This part of GOV.UK is being rebuilt – find out what beta means

HMRC internal manual

Employee Tax Advantaged Share Scheme User Manual

Schedule 3 SAYE Option Scheme: Eligibility of individuals to participate: The employment requirement: Qualifying period of service

If the company wishes to set a maximum five year qualifying period, the rules must make it clear that the five years is calculated by reference to the date the option is granted not, for example, the date that invitations to apply for options are issued. The latter would result in a qualifying period which exceeds five years.

Paragraph 6 refers to a person being an employee ‘at all times’ which means continuous employment. Short absences which do not involve the termination of employment may be ignored. For example, it is acceptable for scheme rules to provide for absences due to maternity leave where alternative arrangements are made to pay the monthly savings amount to the savings carrier. In these circumstances the participant will normally be considered as remaining in continuous employment.

For the purposes of the ‘qualifying period’, those who have five years service with a company must be allowed to participate in a group scheme immediately the employing company is nominated as a ‘constituent company’.