Employee Trust

Employee Trust

Employee trust refers to the level of confidence and faith that employees have in their organization, its leaders, and their colleagues. It is a critical factor in building a healthy and productive work environment. When employees trust their organization and leaders, they are more likely to be engaged, committed, and willing to go the extra mile to achieve the organization’s goals. They are also more likely to communicate openly, take risks, and collaborate effectively with their colleagues.

An employee trust is a trust established to benefit employees. Employees whom an employee trusts are typically defined by their employment with a specific company (or group of companies).  In addition to employees, the beneficiaries of the trust may include some or all former employees (of the relevant company or group) and individuals defined by reference to their marriage to, civil partnership with, or reliance on such an employee (or former employee). Charities may also be included in the category of beneficiaries.

On the other hand, when there is a lack of trust, employees may feel disengaged, unmotivated, and may be more likely to leave the organization. A lack of trust can also lead to conflicts and misunderstandings, which can harm productivity and team morale.

An employee trust is typically formed by the relevant employing company (or a company in the employing group) entering into a trust deed (or other trust instrument) outlining the terms of the trust, including who will act as trustee. An individual, such as a shareholder in the relevant company, could also establish an employee trust, including through their Will.

To build employee trust, organizations should prioritize transparency, communication, and fairness. Leaders should be open and honest about the organization’s goals, strategies, and performance, and should listen to employees’ concerns and feedback. They should also treat employees fairly and consistently, and provide opportunities for growth and development.

The trustee of the trust and the type of property subject to the trust will be determined by the purpose of the employee trust. Many employee trusts are discretionary trusts, which allow the trustee to choose which beneficiaries benefit, when, and how. It is possible that beneficiaries have fixed or absolute interests, for example, where shares awarded to employees under an employee share ownership plan remain held in an employee trust.

Overall, employee trust is essential for creating a positive and productive work environment, and organizations should make it a priority to build and maintain trust with their employees.