On Tuesday, 21 July 2020, the Government announced further good news for companies operating enterprise management incentive (EMI) share option schemes that will allow them to continue to grant new options to individuals who:
- have been furloughed under the Coronavirus Job Retention Scheme (CJRS), or
- have taken unpaid leave, or
- have had their working hours reduced
as a result of COVID-19.
EMI option holders are normally required to commit at least 25 hours a week (or, if less, 75% of their total working time) to the employer company. That can either be difficult or impossible where someone has been furloughed or had their hours reduced. The COVID-19 relaxation covers new options granted between 19 March 2020 and 5 April 2021 and will be welcomed by employers who want to grant options to staff who have been affected by the pandemic.
The period can be extended to 5 April 2022 should this be considered necessary or expedient “if the COVID-19 pandemic has not ended by April 2021” (which suggests it may not all be over by Christmas).
This new concession builds on the previous announcement that “if an employee with share options granted before [19 March 2020] would otherwise have met the scheme requirements but did not do so for reasons connected to the coronavirus pandemic, the time which they would have spent on the business of the company will count towards their working time” (see our previous blog post). That was a time-limited exception for existing participants in EMI schemes to ensure they did not need to exercise options earlier than planned.
One word urging continuing caution – there is still no clarity on the necessity for this (extended) concession to be approved by the European Commission for State aid purposes. Considering similar incentives have been adopted across Europe as part of the fiscal response to the pandemic it seems unlikely to be a problem… but affected employees and employers should watch this space for further developments.