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Worker Co‑operative (or Employee-Owned Co‑operative)
Main worker co‑operative webpage
General Characterisics
A democratic, member-benefit organisation where the members are the employees of the business. Worker co‑operatives are normally self-financing through the sale of goods and services produced by their employee-members. The primary benefit to members is satisfying, self-managed employment and a fair return on their labour.
In common with other forms of co‑operative, control is normally exercised on a one member, one vote basis; the governing body is elected by and from the membership; and - although operated fundamentally as a business - there is a strong commitment to social welfare, sustainability, and support for the community. Membership is open to all employees.
Ownership: a worker co‑operative is owned by its employee-members, although many are structured on the basis of "common ownership" which means that while members may benefit from profits generated, they never have access to the assets of the business even if it is wound up.
Charitable status: a worker co‑operative will not be eligible for charitable status.
Examples of Use
Worker co‑operatives can be found trading in all types of industry and commerce. They are defined by their structure, not their activity.
The worker co‑operative structure can be used as a form of social co‑operative, where some or all of the members are people with special needs, disability or disadvantage and the co‑operative can offer employment and training opportunities.
Legal Forms Used
Many worker co‑operatives are registered either as companies limited by guarantee or as companies limited by shares as an alternative to the more traditional legal form for co‑operatives, the industrial and provident society.
Some use more complex and sophisticated structures involving trusts to hold shares on behalf of the workforce, usually for tax reasons.
Profit Distribution
It is common - though not obligatory - for worker co‑operatives to permit profit distribution: any surpluses represent profits made on their members' own efforts. However, many worker co‑operative do not permit the distribution of residual assets in order to discourage premature closure and asset-stripping of the business.
Participation Issues
Membership is open to all employees, and only to employees. Worker co‑operatives generally feature a very high level of member participation. All members are expected to participate in a collective model, and to elect a governing body in a representative model.
Worker co‑operatives in sensitive industries - such as personal care for the elderly - may encourage a degree of participation from users or their representatives or advocates, in order to ensure responsiveness to their client group.
Worker co‑operatives established from the externalisation of public services may retain some residual representation from the public authority from which they came, and may also include user representation.
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