ETASSUM20130 - Schedule 2 Share Incentive Plan (SIP): Introduction - Conditions for participation

A Schedule 2 SIP is an all-employee plan. All qualifying employees and directors must be eligible to participate, all eligible employees and directors must be invited to participate and those that do participate, must do so on the same terms.

The same terms requirement is not infringed:

Partnership Shares – by the operation of any percentage limits specified in or under paragraph 46(2) or (3) Schedule 2 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA), so far as the application of that limit to employees with different levels of remuneration results in deductions of differing amounts and therefore in the award of differing numbers of shares (ETASSUM24340 and ETASSUM21080),

Free Shares – by an amount of shares varied by:

  1. level of remuneration,
  2. length of service, or
  3. hours worked,

provided each factor gives rise to a separate entitlement related to the level of remuneration, length of service, or (as the case may be) hours worked, and, the total entitlement is the sum of those separate entitlements (refer to ETASSUM24140) or where free share awards include performance conditions (refer to ETASSUM24150) (paragraph 9 Schedule 2 ITEPA).

The company can specify a qualifying period of employment, which may be up to 18 months, in order for employees to be eligible to participate (paragraph 16 Schedule 2 ITEPA).