Different types of employee ownership

By the end of this section you should understand the different types of ownership structure

There are three general ways in which employee ownership can be structured in an employee buy-out process. Watch this short film explaining the different types of ownership structure and see more below:

Direct Ownership

Individual employees directly own shares in the business they work for. This ownership may have been facilitated through employees purchasing shares using tax advantaged share schemes.

A well-known example of a directly owned business is Suma Wholefoods.

Indirect Ownership

An employee benefit trust owns shares in the business on behalf of beneficiaries. The beneficiaries of the employee trust are the existing employees, past employees and employees in the future. The employee trust holds these shares with no intention of ever selling them and any benefit derived from holding them is solely for the beneficiaries.

A well-known example of an indirectly owned business is the John Lewis Partnership.

Hybrid Ownership

A mixture of both direct and indirect ownership – i.e. individual employees directly own shares and an employee trust also owns shares.

A well-known example of a hybrid business is School Trends. Watch a video on School Trends: 

Employee Benefit Trust

Watch our short video about Employee Benefit Trusts and Financing buyouts:

Types of legal form

Employee buyouts may use a variety of legal forms including company limited by share/guarantee or a co-operative society. Read about your legal and governance options in more detail.

Updated: 21/03/2016