International research indicates that Employee Share Schemes (‘ESS’) are linked to a constructive alignment of the interests of workers and employers. An international study in 20161 found that across a range of quite different data-sets, workers who participated in an ESS experienced higher job satisfaction than those who did not. The Employee Ownership Index administered by FTSE International, measured from 2003 to 20152 , suggests that among UK-listed companies, 3 percent or more employee ownership could be linked to an average annual performance improvement compared to the broader market of more than 10 percent.

Limited research in Australia3  has indicated that broad-based employee ownership supported companies on average to outperform the index by more than 5 percent, and to have higher dividend yields.

The economic recovery from COVID-19 will be highly dependent on effective cooperation existing between workers and employers. A good example is the results which government, employer groups and unions have achieved by working together over temporary changes to workplace legislation to facilitate the JobKeeper program. It is therefore timely for Australia to take a fresh look at its tax and regulatory settings for ESS, and to consider what new schemes could contribute to the recovery.

Our proposal

The COVID-19 Accelerated Recovery Employee Shares (CARES) is a KPMG proposed reform that would initially operate for a limited period of two financial years and allow employees to acquire a higher value of tax-free shares (and employers to get a higher tax deduction for issuing the shares) than is currently available under existing tax rules.

KPMG’s proposed CARES reform would enable the employer to conserve cash, while at the same time achieving alignment between workers and shareholders that can be more tax-effective for the worker than a similarly structured cash bonus.
An employer would offer CARES on an opt-in basis, and it would represent an additional pathway for providing remuneration to workers in a situation where capital was scarce.

Shares acquired as CARES would be subject to a sale restriction for a maximum of three years. An additional feature for consideration could be to allow employees a window to sell a portion of their CARES once the share price has grown by 50 percent, if this occurs earlier.

CARES should be capable of fitting within the streamlined disclosure requirements that the Australian Securities & Investments Commission (ASIC) has issued in relation to employee incentive schemes for listed and unlisted companies.

Key contacts


Related insights



1. Bryson, Clark, Freeman & Green. Share capitalism and worker wellbeing. 2016.
3. McElvaney, E.J. The benefits of promoting employee ownership incentives to improve employee satisfaction, company productivity and profitability. Deakin University. 2011.