In recent years there has been increased demand for professional advice and support relating to employee and worker ownership.
The Ownership Hub is developing resources and training for professional advisors to be able to support entrepreneurs and businesses to adopt employee and worker ownership at different stages of the business lifecycle.
Employee and worker ownership is our umbrella term for businesses in which workers have a stake and a say through ownership. The main models for employee and worker ownership in the UK are:
- employee ownership trusts
- employee share schemes
- worker co-operatives
- hybrids of these
While further resources are being developed, the following information and links will be useful for advisers.
Worker co-operatives are trading enterprises that are democratically owned and run by the people who work in them, such employees, freelancers, contractors and partners. These workers have an equal say in what the business does, and an equitable share in the wealth created from the products and services they provide.
Worker co-operatives are the established model for creating businesses that are worker owned from start-up. The model is also often also used by young businesses to transition to worker-ownership early on.
In a growing number of cases, ‘hybrid’ co-operatives empower other stakeholders as members alongside workers, such as customers, or people in the community, who may also provide investment.
It is also possible to combine the worker co-operative model with an employee ownership trust, which can be used to transition an existing business to a democratic form of employee ownership, as part of planned ownership succession.
Worker co-operative resources
Employee ownership differs from employee share ownership. While both use some of the same share schemes, the definition for employee ownership is taken from the Nutall Review 2012 - ‘offers a meaningful stake and a say’:
- A meaningful stake means that more than 25% of the businesses has to be in the hands of employees and this has to be open to all employees.
- A meaningful say means that there needs to be representation of employee voice in the business in the operation and strategic direction of the business, which takes various forms.
- Direct - there are about 180 employee owned businesses in the UK that have direct shares on an all-employee basis, most of which are majority or wholly owned by their employees.
- Indirect ownership - there are 500+ employee owned businesses that are majority or wholly owned by a trust, predominantly by an employee ownership trust (EOT) - one of the fastest growing succession plans in the UK.
- Hybrid - many employee owned businesses, especially if they started as a family business, have a hybrid of both direct and indirect employee ownership.
Employee ownership resources
- Read the EOA’s Guide to Structuring
- Visit EOA website - What the evidence tells us
- Check out the guide to setting up an employee owned business
- Contact the EOA