Employee Ownership around the world: Slovenia introduces new EO model
As far as we are aware, there is no employee ownership on Mars or anywhere else beyond planet Earth. That said, I’ll wager that any advanced society that has mastered artificial intelligence has likely found a way to ensure a fair distribution of wealth.
Back on Earth, a growing number of countries are doing just that through employee ownership.
Established models exist in the United States, Canada and Spain with new entrants including Denmark and now Slovenia.
This is the first instalment in our ‘Employee Ownership Around the World’ series where we explore how different countries are implementing employee ownership, what’s driving it, how they are doing it and highlighting any particularly attractive aspects (from my perspective at least) to their approach.
We begin with Slovenia, whose new Employee Ownership Co-operative Act (EOCA) came into force on 1 January 2026 and is the legal framework enabling employees to acquire ownership.”
Why did Slovenia introduce Employee Ownership through the EOCA?
Succession is a growing problem
Like many economies across Europe and beyond, many of Slovenia’s small and medium-sized enterprises (SMEs) are owned by ageing founders with no clear succession plan. The University of Ljubliana found that 35% to 50% of owners of closely held companies will exit in the next decade.
Without clear succession plans, many viable businesses risk closure, something I have witnessed first hand in the UK.
The EOCA provides a new succession pathway, - enabling employees to to take ownership, preserving businesses, protecting jobs, and supporting local economies.
Evidence of stronger business performance
There is compelling evidence that employee-owned companies outperform their non-employee owned counterparts across several metrics, including productivity, resilience, and employee engagement. (LINK: see people powered growth report blog here)
Broader goals for supporting inclusive and sustainable growth
Beyond succession, Slovenia has a broader society objective of fostering deeper employee participation in their company’s governance, local economic sustainability and democratic workplace practices.
A European model
Unlike the UK, most continental European legal systems do not recognise trust structures in the same way. This makes the UK’s Employee Ownership Trust (EOT) difficult to replicate. Instead, Slovenia is creating individual employee share ownership, following the more familiar co-operative structure which is well established in many European countries.
Key features of Slovenia’s EOCA
The Employee Ownership Cooperative – a new legal structure
The EOCA introduces the employee ownership co-operative (EOC) – a legal entity designed to acquire and hold shares on behalf of its employees.
The EOC must create broad-based employee ownership of at least 75% of employees .
Low financial barriers to entry for employees
Employees are required to contribute to join the EOC, but this is capped at €300, making participation widely accessible
Limited financial risk for employees
Employee members are not personally liable for the EOC’s obligations. Their financial exposure is limited to their initial contribution.
A clear business succession mechanism
The prime purpose of the EOC is to enable business succession.
It typically does this (in a similar way to the UK employee ownership trust) by acquiring a controlling stake in the company.
Funding of the purchase price will usually be structured through:
- debt, either from the seller (i.e. a deferred payment)
- and/or using external funding.
Building individual ownership value
As acquisition debt (due to former owners) is paid off and/or the company grows in value, the value of each employee’s share increases. Employees can realise this value and turn this into cash over time or when they leave the business.
Does the EOCA provide tax incentives?
The EOCA includes several tax incentives:
- Company funding of the EOC is corporation tax deductible.
- These funds received by the EOC are not taxable.
- Sellers benefit from a reduced Capital Gains tax (CGT) rate of 20%, (headline rate 25%).
- Employees pay reduced CGT on exit, falling to 0% after 15 years.
Other ownership rights and governance
All members of the EOC have equal rights with governance based on democratic principles. Employee members participate directly in decision-making, including appointing senior management.
How does the Slovenian approach compare with the UK’s employee ownership trust (EOT)?
We’ve identified a few key differences:
| Slovenian Employee Ownership Cooperative (EOC) | UK Employee Ownership Trust (EOT) | |
|---|---|---|
| Legal model | Employees indirectly hold equity through the EOC. | Trust holding shares on behalf of all employees collectively. |
| Participation contribution | Up to €300 | Typically none |
| Governance rights | Direct democratic rights as members (board elections, voting). | Governance led by the trustees (on behalf of the employees). |
| Seller Tax relief | Sellers have their CGT rate reduced to 20%[1] | Sellers have their CGT rate reduced by 50% |
| Employee tax benefits | Employees can be paid out for their shares in the EOC at a reduced tax rate depending on how long they have held them. | Employees can receive an annual bonus free of income tax (max. £3600) |
| Funding treatment | Funding of the EOC is tax deductible for the company. | Funding of the EOC is not tax deductible. |
[1] ie from a headline rate of 25% to 20%, although Slovenia headline rates taper down to 0% if a seller has held shares for 15 years before selling.
Are there any particularly attractive aspects of the Slovenian approach compared with the UK?
The Slovenian EOC model reflects a fundamentally different legal foundation and is necessarily going to be quite different from the UK EOT but it does offer some notable contrasts.
Greater flexibility in ownership structures
Unlike the UK EOT, the Slovenian model does not appear to require the EOC to have e a controlling stake to access tax benefits. This may make it easier to fund the ownership change (smaller purchase price to fund if less than 50% of the company is being sold) and allows for more flexible structures and hybrid forms of employee ownership, such as a management and employee buyout (MEBO).
Tax deductible funding
One particularly attractive aspect of the EOC is that the funding of it is tax deductible. If applied in the UK , this could significantly accelerate debt repayment reduce the financial burden on the company, and bring forward the date when the employee-owned company has “financial freedom”.
Direct employee share ownership
Employees hold their own capital stake which they can be realised over time In principle it is possible to do something similar with the UK EOT (for example by awarding shares to individual employees under a Share Incentive Plan (SIP) (LINK TO SIP PAGE) but in practice can be complex and fiddly.
Conclusion: A promising new model in Europe
Slovenia’s introduction of the EOCA marks another important step in the global growth of employee ownership.
We are excited to see another country adopt its own employee ownership law and we look forward to tracking its progress and perhaps seeing elements of this model influence future developments in the UK, particularly the potential benefits of making contributions to the EOT tax deductible.
Further reading
You can find out some more about how the Slovenia EOC works here.
Thinking about employee ownership as a succession route?
Employee ownership continues to evolve across Europe, and Slovenia’s new EOCA model is a fascinating example of how different legal systems are adapting to the same underlying challenge: business succession and long-term sustainability.
If you are considering employee ownership for your business, whether through an Employee Ownership Trust (EOT), a hybrid structure, or an alternative succession route, our team would be happy to help you explore your options.
Get in touch with us to discuss how employee ownership could work for your business.
About the Author
Robert Postlethwaite is the founder of Postlethwaite Solicitors and a leading UK adviser on employee ownership. Over the last twenty years he has helped structure hundreds of business transitions to employee ownership, and has particular expertise in Employee Ownership Trust (EOT) transactions and succession planning for privately owned businesses.
Robert writes and speaks regularly on employee ownership, business succession, and the legal frameworks that support long-term business sustainability across the UK and internationally.