Employee Benefits
THE BEST laid plans for employee benefits often go awry through a lack of foresight or neglect of the legal details, with problems only surfacing when a contract has to be terminated or the company sold.
Using experts is important when drafting incentive and benefits schemes, according to Brian Garner, senior tax consultant at Bond Pearce.
"Employee share schemes for me are all about employees having a stake in their company and linking employees' rewards to the share price growth of the company they work for", says Brian.
"Owning shares is a long-term investment likely to tie people in over a longer period than a cash bonus - the aim is to make employees think like owners."
"But things can go wrong. If you're in the process of selling your company, an unwieldy scheme can even reduce its value to prospective buyers because the details haven't been thought through. In a worst-case scenario, there can be delays in the sale process, or employees will end up demotivated because they have paid more tax than they had anticipated - that can be a problem for the business going forward, and is exactly the opposite of what an employee share scheme is supposed to achieve."
Brian's specialist background in employee share schemes has been key to Bond Pearce's continuing expansion in employee benefits law, including AIM and FTSE-listed clients.
"We are attractive to the bigger clients because we offer City-class advice at much lower fees."
Similarly, Brian believes that it is common for problems to arise out of a lack of long-term thinking and preparing for the 'worst', as well as the 'best' case scenario.
"You need to identify, accurately, what behaviours you are trying to reward," Brian says.
"That includes planning for under-performance, terminations and, ultimately, disputes. Part of our job is to think through these issues and ensure the documentation is in place to protect employers as far as possible."
"We've put together an integrated team that can deal with problems across the board - from share-based incentives, cash bonuses, and tax efficient terminations as well as guidance on the developing case law on discretionary bonus schemes."
