Employee Share Schemes

Employee share schemes can be an excellent way to attract, reward and incentivise employees, but they must be carefully designed with expert support. This helps to ensure that a scheme has the best chance of achieving its intended purpose, while making sure all potential issues have been considered to protect the business.

At Glanvilles, our corporate team can help companies with all aspects of employee share schemes. With many years of experience, we can make sure you get the right scheme in place for your company and its employees.

Our experts can assist with matters including:

Designing and implementing employee share schemes
Tax on employee share schemes
Administering employee share schemes

We offer a modern, accessible service designed to deliver the legal expertise you need in the most convenient way possible. Whether you prefer to call, email, video conference or visit us at our legal offices, we will do our best to accommodate you.

Get expert legal support with share schemes for employees

For expert help with employee share option schemes, please contact your local Glanvilles team in Chichester, Fareham, Havant or Petworth.

Alternatively, you can fill in our simple online enquiry form for a prompt response.

How we can help with share schemes for employees

Designing and implementing employee share schemes

We can assist with all aspects of designing employee share schemes, including choosing the right type of scheme. Our team can then create all of the legal documentation required and ensure all necessary applications are made, including registration with HMRC.

Tax on employee share schemes

We can advise on all of the tax advantages and implications of employee share schemes, including where employees may be required to pay Capital Gains Tax if they sell their shares.

Administering employee share schemes

We can provide ongoing support for companies operating employee share schemes, including with issues such as reporting requirements and what to do if any problems or disputes arise.

Employee share scheme FAQs

What is an employee share scheme?

An employee share scheme is a mechanism for awarding shares in a company to its employees. These shares may be available to all employees or just certain employees, such as senior managers. Shares can be awarded in various ways, including as a bonus or by making them available for eligible employees to purchase.

How does an employee share scheme work?

Exactly how an employee share scheme works will depend on which type of scheme you choose to create. Some common types of schemes are:

Share awards – Employees are given shares as a gift (often in the form of a bonus). This might be done as part of an employee share incentive plan, where employees can receive shares for hitting certain targets or milestones.
Share options – Employees are granted the right to buy company shares. They will normally have the right to do this either at the time the shares are granted or in the future, with the price per share that they would pay fixed at the share price at the time the option was granted.
Share purchase schemes – Employees are given the option to purchase company shares, often at a lower price than the shares’ current market value.

What is the benefit of an employee share scheme?

There can be many benefits to introducing an employee share scheme, including:

Rewarding employees – Giving shares to employees can be a cost-effective way to reward them for their hard work.
Incentivising employees – The opportunity to buy shares can be a good way to motivate employees to hit targets. Giving employees a stake in the business can also act as an added incentive for those employees to work harder for the company’s success.
Attracting new talent – Employee share schemes can make a company a more attractive place for employees, helping to recruit top performers.
Retaining existing employees – Employees who have a stake in the business may be less likely to leave as they would normally have to give up their shares when doing so.
Offsetting lower salaries – Where a business has cashflow issues, meaning it cannot offer top salaries, granting shares to employees can be a way to mitigate any concerns about wages.

How do you create an employee share scheme?

The four key steps to creating an employee share scheme are:

Determine if your company is eligible – There are strict eligibility criteria which vary from scheme to scheme. You must make sure that your company meets those criteria before embarking on creating an employee share scheme.
Choose the design for your scheme – You will need to design a scheme that suits the needs of your business. This is something with which our team can assist.
Secure authorisation – This can be done in various ways, such as by a resolution from our company’s shareholders or directors, or through revising your company's Articles of Association.
Register your scheme with HMRC – Your scheme needs to be registered with HMRC for tax purposes.

It is good practice to have specialists in corporate law assist you with this process to make sure everything is carried out correctly, protecting you from any legal risk.

What is the Enterprise Management Incentive?

The Enterprise Management Incentive (EMI) is a scheme backed by the UK government that allows companies to reward employees with company shares. There are tax advantages for using the EMI, with share options offered to employees qualifying for statutory tax reliefs. As a result, using the EMI for your employee share scheme can make it more tax efficient, which is why it is such a popular option for UK businesses.

There are alternatives to the Enterprise Management Incentive for employee share schemes, so it is important to fully explore and understand your options before making a decision. Our team will be happy to talk through the advantages and drawbacks of different approaches, so you can be confident that you are making the right decision for your company and its employees.

Why choose Glanvilles for help with employee share schemes?

Glanvilles’ corporate solicitors offer high-level legal expertise and first-rate client service for companies of all types and sizes throughout Hampshire, West Sussex and across South East England.

Every business has unique needs, as do its employees, so we make sure to tailor our solutions and our approach to each specific situation. We will work closely with you to understand your company and the outcome you want from your employee scheme, then make sure we deliver the results you need.

The cost of implementing share schemes for employees is an important consideration, so we will be clear about our pricing from the start. Much of the support we offer can be delivered on a fixed fee basis, so you know the full cost in advance. Where ongoing support would be beneficial, we will make sure our hourly rates are clear and all billable work is agreed in advance.

When you use our legal services, we promise:

Our staff will be friendly, respectful and attentive.
Your concerns will be listened to, your questions answered and your options explained in plain English.
The cost of dealing with your requirements will be made clear to you from the outset.
We will answer your phone calls and emails promptly.
We will keep you up to date about any developments at all times.