We have seen a lot of recent publicity in the area of Employee Share Plans and I believe there is a groundswell building – both from employers looking to engage employees more directly in the ownership and capital structure of their businesses and in employees wishing to participate more actively in the success of the business they work in and taking substantial steps to secure their financial future. As many of our clients will testify we have used these plans ( our own variant of them anyway ) to fund succession planning. The President of AEOA ( Australian Employee Ownership Association ) explained further in a recent statement:
The Australian Employee Ownership Association (AEOA) is urging the Australian union movement to stop arguing with companies and to encourage employees to become shareholders. The organisation made a presentation yesterday to delegates attending the ACTU Congress in Brisbane, discussing the need for Australian business to embrace employee share trusts as a way to fund business through the Global Financial Crisis (GFC). In light of the recent budgetary employee share plan announcements, the AEOA will be calling on the Government to legislatively enshrine existing share requirements to encourage more businesses to set up employee share trusts.
“Employee ownership of companies is particularly important in this economic climate when various corporations are looking for injections of cash to stay afloat,” AEOA President Ian Woods said. “Day after day, we’re hearing more and more companies crying out for Government funding or international investment to survive. By raising funds through employee share trusts, businesses can retain Australian ownership and ensure that decisions are made in favour of Australian and its employees – not just for foreign shareholders and the executive team. An employee share trust is beneficial to both the company and the employees and can still attract favourable taxation treatment.”
“Employee share ownership is implemented in about five percent of Australian businesses, compared to 20 percent in the USA and about 40 percent in France. The last year has shown us that the previous model of capitalism doesn’t work and that we need to look elsewhere to maintain economic growth into the future,” Mr Woods said. “Unions should really be considering this as the model of the future as it provides the facility to enshrine excellent conditions for workers in all tiers of a company.”
Captain Ian Woods, President, AEOA, 3rd June, 2009