Employee Incentives
The Employee Incentives Team is a core part of the Tax group. This aspect of our work is driven by trying to achieve the most tax efficient arrangements for companies wishing to incentivise their employees and directors, and indeed for the employees and directors themselves. The team works closely with our specialist employment and corporate lawyers.
However, the work of the team is not limited to pure tax issues. The design and implementation of share schemes (and advising on methods of incentivisation using direct share ownership) involves the consideration of issues ranging from the accounting impacts of the proposed arrangements to securities laws and financial assistance issues.
The team has extensive experience in advising both private and public companies on the most beneficial structures to put in place to incentivise their staff. In addition, we advise in relation to employee incentives and taxation in connection with the events occurring in a company's development from incorporation, to VC or private equity funding, to merger or acquisition and IPO.
UK Employee Incentives
Our UK team offer specialist advice to UK-specific employee incentives:
Bespoke Option Arrangements
The team also advises on and designs one off option arrangements for employees, executive and non-executive directors and consultants.
Corporate Governance
The team advises on the corporate governance issues raised by the provision of equity incentives to employees. We advise on compliance with institutional investor guidelines and Companies Act requirements associated with the provision of share options or shares.
Employment Issues
Working closely with the Employment Group, the team advises on the effect of termination of employment on the share option or equity incentive arrangements that employees may have in place and any tax consequences that may occur. We also advise on the drafting of offer letters and employment contracts in relation to share option or equity incentive arrangements.
Equity Incentive Arrangements
The team structures tax efficient means by which employees can invest directly in the equity of their employing company. We advise on all aspects of the tax treatment of employment related securities from acquisition to disposal, including the new restricted securities regime and post-acquisition benefits from securities.
In-bound Work
The team has an extensive practice advising companies wishing to set up in the UK, Germany or France on rolling out their existing share option and equity incentive plans to their UK, German or French employees. The advice encompasses tax, accounting, corporate governance and financial services issues.
Income Tax and National Insurance Contribution Issues
One of the main aspects of the team's work is advising on the income tax and national insurance contribution treatment of payments made to employees, whether these are cash payments made on the termination of employment, or share based incentive arrangements. We advise in relation to how companies should structure such arrangements to mitigate their own and the employees' tax exposure.
Scheme Design and Implementation
The employee incentives team has extensive experience in designing and implementing a wide range of share option schemes, ranging from:
- the UK tax efficient discretionary Enterprise Management Incentive ("EMI") options
- Company Share Option Plans ("CSOPs")
- all employee Save As You Earn ("SAYE") schemes
- Share Incentive Plans ("SIP")
- unapproved arrangements where tax efficient schemes are not available.
The team also advises and designs Phantom Share Option Schemes, Deferred Bonus Schemes and Long Term Incentive Plans ("LTIPs").
Transactions
The team works closely with the Corporate Group on advising on the employee incentive issues arising in the context of mergers, acquisitions and IPOs.