Chancellor George Osborne has announced plans for a new kind of employment contract called an owner-employee. New owner-employees will exchange their UK employment rights for rights of ownership in the form of shares in the business they work for, any gains on which will be exempt from capital gains tax.

In a highly political speech delivered at the Conservative Party Conference in Birmingham, the chancellor jokingly borrowed the Marxist slogan 'workers of the world unite' to launch the new scheme.

Under the new type of contract, employees will be given between £2,000 and £50,000 of shares that are exempt from capital gains tax. In exchange, they will give up their UK rights on unfair dismissal, redundancy, and the right to request flexible working and time off for training, and will be required to provide 16 weeks' notice of a firm date of return from maternity leave, instead of the usual eight.

Owner-employee status will be optional for existing employees, but both established companies and new start-ups can choose to offer only this new type of contract for new hires. Companies recruiting owner-employees will continue to have the option of inserting more generous employment conditions into the employment contract if they want to.

The new scheme, which seems like the 'John Lewis Economy' scheme pushed by Nick Clegg earlier in the year, but with a twist, will be available to companies of any size. Although it is principally intended for fast growing small and medium sized companies that want to create a flexible workforce.

Osborne said: '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.'

Legislation to bring in the new owner-employee contract will come later this year, so that companies can use the new type of contract from April 2013. The government will consult on some details of the contract later this month.