Employee Trust
Estimates suggest that one-fifth of the working population may resign in the next year. [1] Is it co-incidental that UK businesses are broadening share ownership as reported in the Financial Times in December [2] or is it proactive people management with a reward strategy to retain key employees?
FCM’s Head of Incentives, Franck Matthews, provides insight into broadening share ownership to mitigate the threat of people attrition and how employee engagement is now high up on the corporate agenda.
What is employee share ownership?
The concept is simple – to allow employees to acquire equity in their employer which seeks to benefit both parties.
For the employee, it provides an additional form of remuneration, often a tax–efficient one, a voice in how the business is run and greater engagement given the increase in performance and job satisfaction.
The employer benefits from a more engaged workforce driving productivity given that employees have a vested interest in the company’s success. In short, the employees’ interests are aligned with those of shareholders.
The UK Government strongly supports the idea of employee ownership and has offered substantial tax exemptions to shareholders and employees. In December, the Mayor of London, Sadiq Khan, announced the New Ownership Hub in support of worker co-operatives and employee-owned businesses. Mr Khan commented on employee ownership:
“Employee ownership creates dynamic, engaged workforces who feel a deep connection and shared purpose with where they work and who they work with. Increasing the number of employee and worker owned businesses is a key part of my mission to build a better London for everyone – a safer, fairer, greener and more prosperous city for all.” 3
How does an employer deliver equity?
Share schemes and share incentives are the most common form of employee ownership in the UK.
A broad range of share schemes exist ranging from HMRC tax-advantaged plans to highly flexible alternatives which are tailored to the reward strategy of the employer. FCM has a wealth of experience in this area having established strong working relationships with tax, accounting and legal professionals over the last 25 years.
FCM outlines four stages, from concept to launch of a new plan.
The planning phase will identify the type of share scheme that best supports the strategy and key business drivers whilst the design phase will consider participation, time horizon, vesting and performance conditions along with tax, accounting and legal considerations.
The implementation and communication phases are intrinsically linked given that communication is crucial to the successful implementation of a share scheme. Ongoing plan administration support will also ensure that all necessary submissions are met annually.
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Equity is delivered through a commitment to mutual success given that employees become engaged and aligned with the long-term goals of the business.
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About FCM
Founded in 1997, FCM is a family-owned and independent business, committed to remaining in private ownership. Based in Jersey and regulated by the Jersey Financial Services Commission, it provides director-led private wealth and corporate services to clients across the globe.
The company prides itself on its client-focused approach, which enables them to build strong, lasting relationships.
Last year, FCM celebrated its 25th?anniversary in the industry.
For more information about FCM and its Incentives services, please visit: www.FCMtrust.com
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