Employee ownership guidance published

The government has published joint government and industry-led guidance aimed at helping organisations move towards employee ownership.

The announcement, from business secretary Vince Cable, came on the first Employee Ownership Day on 4 July.

Cable also confirmed that the government is to set aside £50 million each year from April 2014 to promote employee ownership models, as announced in the Budget 2013.

The published documents include:

  • Guidance from the Department of Business, Innovation and Skills (Bis) for employees who want to request a move to employee ownership.
  • Model documentation on a move to employee ownership by law firm Pett, Franklin and Company with accompanying Bis and HM Revenue and Customs (HMRC) guidance.
  • Guidance from the Employee Ownership Association explaining the different models of employee ownership.
  • Guidance from Co-operatives UK on how co-operative principles and ways of working can be implemented into employee-owned businesses.

Nick Clegg, deputy prime minister, said: “The benefits of employee ownership are clear. Staff who have a stake are more motivated and are rewarded for thinking in the long term. That’s good for business and good for families, [because] it means lower absenteeism and lower levels of staff turnover.

“We’ll be providing capital gains tax relief for employers that sell a controlling stake in a organisation to their staff.

“Giving hard-working people a real stake in their employer is a hugely under-used tool in unlocking growth. This straightforward new guidance will help organisations of all sizes realise their potential, boosting staff motivation and laying the foundations for growth.”

Graeme Nuttall, a partner at Field Fisher Waterhouse and the author of the Nuttall review of employee ownership, stressed the importance of education around employee ownership.

“One of the general recommendations of the review is to raise general awareness about employee ownership in the business community and that would include raising awareness among educational and training institutions,” he said.

Sign up to our newsletters

Receive news and guidance on a range of HR issues direct to your inbox

This field is for validation purposes and should be left unchanged.

“What’s important is that this is part of a general education on alternative business models, alternatives to being a listed company or an organisation with outside shareholders.”

Dan Knowles, founder of employee-owned organisation Mark Knowles Homecare, added: “The vision is to foster this ownership mechanism that gives employees a stake in their business and, therefore, an implicit requirement to manage those organisations for long-term success and not financial reward.”