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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.