Government to encourage more employee share ownership

Employment Law & HR update 17/01/2012

Government plans have been announced to reform the British tax system to encourage more employee share ownership schemes.

Detailing the plans to business leaders at the Centre Forum think tank in London, the deputy Prime Minister, Nick Clegg, said that the aim of the reforms would be to create more systems like that in place at the department store chain, John Lewis.

He explained that such schemes have a proven history of improving employee performance and encouraging growth, and that they should be made much easier for employees to take part in.

"What many people don't realise about employee ownership is that it is a hugely under-used tool in unlocking growth," Clegg explained. "I don't value employee ownership because I believe it is somehow 'nicer', a more pleasant alternative to the rest of the corporate world. Those are lazy stereotypes. Firms that have engaged employees, who own a chunk of their company, are just as dynamic, just as savvy, as their competitors. In fact, they often perform better."

John Collison, the head of ifs ProShare - the industry body for the employee share ownership industry - welcomed the moves to expand the set up, explaining that it is an excellent tax-efficient, low-risk method of saving.

"Share plans often strengthen employee - employer relationships and give all employees the ability to share in the success of the company they work for," Mr Collison said. "Companies benefit from a more engaged workforce when employees know their efforts are directly contributing to the value of the company and the value of their share holding."

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