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Economic conditions are improving for many employers, with confidence rising amid signs of recovery in the energy industry – that could in turn lead to an increase in the use of employee share schemes and other forms of employee incentivisation.

For SMEs throughout the UK who might consider taking advantage of this, there was welcome news this week when approval for the continuation of the most popular share option scheme for employees was finally given by the European Commission.

The press release issued by the European Commission on 15th May 2018 has removed the recent uncertainty caused by the delay in reaching a decision on the extension of these share option arrangements in the UK beyond expiry on 6th April 2018. This is positive news for companies who may have meantime had to shelve plans to grant new EMI share options for their employees.helping hand

Companies in a variety of sectors which may have cut their workforce in the last couple of years are expected to now be looking at ways to incentivise and retain their existing key employees and also to attract new staff as they gear up for the opportunities which lie ahead.

map of europeWhile many will be faced with cashflow constraints for some time, preventing them offering enhanced remuneration packages, employers often look to explore some form of share option reward scheme. The financial burden on the employer, and employee, when implementing these methods is usually minimal, with no up-front tax charge. The longer-term reward and tax reliefs available for employer and employee make it an attractive option to explore at a point in the cycle where the market seems to be on its way back up.

The Enterprise Management Incentive (or ‘EMI’) option scheme is still at the head of the queue for many as the most attractive form of share option scheme available for owner-managed businesses and SMEs which meet the qualifying criteria.

The EU Commission have confirmed that the renewed state aid approval is however only continued until the UK finally leaves the EU. While Brexit is looming next year and bringing yet more uncertainties surrounding the continuation and regulation of this type of share option scheme, owner managed businesses and SME employers now have a 10 month window of opportunity to plan for growth.

If you would like further information about Enterprise Management Incentive (EMI) option schemes or any other form of share incentivisation please contact a member of our Corporate Team.  

Ross Gardner, Partner


 

Chambers UK 2018

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