ETASSUM53020 - Enterprise Management Incentives (EMI): Eligible employees: Working time commitment

Paragraphs 26 & 27, Schedule 5 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA)

Employees are eligible for EMI options only if they are required to spend:

  • at least 25 hours each week (the 25 hours requirement), or
  • if less, 75% of their working time (the 75% requirement),

working as an employee for the company whose shares are subject to the EMI option or for a qualifying subsidiary. The working time requirement is based on the average working time of an employee, so it can apply to an employee on flexi-time whose hours vary, but whose average working time meets the requirements.

To check if an employee meets the 75% requirement, the total working time needs to be established. The employee’s working time should take into account all remunerative work including employment and self employment (see ETASSUM53030). The term employment includes any employment under a contract of service, any employment under a contract of apprenticeship, and any service under the Crown. “Remunerative work” means work from which the income received is taxable as employment income or work undertaken as a self employed person with a view to profit. The earnings and profits are those that are taxable in the UK or would have been taxable if the employee were resident in the UK.

In calculating “working time,” time is treated as working time if it is time that an employee would have been working but for injury, ill-health, disability, pregnancy, childbirth, parental leave, carer's leave, reasonable holiday entitlement or not being required to work during a period of notice of termination of employment.

From 19 March 2020, employees who would otherwise have met the working time requirements but were unable to do so for reasons connected to the coronavirus (COVID-19) pandemic, were able to use the time which they would have spent on the business of the company in calculating their "working time".

Reasons connected to the coronavirus (COVID-19) pandemic may include employees who are on:

  • On furlough
  • Working reduced hours
  • On unpaid leave

The reasons must be attributable to the coronavirus (COVID-19) pandemic. Employers and employees should retain documentation to demonstrate this.

From 6 April 2022, the easement which provides an exemption from the working time requirement for employees affected by COVID-19 is no longer available.