Using employee benefit trusts for employee ownership Graeme
Using employee benefit trusts for employee ownership Graeme Nuttall Partner, Field Fisher Waterhouse LLP UK Government Independent adviser on employee ownership Email: graeme. nuttall@ffw. com Co-operative Education Trust Scotland 31 May 2012
Employee ownership • Unprecedented Government support • Role of independent adviser • Informal consultation • Obstacles • Solutions?
Unprecedented Government support • Nick Clegg, Deputy Prime Minster’s announcement on 16 January 2012 at Mansion House: “. . . of a new Government drive to introduce the concept of employee ownership into the mainstream British economy” • Norman Lamb is leading the cross-Whitehall work to investigate how Government can support this growing business model • The Mutuals Taskforce under Julian Le Grand the Cabinet Office led by Francis Maude are promoting employee led mutuals • The reform of Royal Mail and its transformation into an organisation in which staff have a meaningful stake • HM Treasury internal review of employee ownership
Role of independent adviser • A new role • The remit is to: "work with Government to identify the barriers to employee ownership and help find the solutions to knock them down” • The independent adviser is asked to make his recommendations to Government in a report presented to Norman Lamb • The answers and solutions will be brought together at a summit chaired by the DPM on 4 July 2012 • Part-time and unpaid • Does not provide advice on specific cases or take any executive decisions - he may continue to advise clients
Informal consultation • Organised by Department for Business, Innovation & Skills (”BIS”) email: employeeownership@bis. gsi. gov. uk • Key questions: • What are the barriers? • What are the solutions?
Obstacles? Consistent themes, include • Lack of awareness of the concept of employee ownership • Information is often completely misunderstood • There can be resistance due to fixed ideas about ownership models • There is a lack of awareness of the solutions that already exist • There may be a fundamental problem with access to finance to implement employee buy outs • There are complexities in the legal structures needed to implement and maintain employee ownership. • There probably are material obstacles in how the tax system applies
Lack of awareness
Solutions? Raise awareness
Solutions? Increase resources and reduce complexity • Use of an employee benefit trust (“EBT”) John Lewis Partnership Employee Benefit Trusts John Lewis Partnership plc & subsidiaries
Solutions? Individuals as trustees Founder’s family etc. Employees Beneficiaries Wilkin & Sons Employee Benefit Trust Shareholders Donald Insall & Associates Limited Employment
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