Business employee ownership scheme voting rights
May 7th, 2009 — dodoWhen the dti launched the BEE Codes in December 2006, it made specific mention of the concern that employee ownership schemes were increasingly being used as an employee retention strategy.
In the presentation, the dti discouraged the use of employee BEE ownership schemes to retain employees based on the master-servant relationship between employer and employee. Where such a relationship exists, active participation in management is unlikely. Using the BEE employee ownership scheme as a retention strategy distracts the employees‘ focus from ownership participation. As a consequence, voting rights may be undermined. In reality, a fine line exists between effective employee ownership schemes and circumvention of the Codes.
Employee ownership schemes have their place in BEE. However, they are easily abused and in many circumstances do not provide the employee with any real ownership. Participation in economic benefits is limited through retention strategies that normally do not benefit theemployees.
Where employees are approached to participate in an employee ownership scheme, they must investigate the terms of the scheme and negotiate for a real right to ownership benefits. Verification agencies must examine the terms of employee ownership schemes carefully to determine whether the nature of the scheme meets the objectives of theownership element of BEE.
For a company wishing to implement an employee ownership scheme in good faith, it must ensure that the employees have a real right to ownership benefits.
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