GEO INSIGHTS

Australian tech startups can use Employee Share Schemes (ESS) to attract and retain skilled talent by offering employees equity that aligns their interests with the company’s growth, especially when cash is tight. The ESS startup concessional regime makes this tax-effective by taxing employees only at a liquidity event and allowing shares to be offered at a discount, giving employees real ownership and potential upside. Eligible companies and employees must meet specific criteria, and when set up correctly, ESS can turn staff into true partners in growth, helping startups move from early-stage survival to long-term success.

An SMSF generally cannot acquire shares issued under a remuneration-based employee share scheme, except in limited circumstances such as when the shares come from a listed company and meet related-party rules. Experts warn that these arrangements often create compliance risks, including breaches around asset acquisition, valuation at market value, and potential non-arm’s-length income issues if discounts apply. Trustees are urged to assess eligibility and compliance upfront, as problems commonly arise when transactions are completed before proper advice is sought.

Employee share ownership plans are widely used in the UK but poorly understood by MPs, and outdated design is contributing to falling participation despite clear benefits for workers, businesses, and productivity. SAYE and SIP schemes in particular have not kept pace with a more mobile workforce, with long lock-in periods and complexity discouraging take-up even as government policy seeks to broaden share ownership. With strong cross-business support and clear economic upside, the new government has a timely opportunity to modernise these plans—such as shortening holding periods—to revitalise employee ownership and inclusive growth.

Equity compensation—such as restricted stock units (RSUs), stock options (ISOs and NQSOs), and employee stock purchase plans—has become increasingly common, offering employees potential wealth-building opportunities but also creating complex tax considerations. Understanding vesting schedules, tax treatment, strategies like Section 83(b) elections and net unrealized appreciation, and risks such as concentrated stock positions is essential to maximizing value and avoiding costly surprises. With proper planning and coordination with tax and financial advisors, equity awards can be transformed into a strategic asset that supports both short-term financial needs and long-term goals.

Around 5,700 Jet2 employees are set to share a £58 million payout as the airline’s first sharesave scheme, launched in August 2022, matures, with returns boosted by an 84% rise in share price. Employees who participated can either hold or sell their shares, with typical investors seeing gains of several thousand pounds depending on their monthly contributions. Following this success, Jet2 has introduced three more sharesave schemes for over 8,900 employees, alongside ongoing salary increases, profit-sharing, and bonus schemes to reward staff for their customer-focused performance.

Despite a year of global economic, political, and environmental challenges, most multinational companies remain committed to employee well-being, offering programs like counseling through Employee Assistance Programs (EAPs) and promoting healthy work-life balance. Encouraging managers to model boundaries and use PTO helps prevent burnout, retain top talent, and support employees with caring responsibilities. Forbes’ 2025 World’s Best Employers ranking, based on surveys of over 300,000 employees in 50+ countries, highlights 900 companies excelling in pay, career growth, work-life balance, and overall reputation.

Elis has launched its 2025 “Elis for All” employee share ownership plan, offering eligible employees in France and 20 other countries the chance to subscribe to company shares through two capital increases capped at €2 million (0.85% of share capital). The plan uses a classic structure with a 30% discount on the reference share price and a matching contribution of one free share for every 10 subscribed, with holding periods of five years in France and three years internationally. The subscription period runs from 16 September to 2 October 2025, with new shares expected to be admitted to trading on Euronext Paris after completion in November 2025.

Many incentive plans rely on binary, high-risk equity like growth shares, which suit founders but can be unfair for professional hires who face the risk of ending up with nothing. Pairing growth shares with a lower-volatility instrument like a CSOP creates a balanced incentive stack, preserving upside while cushioning modest outcomes and keeping executives engaged. Ultimately, good incentive design is risk design: combining armour and ammunition manages downside as well as upside, which is essential in volatile markets.

In 2024, New Zealand businesses faced political uncertainty and a challenging economic climate, yet continued to implement employee share plans (ESPs) to retain key talent amid ongoing migration and talent competition. Long-term incentives (LTIs) showed greater variation in face values, with ESG metrics increasingly incorporated into performance and vesting conditions alongside financial targets, reflecting formalised climate and sustainability reporting requirements. Effective ESPs, particularly when clearly communicated and supported by technology, boost employee engagement and loyalty, while recent tax changes—such as higher tax-free thresholds and proposed deferral regimes—aim to make these schemes more attractive and accessible.