About Employee Ownership Trust (EOT)

What is an Employee Ownership Trust (EOT) & How Does an EOT Work?

An Employee Ownership Trust (EOT) is a way of structuring a company so that it is owned by a trust on behalf of its employees. This unique model, where shares are held collectively for the benefit of all employees, is designed to create a strong sense of shared ownership. This shared ownership is a key factor in fostering a more motivated and engaged workforce, as everyone has a stake in the business’s performance and future. 

The trust is managed by a group of trustees who ensure it operates for the benefit of all employees. Trustees can include employees and independent individuals. All employees benefit from the trust, sharing in the company’s success and profits, even though they don’t receive individual shares. This structure fosters a collaborative environment where everyone works together for the company’s success, sharing the benefits among all employees.

For more information on EOT, we strongly recommend visiting the Employee Ownership Association. 

Benefits of an EOT (from Every Perspective)

For the Business  

Employee Ownership Trusts (EOTs) can significantly boost a company’s performance. With employees having a stake in the company’s success, productivity and efficiency often increase. The long-term stability provided by an EOT avoids the volatility that comes with external shareholders. Additionally, the enhanced employee engagement and morale fostered by an EOT create a positive workplace culture that benefits the entire business.  

For Employees  

EOTs offer employees a sense of ownership, making them feel more connected to the company and fostering a sense of pride and responsibility. Financially, employees may benefit from profit-sharing schemes or bonuses linked to the company’s performance. The long-term stability provided by an EOT ensures job security, reducing the likelihood of layoffs and providing a more secure working environment.  

For Customers  

Customers also benefit from businesses transitioning to EOTs. A motivated and engaged workforce typically leads to better service and product quality, enhancing the overall customer experience. Additionally, customers may feel more connected to a business that values and invests in its employees, fostering trust and loyalty. The focus on long-term goals and sustainability in EOTs ensures that the company remains reliable and sustainable, which is a significant benefit for customers seeking consistency and dependability. 

As a customer, you’ll be dealing with an Owner at every interaction!

For Current Owners  

Transitioning to an EOT can ensure a smooth handover of ownership for previous owners, preserving the company’s values. The company is in the hands of committed employees who can offer peace of mind and reassurance about its future. 

Statistics on Employee Ownership Trusts (EOTs)

Economic Contribution: EOTs add up to £42 billion annually to the UK economy, representing 0.1% of the workforce but contributing 0.8% to the economy.

Employee Benefits: Employees in EOTs experience higher job satisfaction, greater engagement, and receive nearly double the bonuses compared to those in non-EOT companies.

Business Performance: EOTs tend to be more profitable, productive, and resilient, reporting increased profits and higher investment in R&D.

Community and Sustainability: EOTs are more community-oriented, donating over £500 million more to charities and prioritising environmental sustainability compared to other businesses.

Source: Employee Ownership Association

Common Questions and Answers About EOTs

What is an Employee Ownership Trust (EOT)? 

An EOT is a structure where a company is owned by a trust on behalf of its employees. This means that instead of individual shareholders, the trust holds shares for the benefit of all employees. 

How does an EOT benefit employees? 

Employees who have a stake in the company’s success feel more motivated and gain a sense of ownership. Although they don’t receive individual shares, they can benefit from profit-sharing schemes and bonuses. 

How does an EOT impact the company’s operations? 

The company’s day-to-day operations remain largely unchanged. The main difference is the ownership structure, which promotes long-term stability and employee engagement. 

How is an EOT managed? 

An EOT is managed by trustees who are responsible for ensuring that the trust operates in the employees’ best interests. 

Do employees get individual shares in an EOT? 

No, employees do not receive individual shares. Instead, the trust holds the shares collectively, and employees benefit from the company’s overall success. 

Why would a company choose to become an EOT? 

Companies might choose an EOT to ensure a smooth transition of ownership, maintain company culture and values, provide long-term stability, and engage and motivate employees.