackson, chief executive, family support charity, Working Families said: "Employers beware. Offering owner employee contracts where employees effectively sell their employment rights for shares is unlikely to deliver the highly motivated, engaged workforce you need."
Other business leaders welcomed the scheme, but warned that the take-up was likely to be limited. "This is a niche idea and not relevant to all businesses," said John Cridland, director-general of employers group CBI.
The scheme will be optional for existing employees, but companies could choose to offer this scheme to new hires. The Government expects to bring it in from April 2013.
