Hi, does anyone know of any good info, particularly if there are some good graphics, flowcharts etc, on the difference between worker co-ops and employee owned organisations.
Not looking for an explanation here on the difference, I’m generally aware, I want to find info, that either I can distil, or hopefully someone else already has, to be able to send around fellow co-op members.
One of the main players in the wholefood industry, is employee owned (and has been for a few years), I want to be able to explain to people at Suma, the technical difference, and the reality of that.
I think wider it is a good potential topic we could/should be pushing worker co-ops in, but is certainly something I would like to push back on against this particular company, and ideally I’d like to start with making sure people in Suma are better informed on the topic.
If anyone has anything, can message on here, or email me at Suma rossh@suma.coop, also interested in any training that already exists, graphics, presentations etc on worker co-ops, that might be useful to share with members, particularly newer ones, for bitesize induction type stuff, but the main thing is the worker coop v EO stuff.
The graphics in the worker co-op code might be useful. You can find Employee Owned Trust diagrams online, or some of the EOA’s case studies might include diagrams.
i may have some really (like 20 years) old materials from a Coops UK Succession project, in hard copy which may have addressed this. If I can find them I will scan and send.
IMO too often material has shied away from talking openly about the difference between EO and worker co-ops rather than confronting it head on, leaving that to support practitioners.
A piece here: Adapting employee ownership for truly democratic businesses
I penned a response they printed in the next issue, the penultimate paragraph is the most relevant bit:
Dear Editor
I was pleased to read a piece calling for more democracy in worker buyouts in the Autumn 2024 issue of Stir magazine. While all worker buyouts are to be applauded, Employee Ownership Trusts (EOTs) are the dominant vehicle of choice for worker succession. In 2021 I participated in a working group convened by the Co-operatives UK Worker Co-op Council to explore some of the reasons why worker co-ops weren’t more prevalent. Key among them was that a business owner transferring to an EOT pays no Capital Gains Tax on the sale of the business, whereas transferring to a Worker Co-operative Society would incur a tax bill.
The working group requested Co-operatives UK to lobby for these tax reliefs to be made available when a business owner sells to a Worker Co-operative Society and level the playing field. We believe this will result in an increase in the use of Worker Co-ops for succession. Co-op Culture repeated this call in our submission to Co-operatives UK to inform the government on how to double the co-op sector. The new worker co-op federation workers.coop is also supportive of such a move.
The likes of VME Co-op have hacked the EOT model to implement sociocracy and leverage high levels of democracy, showing worker democratic control is achievable in EOTs. However, this is not the default setting and there is a risk that Employee Ownership Trusts can become technocratic rather than democratic, or managerial rather than participatory. Their complexity can be a barrier to full engagement.
In a recent CICOPA international gathering of co-op movement representatives the success of worker buyouts in Canada, Argentina, France and Italy was attributed to supportive legislative and tax frameworks that maximised the co-op sector’s solidarity based actions. Extending Capital Gains Tax relief on sale of a business to a Worker Co-op could drive more democracy in worker ownership. In addition Corporation Tax reliefs for co-ops akin to Italy’s Marcora Law could provide the resources to drive this important work.
@rossh (and anyone else interested). CUK produced Simply Buyout ( Simply Buyout | Co-operatives UK ) and Section 2 has diagrams for Direct Ownership, Indirect Ownership through an EBT and Hybrid Ownership. No Co-op Ownership diagram…A co-op would be akin to Direct Ownership but no percentages against the “employee shareholders” rather 1M1V so the point to make here is that you could have Direct Ownership where voting power and profit distribution isn’t 1M1V. The EBT and Hybrid Ownership approaches are complex and IMHO reliant upon trustworthy accountants and/or lawyers to interpret and manage them. A simple co-op is understood by all.
The point to make is that the complex forms are usually to deliver tax advantages. Firstly to the owner as an incentive to sell to the employees, secondly to the employees.
thanks @NathanBrown much appreciated I will have a look through them and let you know where I get to. I generally try and explain it as employee ownership is effectively a trust, that runs for the employees benefit, they dont really have a say in what that benefit is (I realise some will work better than others on that, but the trust makes the decisions).