Employee Ownership

Employee ownerships are not technically co-operatives, but share the same ethos and most of the same characteristics, so are very much part of the same family.

The internal structure and voting systems are slightly different, but the involvement of the workers as “partners”, sharing in the responsibility of running the business and benefitting from the profits, give them that special co-operative characteristic.

The best known example is the John Lewis Partnership, which also owns Waitrose, and has its second largest department store in Cardiff.

More details at:- www.johnlewis.com

Emplyee owned businesses are represented by the Employee Ownership Association:- www.employeeownership.co.uk

Companies where employees own a significant stake in the company they work for – sometimes termed ‘co-owned’ businesses – now account for combined annual turnover in excess of £25 billion, more than 2% of GDP and growing.

Employee ownership can take one of three forms:-

  • Direct employee ownership – using one or more tax advantaged share plans, employees become registered individual shareholders of a majority of the shares in their company;
  • Indirect employee ownership – shares are held collectively on behalf of employees, normally through an employee trust;
  • Combined direct and indirect ownership – a combination of individual and collective share ownership.

Employee ownership typically happens in one of the following scenarios:-

  • Business succession or ownership succession – private owners, such as an entrepreneur or family business, decide to sell to their workforce. The most typical route into employee ownership.
  • Professional partnerships – partners might decide to broaden ownership to cover most or all employees, reflecting the need to attract, retain and motivate talented people. 
  • Insolvency or closure threat – employee buy–outs can prove an effective route to recovery for businesses that might otherwise fail.
  • Independence – companies may decide that a significant and even majority employee stakeholding will demonstrate and help protect the company’s independence.
  • Privatisation – bus services and other privatisations have provided occasional opportunities for employee buy-outs.
  • Owner vision – as in the case of John Lewis, Arup Group or Scott Bader, the founder of a business opts for employee ownership at the outset of the business or later