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A practical policy for organisations that offer employees shares or share options as part of their reward, retention and incentive arrangements. It explains how the scheme operates, who may participate, how awards are made and what happens when employment ends.
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This template brings together the key information, sections and considerations you need to create a clear, comprehensive and professional HR document. Preview the document below.
1 Overview
1.1 [Company Name] recognises that employee share ownership can provide an additional way of rewarding employees, supporting retention and aligning employees with the long-term performance and success of the business.
1.2 This policy explains the general principles governing the company's employee share scheme. It should be read alongside the formal scheme rules, individual award or option documentation and any other documents governing the scheme. Where there is any conflict between this policy and the formal scheme documentation, the formal scheme documentation will take precedence.
2 Scope
2.1 All eligible employees of [Company Name].
3 General Principles
3.1 Purpose of the scheme
3.1.1 The purpose of the scheme is to:
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Explore the Pay and benefits policy templatesEmployee share schemes can provide a valuable way of aligning employees with the long-term performance and success of a business. This policy provides a clear framework for operating a scheme fairly and consistently, while leaving the detailed commercial and legal terms to the company's scheme rules, award documentation and shareholder arrangements.
The policy explains the purpose of employee share ownership and how participation may support recruitment, retention, engagement and longer-term alignment with the company's objectives. It helps employees understand that shares or options can have both potential value and associated risks.
The policy sets out how eligibility is determined, how employees may be invited to participate and how awards may be approved. It can be adapted for an all-employee arrangement or a discretionary scheme for particular employees or roles.
Employees need to understand what happens to their awards over time, including any vesting conditions, exercise periods and restrictions on transferring or selling shares. The policy also provides a framework for dealing with resignation, dismissal, redundancy, retirement, death and other circumstances in which employment ends.
The policy establishes responsibilities for administering the scheme and maintaining appropriate records. It also makes clear that tax treatment can vary depending on the type of scheme and individual circumstances, and that employees may need to obtain independent financial or tax advice before making decisions about their shares or options.
Use these best practice actions, recommended timescales and process stages to understand when and how the Share Scheme policy should be used, helping ensure each step is handled consistently and appropriately documented.
Understand the common mistakes to avoid when using this HR template, helping you reduce risk, prevent unnecessary costs and ensure the process is handled correctly.
This depends on the particular scheme. Some arrangements are designed to be available to all eligible employees, while others may be discretionary and restricted to employees who meet specified criteria. Eligibility should always be checked against the formal scheme rules.
They can be. The tax treatment depends on the type of scheme, how and when shares or options are acquired, the circumstances of the employee and what happens to the shares subsequently. Some tax-advantaged schemes provide specific tax reliefs where their statutory conditions are met.
This depends on the scheme rules and the reason for leaving. Different provisions may apply to resignation, redundancy, retirement, dismissal, death or other circumstances. Employees should be given clear information about any applicable exercise periods or forfeiture provisions.
The ability to change, suspend or terminate a scheme will depend on its formal rules and the terms under which awards have been made. Any proposed changes should be reviewed carefully before implementation, particularly where employees already hold shares or options.
Not necessarily. An employee may receive an actual share award, or may receive an option giving them the right to acquire shares in the future. The distinction is important because the rights, restrictions and tax treatment can differ.
AI can help generate ideas, but an employee share scheme involves company law, tax, employment-related securities reporting and scheme-specific rules that need to work together. HRDocBox provides a structured UK HR starting point designed around practical workplace use, while recognising that the formal scheme rules and specialist legal or tax advice may still be required. The template can then be adapted to reflect the organisation's actual scheme rather than relying on generic AI-generated wording.
How this content is developed and reviewed
The Share Scheme policy template is developed using a practical HR methodology that considers current UK employment legislation, ACAS guidance, CIPD good practice and the real-world HR process it supports. Templates and supporting information are regularly reviewed and updated, with additional reviews triggered by significant changes to legislation, guidance or established HR practice, helping ensure each document remains practical, relevant and suitable for UK employers.
Darryl Horn, Chartered HR Director
Darryl is a Chartered HR professional with over 25 years' experience in senior HR and employee relations roles.
He has extensive practical experience of managing pay and benefits HR processes and founded hrdocbox to provide businesses with practical, professionally developed HR resources grounded in UK employment law and best practice.
HRDocBox has been creating practical UK HR documents since 2009.
"Darryl provides support and advice with excellent judgement, and has a strong understanding of people, policies and UK employment legislation."
"He is someone I trust; consistent, dependable, and committed to doing things properly."
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