Are you looking for alternatives to traditional bonus schemes to incentivise your employee’s longevity in your company?
An employee share scheme (ESS) just might be what your company needs.
What is an Employment Share Scheme?
Employee share schemes offer eligible employees shares or options to purchase shares in the company. Shares could be paid for upfront, by salary, or through a loan. ESS participation can help give your employees a sense of ownership, even the satisfaction of controlling their salary packages.
The schemes typically offer the opportunity at a discounted price and entice employees by promoting their chance to share in a company’s growth and success.
Why companies should employ an ESS
- To align their interests with employees and shareholders
- To attract, motivate and retain employees
- To give employees a better understanding of company operations
The employee benefits of an ESS will ultimately improve productivity as staff will be invested (literally and figuratively) in the company’s success; Understanding a company’s future plans and the strong likelihood of them being achieved is a great motivator for employees to help the company grow.
Australia’s ESS laws changed for the better in 2022
In April this year, the Australian government passed legislation replacing the previously restrictive value cap for employees purchasing shares in an unlisted (private) company.
By allowing employees to purchase up to $30,000 worth of shares – previously $5000 – the government revealed their hopes of encouraging an ESS increase to help Australian companies better compete in the international market.
The new legislation was passed to improve the attractiveness and accessibility of share schemes and entice employees from all levels and stages in their careers to participate.
How to start your ESS
Before deciding on the finer details of your employee share scheme, we advise you to discuss any and all concerns regarding your potential scheme with a commercial lawyer.
They can advise on the design and implementation of an ESS that will benefit your company and ensure you understand your obligations in the agreement.
Our broad commercial knowledge covers all aspects of an ESS including:
- Employment laws
- Taxation
- Corporate regulatory laws
The list of positive outcomes employee share schemes can facilitate, specifically for start-ups, under Australia’s ESS legislation amendment is significant. With the right legal strategists guiding you, your company will surely see its employees and turnover thrive.
Contact Clearpoint Legal today for your employee share scheme consultation.
