Research released on 19 October 2023 brought together by the employee-ownership trade body the Employee Ownership Association and think tank Ownership at Work has revealed that employee and worker-owned businesses (such as employee ownership trusts (EOTs)) tend to be more profitable and support their employees, surrounding communities and the globe more than their non-employee-owned peers.
The employee ownership sector has been super-charged in the last few years by the EOT model. UK business owners can transfer shares to an EOT, receiving full market value without paying Capital Gains Tax. An EOT benefits owners and their employees may enjoy annual tax-free bonuses.
Independent researchers surveyed approximately 150 employee-owned businesses (EOBs) and compared the results to that of a controlled group of non-EOBs. This research uncovered that EOBs are up to 12% more productive based on Gross Value Added per employee.
According to the study, researchers at WPI Economics uncovered:
- EOBs return twice as much in bonuses and dividends to employees.
- EOBs were five times less likely to make people redundant in the last three years.
- EOBs tend to pay higher minimum annual wage by roughly £2,900 and are over twice as likely to hold accreditation for fair pay.
- EOBs provide more supported access to private healthcare, mental health resources and flexible working.
- EOBs invest on average 12% per annum (£38,000) more in on-the-job training and skills.
- 83% of EOBs reported increased employee motivation since adopting an EO model and 73% reported increased job satisfaction.
The commissioners of the report, the Employee Ownership Association, the sector’s official trade body, represent that businesses who invest more into their employees are the driving forces behind growth that promotes a stronger and fairer economy, more resilient communities and a cleaner planet:
EOBs are proven to create more jobs and are more likely to generate profits and invest more into research and development. EOBs make up just 0.1% of UK businesses but drive 0.8% of direct Gross Value Added and 1.7% to 2.1% of overall economic activity (combining direct, indirect and induced GVA) – a £32bn-£41bn contribution.
EOBs are almost three times as likely to offer volunteering days and in aggregate contributed over £500m more to community causes than non-employee-owned businesses.
EOBs are more likely to have a Net Zero strategy and wider environmental sustainability accreditations in place.
Head of Employee Incentives , Samantha Lenox, comments:
The report from the Employee Ownership Association and Ownership at Work provides strong evidence for what the sector has been saying for a long time. Employee ownership is good for productivity and growing the economy, good for employees and good for communities.
Access the research report containing more insights on the potential of the UKs employee-owned business model and its impact for more information.
Want to find out more? Read our Employee Ownership Trusts FAQ article about how to set one up, the pros and cons, and what rules you need to follow along the way. If you feel an EOT may be right for you, contact our specialist EOT solicitors. You can contact us on 0800 689 1700 or fill out the short enquiry form below and a member of the team will be on contact.