Chancellor George Osborne’s plan for employees to exchange legal rights for tax-free shares in their workplaces has received a cool reception from employment lawyers.

In his speech to the Conservative party conference in Birmingham, Osborne said that under the ‘voluntary three-way deal’ employees would ‘replace old rights of unfair dismissal and redundancy with new rights of ownership’. Profits made on shares granted under the scheme would not be liable to capital gains tax.

Rebecca Briam, partner at Gannons Solicitors, dismissed the plan as ‘unlikely to get off the ground’. She said: ‘The proposals will be unpopular with employees because the chances of benefitting are so slim, and unpopular with employers, especially privately controlled companies, because of the risks imposed to the share structure.’

James Hall, associate in the employment team at Charles Russell, said that rights in relation to discrimination would remain under the proposed new contracts.

The chancellor has left many questions unanswered, he said, particularly on the status of shares issued through the scheme.

However, he predicted that big businesses may be very interested in this approach, ‘seeing it as a way of restricting employment rights for a relatively small financial outlay’. But he said questions should be asked about how much information employees will be given about the health and prospects of the company, ‘not to mention whether the number of shares that they will own will be commensurate with their position and the rights they will be giving up’.

Meanwhile, the Confederation of British Industry described the plan as ‘a niche idea and not relevant to all businesses’.