Alternatives to salary bonuses on offer

09.02.09

Small employers should review share options to remunerate and retain key staff, legal experts advise.

Firms that are tight on cash can use Enterprise Management Incentive (EMI) schemes, rather than salary or cash bonuses, to incentivise staff, according to law firms.

EMI is a scheme that in giving staff equity links their performance with the value of their shares in the business. Employers do not lose control over their business, but can attract and retain key staff without hampering cashflow.

Ian Hodgkinson, corporate partner at Mace & Jones, said: “The EMI scheme is ideal for firms tight on cash who want to keep or attract experienced and able staff.”

EMIs are also attractive from a tax perspective as there is no national insurance contributions liability, as there is with salary or cash bonus payments.

Hodgkinson noted that companies need to meet a number of criteria to qualify to use EMIs. He said: “Firms must have gross assets of no more than £30m, not be under the control of another company, and not have more than 250 employees.”

Sectors such as property development, financial services, hotels, nursing homes, leasing and legal and accountancy services are excluded from the scheme.

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