The Chancellor George Osborne has announced plans for a new kind of employment contract, an ‘owner-employee’, under which individuals would exchange some of their UK employment rights for ownership in the form of tax-exempt shares in a business.

Any capital gains made on the shares acquired as part of the contract, which would have a value of between £2k-£50k, would be exempt from capital gains tax.

The Treasury says the new contract, which could be enshrined in law by next April, would be available to companies of any size, but would principally be intended for use by “fast growing small and medium-sized companies that want to create a flexible workforce”.

Rights given up would include rights on unfair dismissal, redundancy and requesting flexible working, as well as having to give 16 weeks’ notice of a firm date of return from maternity leave rather than the usual eight.