Irish Save As You Earn (SAYE) plans

What is Irish Save As You Earn?

In a Save As You Earn (SAYE) plan, also known as ‘Sharesave’, employees save money from their net pay in order to buy shares in their employing company (or a company that controls their employer).

Employees join the plan during an invitation period (which is typically opened annually) and choose the amount they wish to save. When the invitation period closes participants are granted share options which can be exercised at the end of the plan.

The option price is often an average of the closing share price over a three to five day period before the invitation date. It can then be discounted by up to 25%. Companies have the flexibility to amend this in their plan rules. The number of options granted to each participant is calculated using the option price and the participant’s total savings.

When an SAYE matures, participants can either take their cash savings back in full, or exercise some or all of their options.

A simple example for a three year Irish SAYE

• The company share price at invitation is €1 - this is discounted by the maximum 25%, setting the option price at €0.75
• An employee enrols, saving €100 per month for three years, building savings of €3,600
• The employee is granted options over 4,800 shares – calculated by dividing their total savings (€3,600) by the option price (€0.75)
• At maturity the company share price is €1.30
• The employee exercises all their options and immediately sells all 4,800 shares for €6,240 – making a gain of €2,640 over their original savings of €3,600

A simple plan with some flexibility in design

• Engage employees by giving them the chance to profit if the company performs well.
• No share price risk: employees don’t own shares (unless they choose to hold shares after maturity) so if the share price doesn’t rise over the savings period they simply take their savings back.
• Employees can take their savings out of the scheme at any time – if they do so their options will lapse.
• Employees can pause contributions without their options lapsing – currently for up to six months.
• Companies can offer three or five year plans – or both.
• Companies can set the minimum monthly savings limit between €12 and the maximum monthly limit up to €500.
• Employees can join SAYE at each invitation, but cannot save more than the maximum monthly limit across all plans.
• Companies can set a qualifying period of employment of up to three years’ service – although most don’t impose a service condition
• Companies can set a maximum number of options available, and can scale back grants if the plan is oversubscribed