Q: I own an engineering firm with thirty-four employees. Like every other business, keeping staff gainfully employed during the coronavirus pandemic was not easy, but with the supply chain rolling again we now have orders coming in.
The workforce is keen to do whatever it takes to get things back on track, but the worry of the COVID-19-induced hiatus in the business, my poor health and my age, I really want to retire. However, as I do not want to let down my loyal workforce, I was wondering how easy it would be to offer them the opportunity of collectively owning the business?
A: You probably could not have picked a better time than now to consider Employee Ownership, as the COVID-19 pandemic has brought a surge in the number of businesses transitioning into this type of structure. As well as business owners taking this route to retirement, many entrepreneurs are creating new businesses in this way.
Particularly in the case of SME businesses, employee ownership can be an ideal way of creating business growth. Additionally, it has long been proven that employees are more engaged and committed to the success of a business if they own a share of it and can directly benefit from that success. This is particularly significant as the country comes out of furlough and staff who have been effectively ‘laid off with pay’ find themselves having to return to full time working.
There are many ways in which share ownership schemes can be categorized. Three are: share options, share awards and phantom share awards. Employee Ownership covers situations where there is majority employee ownership and has been simplified by the 2012 Nuttall Review. It is important that business owners choose the right option to suit their current and future needs and those of their business. An initial appointment with a corporate and commercial lawyer would identify your most viable route.
Article 12/11/2020
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