At a time when Slovenia is facing a high tax burden on labour, the Government adopted the Workers' Ownership Cooperative Act (i.e. the Esop law),[1] which introduces the Esop model of employee ownership into the Slovenian legal space. The ESOP law brings a number of benefits for various stakeholders in our economy. In this article, we summarize these benefits and explain why work will pay off again for (some) workers in Slovenia.

First, how does the Esop work?

• The decision to sell company stock to employees rests with each individual owner, who also determines the price.
• The shares are bought by the Employee Ownership Cooperative on behalf of the employees.[2]
• The purchase of shares is financed through a loan, which may come from the owner, a bank, or another lender. The loan is repaid by the operating company, which allocates a portion of its profits to the ESOP for this purpose. Although employees do not contribute out of their own pockets, they repay their ownership by working collaboratively to ensure strong business performance.
• Employee co-ownership is rooted in the principle of inclusion, making it the responsibility of both management and employee representatives to encourage the broadest possible participation in the ESOP.
• When leaving the company, the employee cannot keep the ownership share, but it is paid out gradually.

Benefits for owners under the Employee Ownership Cooperative Act:

• 20% lower tax rate on sale of shareholding through Esop scheme
• Employee motivation and loyalty programme
• A tool to address ownership succession - the Employee Ownership Cooperative Act allows for a one-off or phased exit from ownership
• A succession path that ensures that the entrepreneurial legacy is preserved, that the business remains in the local community, and that the collective that helped build the entrepreneurial success story is rewarded

Benefits for businesses of the Employee Ownership Cooperative Act:

• International best practice shows that employee ownership[3] usually leads to higher productivity, faster growth and stronger crisis resilience of firms
• Financing employee co-ownership through an Esop scheme is a tax deductible expense for the company
• The option of tax-exempt recapitalization of the company through a loan exists, as the loan used by the ESOP to acquire an equity stake is repaid before corporate income tax (CIT) is applied.

Employee benefits under the Employee Ownership Cooperative Act:

• Participation in co-ownership requires only a minimal investment – capped at €300 per employee – and a collective commitment to repay ownership through strong business performance, reflecting a 'we're all in the same boat' mentality.
• Gaining a voice in decisions about workplace strategy and organisation – the right to co-design the workplace usually leads to greater wellbeing, increased motivation and a stronger sense of belonging.
• Excess payments through Esop taxed as dividends at the time of employment (25%)
• On termination of employment, payments to repay entitlements taxed at capital gains tax rate (decreasing rate, after 15 years 0%)

Benefits for local stakeholders:

• Unlike a buyout by a financial investor, ownership is transferred to the Employee Ownership Cooperative – and through it, to a group of individuals deeply rooted in the local community.
• Decision-making remains with the company, which is expected to uphold its responsibility to the local community.
• The added value generated remains long-term in the area where the company is rooted, contributing to the development and stability of the local community.

The Employee Ownership Cooperative Act promotes the fair rewarding of work. It introduces several tax incentives that enable more favorable compensation for employees – but only for companies that adopt socially responsible ownership through employee co-ownership. This upcoming legislation presents a significant development opportunity, linking work, ownership, and community. For employees in companies that join the ESOP scheme, work will once again be truly rewarding.

If you’d like to find out more about what the law entails — or get practical insights on how to implement employee co-ownership — we warmly invite you to attend the 2025 Congress of Economic Democracy.

Reserve your free spot and fill the few remaining empty seats. Register here.

We are committed to keeping the event independent of vested interests, which is why it is organized exclusively with the support of Slovenian companies. If you are interested in becoming a sponsor, please contact us at masa.petrovic@ied.si.

Would you like to know more about the specific solutions of the law? Interested in switching to the Esop model? Would you like to join the team that brought the world's most widespread employee co-ownership model to Slovenia? Complete contact form or contact us at info@ied.si.

[1] Official: Employee Ownership Cooperative Act.

[2] Legally, it is a worker-owned cooperative.

[3] It’s important that the transition to employee co-ownership follows best practice principles. At IED, we believe that the legal aspects of this transition are less than half the story—the rest is about people, relationships, and mutual understanding.