Implement an employee share scheme (ESS)

We will help you give key employees a real stake in the business, in a way that actually rewards them and the company.

Equity is one of the most powerful retention tools a growing business has. Done well, it ties your best people to the long-term value they help create. Done badly, it lands them with a tax bill on shares they cannot sell and turns a retention tool into a grievance. We design employee share and option schemes for Australian private companies, working through the tax, corporate, and employment law side of it together so the plan does what you wanted it to do when you started thinking about it. You get a scheme your team values and that the company can defend.

What is an employee share or option scheme?

An employee share scheme (ESS) or employee share option plan (ESOP) is a structured arrangement that gives selected employees the right to acquire shares or options in the business, usually subject to vesting conditions and performance milestones. The tax outcome depends on which concession the scheme qualifies for under Division 83A of the Income Tax Assessment Act 1997 (Cth): the startup concession defers tax until disposal for eligible companies, while the tax-deferred concession defers tax until a deferred taxing point (capped at 15 years) for non-startups. Schemes that do not qualify for any concession are taxed upfront on grant, which usually defeats the commercial purpose. Designing the scheme correctly at the outset is what determines whether the equity ends up being a genuine incentive or a tax problem.

What is the difference between an ESS and an ESOP?

An employee share scheme generally refers to a plan that gives employees shares directly, sometimes through a trust structure or a loan-funded share plan. An employee share option plan gives employees the right to acquire shares at a future date for a defined exercise price, typically conditional on vesting. ESOPs are more common for early-stage businesses because no money changes hands at the time of grant.

What happens to the equity when an employee leaves?

Plan rules usually distinguish between good leaver and bad leaver scenarios, with vested equity often retained on a good leaver exit and forfeited on a bad leaver exit. The treatment of unvested equity is usually forfeiture in both cases. Getting these rules drafted so they align with the employment contract and the commercial expectations of the parties is critical, because plan exits are one of the most common sources of post-employment dispute.

A scheme structure that actually qualifies for the tax concession you are aiming for.

Plan documents that work commercially and legally.

Vesting and leaver provisions that protect the business at exit.

Equity is too valuable a tool to roll out without getting the structure right.

The difference between a properly structured scheme and one that misses a concession is often six or seven figures of tax cost across the team. Speak with us before you commit to a structure.

A poorly designed employee share scheme is a tax bill dressed up as an incentive.

You want to give equity to the people who are building the business with you, but you also know that the tax and corporate law sitting behind employee share schemes is genuinely complex. Get it right and the equity is a real incentive. Get it wrong and the employees end up with a tax bill on grant, the company misses the disclosure relief, and the leaver provisions create disputes the plan was meant to prevent.

We will design the employee share or option scheme structure that qualifies for the right tax concession.
We will draft the plan rules, offer letters, and valuation documentation.
We will prepare the disclosure materials required for the ASIC class order relief.
We will integrate the plan with the constitution, shareholders agreement, and employment contracts.
We will draft good leaver and bad leaver provisions that hold up at exit.
We will advise on the tax treatment of grant, vesting, exercise, and disposal.

You want to give key employees a genuine stake in the business, but you know the tax treatment is complex and you want to get it right.

You are running a growing business and you have identified a group of key employees you want to keep, motivate, and align with the long-term value of the company. You have decided that equity is the answer, but the moment you start looking at how to actually issue it, the complexity stacks up: tax treatment, valuation, vesting, disclosure relief, plan rules, leaver provisions, and integration with the existing shareholders agreement. You do not want to roll out a scheme that creates tax problems for your team or leaves the company exposed on disclosure or governance. The plan needs to be designed properly from the outset.

What's included in your employee share scheme implementation service

Scheme structure design (ESS, ESOP, or loan-funded plan).
Tax advice on eligibility and the applicable concession.
Plan rules drafting.
Offer documents and acceptance letters.
ASIC class order disclosure materials.
Valuation documentation.
Integration with constitution and shareholders agreement.
Good leaver and bad leaver provisions.

What happens when an employee share scheme is not designed properly?

Schemes designed without proper attention to the tax rules regularly result in employees being taxed on grant, on equity they cannot sell and may never realise. The conversation that follows is uncomfortable: a senior team member has just been issued options as a retention tool and has received a tax bill calculated on the spread between the exercise price and the company’s notional market value. The retention purpose evaporates, the equity becomes a source of grievance rather than alignment, and the company finds itself contributing to the employee’s tax liability just to preserve the relationship. The cost of fixing a poorly structured scheme retrospectively, where it can be fixed at all, is materially greater than the cost of doing it properly the first time.

Here is how we design the scheme so the equity actually works as an incentive.

We start with the commercial outcome you want: who gets equity, how much, on what conditions, and what happens at exit. We then work back through the tax structure to identify which concession applies to the business, design the scheme to qualify, and document it so the position holds up if it is ever reviewed by the ATO. The plan rules, the offer documents, the disclosure materials, and the integration with the company’s existing constitution and shareholders agreement all come together in a coordinated package. The result is a scheme your employees value and your company can defend.

Three steps to a working employee share scheme.

Structured, documented, implemented.

Design the structure.

We advise on whether an ESS, ESOP, or loan-funded plan suits the business and which tax concession applies.

Draft the plan.

We prepare the plan rules, offer documents, valuation materials, and disclosure materials.

Issue the equity.

We finalise the offers, coordinate acceptance, and integrate the plan with the company's existing arrangements.

Corporate and tax lawyers experienced in designing employee share and option schemes for Australian private companies.

Most founders we work with on employee share schemes have been thinking about issuing equity to their team for months, and have stalled because the complexity of doing it properly outweighs the appetite for a do-it-yourself approach. That hesitation is rational, because the gap between a scheme that qualifies for the startup concession and one that does not is millions of dollars of tax cost across a team over time. Our corporate and tax team has designed and implemented employee share schemes for technology businesses, professional services firms, and family enterprises across Australia, and we work through the tax, corporate, and employment law layers in one engagement. You get a plan you can roll out with confidence.

We understand you want to know the cost, before we get started.

We will map out our process, from beginning to end, so you know what the journey will look like before you get started.

We will provide you with a clear and detailed Work Proposal covering each step along the way.

Our fair fees are all-inclusive. No hidden costs for telephone calls, emails, photocopying, couriers, or coffee.

Our great lawyer guarantee

We want to be part of your team over the long term. We achieve this by adhering to these core principles:

Take the time

We listen carefully to understand what you want to achieve. Then we thoroughly explain our advice and step you through the documents. You can be sure you know the full consequences.

Share our knowledge

We will pass on as much knowledge as we can, so you can make your own informed decisions. We want to make you truly independent.

Stick to our knitting

We only do what we're good at. You can be confident that we know what we're doing and don't pass on the cost of our learning.

Work as one team

Someone will always be available to answer your questions, or point you in the right direction. You will also benefit from a range of perspectives and experience.

Fair pricing

For advice and documents, we provide a fixed or capped quote so you don't take price risk. If you're in a dispute, we map out the process and costs so you know what to expect.

It's your show

We're not in this for our egos. We're in it for a front row seat to witness your success.

Ready to give your team equity that actually works?

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