The impact of furlough leave or reduced hours on EMI share option holders

03 Apr 2020

As we all know, it is likely many companies are currently looking to place certain employees on furlough leave or amend their hours of work as a reaction to the current situation, but if those employees are EMI (Enterprise Management Incentive) scheme option holders, employers need to consider the impact those changes may have on the employee’s EMI options.

Most EMI option schemes will lapse if the option holder ceases to be employed. However some EMI option schemes provide for board discretion to allow employees to retain certain share options when they leave, especially if there are ‘good’ and/or ‘bad’ leaver provisions included.

Those on furlough leave or reduced hours, will still be employed, but employees with EMI share options still have to meet the working time requirements set by the EMI legislation. They must work at least 25 hours per week, or if less, 75% of their working time with the company which granted the option. If as a result of reduced hours, someone wants or needs to take a secondary job to supplement their income, this could impact their ability to meet this criteria. Likewise if someone was on furlough leave and they took a secondary job, this would not only impact the criteria for the furlough Government scheme, but also the EMI working time requirements.

If you would like us to review your EMI option scheme then please get in touch with Lucy Gleisner  on 023 8082 0539 or  lucy.gleisner@trethowans.com

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Lucy Gleisner (nee Grey)

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