In 2024, about 400 companies in the UK were sold to their workers using a structure called an Employee Ownership Trust (EOT). That represented about eight per cent of all private company sales in the UK. Instead of being sold to outside investors or closed altogether, those companies will now remain domestically owned, keeping jobs in local communities and flowing future profits to workers.
As the threat to Canada’s sovereignty intensifies, we need policies that keep Canadian companies owned by Canadians. With so many business owners approaching retirement, and the Canadian dollar in freefall, Canada faces the risk of a significant sell-off of privately owned companies to Americans. Strong employee ownership policies can counter this, with little or no ongoing intervention by governments, by presenting an attractive alternative to business owners looking to sell.
Currently, there are very few employee-owned companies in Canada, due largely to tax and trust laws that have made these kinds of transactions difficult. In June of last year, the federal government started to address this by introducing an EOT structure and incentives that encourage uptake. The long-term goal is to capture the same proven, positive outcomes seen for employees, business owners and the broader community in the UK over the past decade.
However, Canada’s policy is tentative compared to the UK’s more robust approach. Our legislated $10-million capital gains tax exemption is set to expire by the end of 2026, far too soon given the lead time required in a business sale. It also includes a number of constraints and “red tape” provisions that have made it difficult or impossible for some business owners to access.
It’s a typically Canadian “let’s see how it goes” approach, but the time for that kind of dithering is over.
In the face of the American tariff threat, one of the few Canadian employee-owned companies is demonstrating why employee ownership is such a critical tool in building a resilient economy.
Friesens is a major publisher based in southern Manitoba that exports between 60 to 70 per cent of their books to the U.S. Facing the same headwinds as other Canadian manufacturers, their CEO Chad Friesen recently said: “You’re going to hear about job cuts and factory closures, but not at Friesens. Our objective is to keep our employee-owners as financially whole as we can for as long as we can.”
Companies owned by foreign or financial investors would never make an equivalent commitment.
Employee ownership also has a strong track record in the U.S., where a slightly different version of the EOT (called an Employee Stock Ownership Plan) launched in 1974. Almost 15 million Americans now have share accounts in about 6,500 employee-owned companies, with an average value of about $120,000.00 USD. Along with these extraordinary wealth outcomes, these firms are proven to be more resilient in recessions, be more productive, grow faster and keep jobs in local communities. Early data on the UK’s decade-old program show similar results.
Appealing to Canada’s workers is a clear priority for the two most-likely frontrunners in Canada’s next federal election. In the English language Liberal leadership debate, Mark Carney suggested that, under his leadership, it would be a “great time to be a worker in Canada.” And in a January video, Conservative leader Pierre Poilievre went even further, saying that “instead of turning workers against business owners, we’ll turn workers into business owners.”
There is no better way to declare support for Canada’s workers than to help make them owners.
Each federal party’s platform should contain a commitment to extend and increase the EOT tax incentives and remove the unnecessary red tape from current legislation. On the stump, employee ownership provides a rare opportunity for leaders to offer a message of hope that workers and communities can survive and thrive amidst economic turmoil.
With Canada’s very sovereignty is at stake, we must invest in every approach to keeping Canadian businesses in Canadian hands. Simply matching the UK’s EOT success would see 300 Canadian companies sold to their workers each year; very few policies promise as powerful an outcome.
Employee ownership was a great idea in 2024. It has become an essential idea for Canada in 2025.
Photo courtesy of DepositPhotos
