Written by Chris Budd
Most EOT owned business will have at least one employee trustee. Given that one of the roles of the trustees is to represent the interest of the employees (who are the beneficiaries of the trust) to the Board, we always recommend that one of the trustees should be an employee.
For most employees, however, the very concept of the trust will be new to them, let alone the details of their responsibilities as a trustee.
Training for new trustees is therefore essential. Which is why we put on employee trustee training workshops.
It’s entirely possible that the employees selected will never have sat in a meeting. Now they are not only being expected to represent the employees in a meeting, they are often doing so with a director and maybe even the founder or former owner as one of the other trustees.
This can be extremely daunting!
Then there is the role of the trustees in holding the board to account. How is an employee with no training going to feel about asking tricky questions of their former boss? I think we can guess!
What Trustees Do
Then there is what trustees actually do. There are three primary roles – acting as critical friend to the Board; representing employees; upholding the Flag, the principles of the business.
This is fine in theory, but how do they actually do this? How do they find that tricky path between holding the Board to account, and supporting the Board to achieve the strategy?
How frequently should meetings be held? Just before Board meetings? Just after? Should they receive copies of the Board minutes? Should the Board see copies of the trustee meeting minutes? What information should be given to the employees?
And how to collect the thoughts and opinions of the employees?
Not A Shop Steward
This last point can be especially tricky. The trustees are, in effect, the owners of the business. They represent the interests of the beneficiaries of the trust, the employees. Any views to be shared with the trustee must therefore be on ownership issues.
But what actually is an ownership issue? It is so easy, and common, for fellow employees to approach the employee trustee to complain about day to day type issues, to effectively place them in the position of being a shop steward. How do you prevent this from happening?
Most EOTs are established with corporate trustees, which means the employee trustee will be a director of the trustee company. Most if not all will never have been a director before – what are the responsibilities of being a director? What are the legal duties, and the liabilities?
The trustees are responsible for distributing the profit among employees. How to go about this? How to decide on the split between employees?
The good news is that there are answers to all of these questions. So, if you are an employee who is also a trustee, or if you are thinking of becoming one, then do get in touch, or come along to one of our workshops.