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13/05/2021

Employee Ownership Trusts – the right thing for your business?

Could an employee ownership model help you to build a better business? This is all about culture and long-term ownership of a company.

Businesses such as John Lewis are famous for being pioneers of the employee ownership model. When employees own a stake in a company it can create a positive culture.

Businesses tend to move to an employee-owned model at different points in their lifecycle – typically at start up, when the current owners are looking to sell, or when the employees who want to be more involved in the business invest in a stake (perhaps through a management buy-out).

Employee-owned businesses tend to have committed and motivated employees.

Everyone feels like they are working for themselves (to some degree) as they have a stake in the business.

In recent years, the booming tech-startup sector has embraced various forms of employee ownership model and the concept seems to be gaining traction.

If you are thinking about employee ownership in your firm, think carefully about how best to implement it with a view to the long term benefits of doing so. There are alternatives to engage employees such as EMI Option Plans. It is important to take advice on which structure split suits the long term objectives of employee share ownership.

A good place to start is by looking at how other employee-owned companies are structured. A key consideration is that all employees should receive an offer to participate in the employee ownership scheme on the same or similar terms.

In terms of helpful resources, www.employeeownership.co.uk contains lots of useful information for UK businesses that want to move to an employee ownership model, and we have produced a helpful factsheet which summarises the benefits of an Employee Ownership Trust (EOT) . Also available is a factsheet on whether an Enterprise Management Incentive (EMI) scheme would be beneficial in place of an EOT.

For further information on Employee Ownership Trusts or EMI’s, please contact Alan Williams on 023 8046 1201.

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