Unlocking Shared Prosperity: Lessons from Global Models of Trust-Based Employee Ownership

A new paper by the National Center for Employee Ownership (NCEO), Expanding Employee Ownership: Models in the US, UK, France, Canada, and Slovenia, brings together five leading experts to explore the only legislatively supported trust-based ownership models globally. Their findings make a compelling case for how trust-held ownership, supported by thoughtful legislation and incentives, can deliver broad-based economic benefits and sustainable business succession solutions.

Why Trust-Based Ownership?

Research consistently shows that when employees hold shares individually—especially without significant tax incentives or long-term structures—ownership tends to be short-lived, skewed toward higher earners, and limited in scope. In contrast, trust-based models, where a trust holds shares on behalf of all employees, help lock in ownership for the long term and ensure a more equitable distribution of benefits.

The NCEO report focuses on models where companies fund the ownership plan, rather than requiring employees to buy in—an essential feature for broad participation. Each model also includes some form of legislative support and accompanying tax incentives, making employee ownership a viable and attractive option for business owners planning their exit.

Five Countries, Five Models, One Vision

The five countries profiled take distinct approaches but share a commitment to employee ownership as a policy priority. Here's a brief look at each model:

1. United States – ESOPs (Employee Stock Ownership Plans):
US ESOPs are retirement plan–based structures that allow employees to build equity over time, with most funded by the company and governed under ERISA. They are widely used by private companies as a succession tool, offering tax benefits to both sellers and the companies. ESOPs are among the most rigorously studied models, consistently showing higher employee retirement savings, improved business performance, and reduced layoffs.

2. United Kingdom – Employee Ownership Trusts (EOTs):
The UK’s EOT model holds shares collectively and permanently for the benefit of employees. Employees don’t have an equity claim but receive profit-sharing distributions. Introduced in 2014 following the Nuttall Review, EOTs now account for over 1,800 businesses, growing at a rate of one new transition per day. Sellers receive full capital gains tax relief, and companies can pay up to £3,600 annually to employees tax-free.

3. Canada – Newly Legislated EOTs:
Canada’s EOT model, passed in 2024, borrows from the UK’s EOT and incorporates equity-like features inspired by the US ESOP. Sellers enjoy a capital gains exemption on the first CA$10 million of the sale and may defer taxes for up to 10 years. Employee beneficiaries can receive income and capital gains in a tax-efficient manner, and some trusts may allocate internal equity accounts, echoing US-style wealth-building mechanisms.

4. France – Employee Stock Ownership Funds (FCPEs):
In France, employer-funded collective investment vehicles are often used in larger companies. These are typically required as part of mandated profit-sharing for firms with over 50 employees. Employees can invest alongside employer contributions, but the model often results in minority ownership. The model aligns more closely with corporate governance norms and national labor policies.

5. Slovenia – Cooperative ESOPs:
Slovenia presents a hybrid model blending features of cooperatives, ESOPs, and EOTs. Its unique contribution lies in emphasizing employee governance. Unlike other models, Slovenian legislation includes mechanisms for employee decision-making at both operational and strategic levels. Here, ownership includes not just financial participation but a structured role in governance.

Key Lessons

The paper identifies three key lessons for countries considering or expanding employee ownership:

• Trusts ensure longevity: Models where ownership is held collectively, not individually, tend to be more sustainable and broadly inclusive.

• Tax incentives are essential: Without meaningful tax benefits, few owners will choose employee ownership over more traditional buyers like private equity.

• Rules matter: Broad eligibility, equitable distribution of benefits, and fair valuation rules ensure that employee ownership lives up to its democratic promise.

A Rare Policy Consensus

Perhaps most strikingly, employee ownership enjoys rare cross-party political support in all five countries. In the US, more than a dozen ESOP-related bills have passed with bipartisan backing. In the UK and Canada, EOT legislation saw support from across the political spectrum. France and Slovenia incorporate employee ownership into broader labor or economic development policies.

This political consensus underscores the universal appeal of models that enhance productivity, improve employee wellbeing, and keep local businesses locally owned—all while reducing wealth inequality.

Looking Ahead

The NCEO paper is both a map and a manifesto. It doesn’t just describe what's working—it invites policymakers and practitioners worldwide to learn from these successes and adapt the lessons to local conditions.

As more business owners reach retirement age and the challenges of inequality and disengagement grow, employee ownership offers a pathway to more resilient businesses and shared prosperity. This research shows it’s not only possible—it’s already happening.

To explore the full paper and learn more, visit nceo.org.

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