Get a slice of the action

Employees can boost their wealth through a company's share purchase plan, but there are risks to evaluate

- SUSAN HELY

If you are an employee in demand, you could be offered shares or options by a company as a motivation to join or an incentive to stick around.

Employee share and option schemes have been growing in popularity over the past couple of years, particularly in the technology and start-up sectors. They are being offered by both listed and unlisted companies.

"Working from home and burnout from the pandemic has resulted in all employers considering their value propitiation to employees,” says Peter Bardos, HLB Mann Judd's Sydney tax director.

There is a war for talented employees, particularly in light of “the great resignation”, which in the US has seen 48 million people leave their jobs and in Australia is becoming evident, too.

Two in five Australian workers (43%) are unhappy with their work and plan to search for a new job in 2022, according to a survey by Elmo Software.

It found that a third of workers say they plan to quit their current job as soon as they secure a new role, with 19% intending to quit without another job lined up.

Employers are enticing employees with a whole host of incentives. Surveys show that employees value more flexibility, the option to work remotely more often, access to extra annual leave as well as increased wages and promotion.

Offering shares or options in the company at a discount to the share-market trading price can accelerate your wealth if the share price rises. In some instances - usually at the executive level - shares and options are gifted as a golden handshake.

Changes to schemes allowing employees to build more equity in businesses are making employee share plans more compelling.

Hit the jackpot

Share and option schemes are marketed to employees as a way to help them take part in the company's success.