| Financial Benefits to Encourage Employee Participation |
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under an approved share option scheme or ESOP.102 The employee must not have a material interest, ie control of more than 25% of the ordinary share capital.103 |
There are also conditions as to equal treatment to ensure that all are eligible to participarte and those who do so participate on similar terms.104 However, this does not prevent discrimination on the basis of hours worked, remuneration or length of service; nor does it prevent plans from being performance related. Group plans must not favour directors or higher paid employees.105 |
The shares must also be fully paid up and neither redeemable nor convertible.106 However, there are no rules directing the conditions under which the shares may be issued; so the shares may be non-voting or subject to preemption rights on the part of the company.107 The company must either be listed or be not controlled by any other company,108 ie the appropriate type of company. |
For a table showing the different features see below p 280. |
16A.6.2 The Free Share Plan |
Employers can give up to £3,000 of shares to employees. Employers do not have to treat all employees alike but may discriminate among them, eg for reaching performance targets and so rewarding ‘personal, team or divisional performance’. These plans resemble approved profit sharing schemes; however, unlike those schemes, the award of free shares may be linked to performance provided the criteria are objective and are fair to all employees, ie the |