Also called ‘owner-employee status’, the new rules will enable workers to give up basic employment rights in exchange for shares in their company.
The government has introduced the legislation as part of the growth and infrastructure bill, in a bid to boost hiring confidence and staff productivity.
Businesses can award shares worth between £2,000 and £50,000 to their workers, which will be exempt from capital gains tax.
In return, employees must forgo certain rights, including unfair dismissal, redundancy, training rights and the right to ask for flexible working – although they can still bring discrimination cases to tribunal.
New employees and current workers are eligible, but the status cannot be forced upon existing staff.