The working time requirement is the EMI rule that employees must work at least 25 hours per week, or 75% of their total working time, to qualify for EMI options. It is one of the core eligibility conditions set by HMRC for participation in the Enterprise Management Incentive (EMI) scheme.
This rule ensures that EMI options are granted only to individuals who are meaningfully involved in the business. It prevents the scheme from being used for passive or peripheral contributors.
For companies offering EMI options, verifying that employees meet this requirement is essential at the time of grant.
Working time requirement (EMI) meaning
The meaning of the working time requirement centres on contribution, eligibility and compliance. It ensures that EMI tax advantages are reserved for individuals who actively support the company’s growth.
To define the working time requirement in practical terms, it typically involves:
- Minimum weekly hours: employees must work at least 25 hours per week for the company
- Alternative threshold: if working multiple jobs, at least 75% of total working time must be dedicated to the company
- Applies at grant date: eligibility is assessed when the options are granted
- Employee status required: applies only to employees, not contractors or advisors
- Ongoing relevance: although assessed at grant, continued involvement supports compliance
A clear working time requirement definition highlights that EMI benefits are tied to active participation.
Why the working time requirement matters
This requirement is fundamental to maintaining the integrity and purpose of the EMI scheme.
Its importance includes:
- Determining EMI eligibility: employees who do not meet the requirement cannot receive EMI tax advantages
- Ensuring genuine contribution: focusing benefits on individuals actively involved in the business
- Supporting HMRC compliance: reducing the risk of disqualification or tax complications
- Aligning incentives: rewarding key contributors who drive company growth
- Avoiding misuse of the scheme: preventing allocation to passive stakeholders
For founders, understanding this rule helps ensure that option grants are both compliant and effective.
How the working time requirement works in practice
In practice, companies assess an employee’s working hours at the time EMI options are granted.
For example, a full-time employee working 40 hours per week will typically meet the requirement. A part-time employee working fewer than 25 hours may still qualify if those hours represent at least 75% of their total working time across all roles.
If an individual does not meet either threshold, they cannot receive EMI options and may instead be granted unapproved options.
Because eligibility is determined at the grant date, accurate record-keeping and documentation are important to demonstrate compliance if required.
Where Undo Capital fits in EMI structuring
For founders implementing EMI schemes, Undo Capital provides practical guidance on meeting eligibility requirements such as the working time test.
Rather than treating compliance as an afterthought, Undo Capital helps ensure that option grants are structured correctly from the outset, covering eligibility, valuation and documentation. This reduces risk and maximises the tax benefits available to both the company and its employees.
By aligning equity incentives with HMRC rules, companies can build effective and compliant option programmes.
FAQs
What is the EMI working time requirement?
It is the rule that employees must work at least 25 hours per week or 75% of their total working time for the company.
When is the requirement assessed?
At the time the EMI options are granted.
Can part-time employees qualify?
Yes, if they meet the 75% of total working time threshold.
What happens if the requirement is not met?
The individual cannot receive EMI tax-advantaged options.
Disclosure Notice: This communication is issued by Undo Capital Limited (“Undo Capital”) and is provided strictly for informational purposes only. It contains general information and should not be relied upon as accounting, business, financial, investment, legal, tax, or other professional advice. Undo Capital is not regulated by the Financial Conduct Authority (FCA) and does not provide investment, financial, or tax advice. Our services are designed to assist startups and businesses with company formation, legal agreements, and funding-related documentation. Nothing in this communication constitutes, or should be construed as, a recommendation, offer, or solicitation to purchase or sell any security or financial instrument.
Participation in startups and early-stage enterprises involves significant risk. Such investments may be illiquid, may not generate dividends, may be subject to dilution, and may result in the total loss of invested capital. Any decisions or actions that may affect your business or personal interests should be taken only after seeking advice from suitably qualified professional advisors, and should form part of a balanced and diversified portfolio. This communication may contain links to third-party websites. The inclusion of such links does not imply endorsement, approval, investigation, or verification by Undo Capital. We accept no responsibility or liability for the content, accuracy, or use of information contained on any third-party websites.
