In the last 15 years, employee-owned business shares have done really well against the FTSE All-Share Index. This shows how moving towards an Employer Ownership Scheme is a smart move. It’s a big step for companies that want to try this modern way of sharing ownership.
Changing to an Employer Ownership Scheme is a big change. It brings better resilience, productivity, and shared wealth. Companies like Gripple and Loadhog show how this can lead to growth and more involved employees. Companies that try this not only ensure their future success but also make a workplace where everyone feels they have a stake.
Over four million UK workers are part of share ownership plans. This covers nearly all parts of the UK’s economy. It shows that any company, no matter its size, can benefit from this. It helps employees feel they are part of something bigger, aiming for the same goals. The impact goes beyond just money. It creates a feeling of collective success and fairness.
Smart planning and good advice have helped more companies become employee-owned. The data shows better financial results and more companies taking this path. It’s clear this approach has become a key strategy for businesses. Having a share in the company encourages everyone to work towards shared success.
Understanding the Basics of Employer Ownership
Employee ownership is where workers own a big part of their company. This makes them more involved and responsible. We’ll cover the basics and benefits of employee ownership and its various forms.
What is Employee Ownership?
Employee ownership means workers have a significant share in their company. They can own shares directly or through plans like SIPs. Or, they might share ownership indirectly through a trust. Some use a mix of both ways. This setup rewards them financially and gives them a say in the company.
Benefits of Employee Ownership
Companies owned by employees grow faster in sales and jobs. They’re more productive and make more money. These companies are stable even in tough times. Most employees feel happier and more motivated in such firms.
Types of Employee Ownership
There are different ways to set up employee ownership:
- Direct Employee Ownership: Workers own shares directly and get tax benefits through SIPs.
- Indirect Employee Ownership: Shares are owned together in a trust.
- Combined Form: Uses both individual and collective ownership for more flexibility.
These models enhance worker involvement. This can involve trade unions and even employee spots on the Board. Employee ownership builds a more dedicated and creative team. This is key to business success.
Steps to Implementing an Employer Ownership Scheme
Starting an employee ownership scheme means getting the basics right. This includes knowing what it is and the benefits it brings. The Employee Ownership Trust (EOT) is the most popular way for UK businesses to become employee-owned. Over 150 companies have moved to this model with Baxendale Employee Ownership’s help in two decades.
First, choose the best ownership model for your business. The EOT is great because it offers tax perks. For example, sellers don’t pay capital gains tax, and employees can get up to £3,600 tax-free every year. It’s crucial to own more than 50% of the shares through the EOT. Also, plan the deal details carefully.
Next, think about if employees are ready to buy shares and if the business can handle sharing them. Creating a market for these shares within the company is essential. Getting an independent valuation can also help make things clearer. EOTs help keep the business running smoothly while making sure it and its employees work together well.
Talking and engaging with employees properly is key. Letting them know about the changes and offering tax-free bonuses can encourage their involvement. Companies owned by employees often do better in innovation and team spirit. They also stand strong in tough times. With a good plan and strong leadership, moving to employee ownership can make a company more future-proof.
Employee Ownership Trusts (EOTs)
Chartered Accountancy
Business Transitions to EOTs
Employee Engagement
Nigel Watson, a prominent consultant and author in the realm of Employee Ownership Trusts (EOTs) within the UK, boasts over twenty years of experience. Having embarked on his career as a chartered accountant, Nigel soon shifted his focus to the intricate world of employee ownership models. He has since played an instrumental role in guiding over 100 organizations, from private enterprises to public institutions, through the seamless transition to EOTs.
Read my full Bio
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