Financial Participation
While the United Kingdom ranks somewhere in the middle in Europe with regard to workers’ profit-sharing, an above-average number of workers own shares in their companies.
According to the results of the European Working Conditions Survey (EWCS 2010) which is based on a questionnaire of employees, the incidence of profit-sharing systems in the United Kingdom is 11.8% and that of employee share ownership is 4.4%.1
According to the European Company Survey, 8% of private-sector UK companies with 10 or more employees offer their employees profit-sharing schemes. Compared with other European countries, this is a below-average figure (the 30-country European average is 14%). The prevalence of employee profit-sharing schemes in Great Britain varies according to company size. 7% of companies with 10-49 employees, 13% with 50-199 employees, and 16% of companies with more than 200 employees had a profit-sharing scheme. According to the results of the European Company Survey, 6% of UK private-sector companies offer their employees share ownership schemes. This corresponds to the European average of around 5%.2 The findings of the Annual Economic Survey of Employee Ownership in European Countries in 20012 show that 79.3% of the country’s largest corporations offer wide-ranging (share-based) participation schemes covering the whole workforce This is well above the European average of 53.3%.3
The results of the Cranet Report also show an above-average incidence of employee share ownership schemes in companies with 100 or more employees in the United Kingdom.4 For profit-sharing schemes, however, the Cranet study shows below average incidence.5
The incidence of profit-sharing schemes is influenced by the major importance of the stock market and the typical equity structure of British companies. The relatively high level of employee share ownership schemes can be explained by the greater institutionalisation of the British capital market compared with the rest of Europe and the British public’s greater acceptance of capital investments in shares.6
According to data available in the UK tax authority’s (HM Revenue and Customs (HMRC)) database, more than 12,000 UK companies offered participation schemes in the 2008/09 tax year. A 2010 survey of 488 employees on company salaries and benefits shows that the following distribution: 40% of companies offer SAYE schemes, 26% Company Share Option Plans, 26% Long-term Incentive Plans, 23% SIP with matching shares, 18% SIP with partnership shares, 16% SIP with free shares, 5% EMI, 3% Phantom Share Schemes and 12% other schemes.
The distribution of the value of such shares or options is as follows:
| Less than £ 1,000 |
8 % |
| £ 1,001 - £ 2,500 |
2 % |
| £ 2,501 - £ 5,000 |
10 % |
| £ 5,001 - £ 7,500 |
7 % |
| £ 7,501 - £ 10,000 |
13 % |
| £ 10,001 - £ 20,000 |
11 % |
| £ 20,000 - £ 50,000 |
27 % |
| More than £ 50,000 |
15 % |
| No details given |
8 % |
(Source: HMRC, June 2010)7
HMRC gave the following figures for companies offering the various schemes:
Companies offering tax-advantaged participation schemes:8
| All-Employee Schemes |
Discretionary Schemes |
Any Tax- Advantaged Employee Share Scheme9 |
||||||
| Year |
SAYE Share Option Schemes |
Share Incentive Plans |
Any All-Employee Share Scheme10 |
Company / Discretionary Share Option Plans |
Enterprise Management Incentives |
Any Discretionary Share Option Scheme11 |
||
| 2008-2009 |
670 |
870 |
1,370 |
1,710 |
7,010 |
8,490 |
9,160 |
|
| 2009-2010 |
600 |
840 |
1,270 |
1,490 |
6,780 |
8,080 |
8,710 |
|
| 2010-2011 |
510 |
820 |
1,180 |
1,280 |
7,190 |
8,290 |
8,910 |
|
(Source: HMRC, June 2010).
Company Share Option Plans12
| Year |
Number of schemes at the end of the fiscal year |
Number of employees receiving shares |
| 2008-2009 |
2,150 |
40,000 |
| 2009-2010 |
1,910 |
35,000 |
| 2010-2011 |
1,800 |
40,000 |
(HMRC, June 2010)
Share Incentive Plans13
| Year |
Type of share |
Number of schemes at the end of the fiscal year |
Number of employees receiving shares |
| 2008-2009 |
Free |
180 |
590,000 |
| Partnership |
420 |
4,250,000 |
|
| Matching |
270 |
2,810,000 |
|
| Dividends |
210 |
950,000 |
|
| 2009-2010 |
Free |
180 |
380,000 |
| Partnership |
400 |
4,080,000 |
|
| Matching |
260 |
2,730,000 |
|
| Dividends |
200 |
820,000 |
|
| 2010-2011 |
Free |
170 |
420,000 |
| Partnership |
400 |
4,080,000 |
|
| Matching |
260 |
2,690,000 |
|
| Dividends |
210 |
850,000 |
(Source: HMRC, June 2010)
Enterprise Management Incentives14
| Year |
Number of companies issuing options |
Number of employees receiving options |
| 2007-2008 |
2,850 |
26,500 |
| 2008-2009 |
2,560 |
22,100 |
| 2009-2010 |
2,190 |
16,900 |
(HMRC, June 2010)
Wilke, Maack and Partner (2014) Country reports on Financial Participation in Europe. Prepared for www.worker-participation.eu. Reports first published in 2007 and fully updated in 2014.
