The radical overhaul of UK employment law was announced by the chancellor George Osborne at the Conservative Party conference on Monday (8 October).
He described the new contract as "a voluntary three-way deal" that would see employees trade their "old rights of unfair dismissal and redundancy for new rights of ownership".
These ownership rights would be in the form of shares worth from £2,000 to £50,000 in the participating business, which would be exempt from capital gains tax.
In addition to unfair dismissal and statutory redundancy, employee-owners would give up the right to flexible working and time of for training, while their notice period for returning from maternity leave would be doubled to 16 weeks.
Companies opting into the scheme could make the contract compulsory for all new starters, although it will remain optional for existing workers.
Despite government plans to fast track the legislation, much of the detail has yet to be decided, with a BIS consultation for this purpose due to be launched later this month.
Minuteman Press co-director Lucie Wise, who oversees five employees, said she would consider the scheme but was adamant that employees must be fully informed of the terms they are agreeing to before signing up.
She said: "I don’t see it as taking employees’ rights away if they get something in return. It means the future of the company will benefit employees as well as the employers."
Tahir Chowdry, who started up his print business Vizability a year ago, said he would "jump at the chance" if he were an employee and believed that at least two out of his five staff would sign up if given the option.
He added: "I think if my staff had a stake in the business, they would consider long-term benefits, rather than just the overtime payment."
However, Jacky Sidebottom, managing director of Glossop Cartons, argued that while the scheme sounded "great in principle" it could "compromise companies going forward".
She added: "It could make things difficult when relationships break down and could also cause minority share problems for any possible company sale. In reality I think very few companies will exercise it."
Adrian Steele, managing director of Mercian Labels, also questioned the take up of the scheme, adding that the "effect will be very limited indeed across the economy".
He said that the scheme was "trivial and insignificant" and "does not go far enough to have any impact", but added that it was a "well-intentioned" proposal that the government needed to deliver more of.
Unite national officer Steve Sibbald warned that offering employees shares would have no impact on their attitude towards the company. Sibbald said: "Selling employment rights for as little as £2,000 is ridiculous."
Meanwhile, Wallace Print managing director Gary Wallace was "astonished" by the proposed legislation. He said: "It gives employers a legal way of paying off underperforming employees to get rid of them easily.
"Why can’t the government concentrate on helping to sort out the lending issues, which businesses that can’t raise any capital are having, rather than wasting time creating what are quite frankly bizarre legislations that will only add to the red tape that they claim they are doing away with."
Sibbald slammed the idea as a "silly legislation trying to grab headlines", while Public and Commercial Services Union general secretary Mark Serwotka said the scheme was "laughable" and deserved to "sink without a trace".
