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14 November 2019 0 Comments
Posted in Corporate, Opinion

Employee Ownership Association lays down challenge to government

Author headshot image Posted by , Partner

Bristol is a city that prides itself on being able to combine its strong ethical compass with commercial ambition. So when the Employee Ownership Association (EOA) recently issued a challenge to the government (whatever its complexion post 12 December) to adopt and implement a new, national strategy for employee ownership, we thought that Bristol would be brilliantly placed to take advantage.

The benefits of employee ownership cited by the EOA include the serious perks for business owners around tax efficiency and exits whilst giving hard working and committed employees the opportunity to become a part of an organisation’s success. So with this in mind we thought it worth highlighting 4 of the key advantages  put forward that are particularly relevant to Bristol’s thriving economy:

  1. Increased productivity. Enabling employees to have a stake in the business they work in encourages them to work smarter, innovate and deepen their contribution to their organisations as they move towards thinking and acting like owners.
  1. Better governance and oversight. Employee ownership can transform a company’s governance structure, enabling employee owners to have a voice in the wealth and growth they create. This encourages a modern culture of collaboration as opposed to a more traditional top down approach.
  1. Boosting the local economy. Evidence suggests that moving to an employee ownership model roots a business in their geographical area for the long term. A sale of an employee owned business tends to keep the business (and talent) in the local area.
  2. Increasing ownership and wealth. Employee owned businesses are currently able to distribute up to £3,600 per annum tax free to all qualifying employees, enabling the business to deliver an annual tax efficient reward to the employee owners. The employee ownership sector has grown by 60% since this tax favourable treatment was introduced in 2014.

Our Corporate team have seen a significant increase in the number of clients looking at equity incentives for employees, whether via employee ownership models or more traditional routes such as EMI schemes. In a services driven economy, employees are often a business’s most important asset, ensuring they are engaged and aligned with long term strategy is crucial to building shareholder value. Equity incentives, whether via employee ownership or options, can serve to align employee interests with the wider shareholder group whilst also providing another route to exit for business owners.

 

For more information about facilitating employee ownership contact James Worrall or another member of our Corporate team on:

01173 326 756     Email usjames.worrall@roydswithyking.com

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