Benefits received from an option may be considered part of the employment relationship and included in a severance payment if options are repeatedly granted to an employee. Upon involuntary termination of employment, an employee may be entitled to continued vesting and other rights with respect to his or her option. In order to reduce the risk of employee claims, the award agreement signed by an employee should provide, among other things, that vesting of an option ceases upon termination of employment, and that the plan and any awards under it are discretionary.

Upon involuntary termination of employment, an employee may be entitled to continued vesting and other rights with respect to their option depending upon the terms of grant. In order to reduce the risk of employee claims, the award agreement signed by an employee should provide, among other things, that the vesting of an option ceases upon termination of employment, and that the plan and any awards under it are discretionary.

Benefits received from restricted stock and RSUs may be considered as part of the employment relationship and thus, included in a possible severance payment if restricted stock and RSUs are regularly granted to an employee. Upon termination of employment, an employee may be entitled to continued vesting and other rights with respect to his or her award. Such entitlement risks can be mitigated contractually by the parties for certain cases. In order to reduce the risk of claims, the award agreement signed by an employee should provide, among other things, that the vesting of restricted stock and RSUs ceases upon termination of employment, and that the plan and any awards under it are discretionary. In addition, anti-discrimination rules need to be considered when awarding restricted stock or RSUs. If the Austrian employer has a works council, prior notice should be given before an offer is made.

In order to reduce the risk of employee claims, the award agreement signed by an employee should provide, among other things, that the vesting of an option is non-recurring and ceases upon termination of employment, and that the plan and any awards under it are discretionary. In addition, anti-discrimination rules must be considered when awarding options.

The note made above in relation to holiday pay on RSUs also applies in relation to holiday pay on stock options. Stock options that are nevertheless covered by the Act of March 26, 1999 are exempt from social security contributions and are therefore also exempt from holiday pay.

In the cases where stock options have to be taken into account for employment law purposes (notably the calculation of the indemnity in lieu of notice), the precise calculation method is often disputed. The majority point of view is indeed that only benefits accrued in the last 12 months should be taken into account, which is generally construed as implying the benefits granted in this period should be taken into account, irrespective of their vesting date. While it is established case law that the evaluation method of those benefits under tax law is not binding for employment law purposes, the case law remains divided on the precise evaluation method to be used for employment law purposes. Some case law even takes the view it is impossible to determine the value of non-listed stock options, hence this benefit should be disregarded when calculating an indemnity in lieu of notice.

Benefits received from an option may be considered part of the employment relationship and included in a severance payment. Labor court tends to consider that the RSU and restricted stock have commercial nature, and, as such, does not have salary nature. However, there are decisions in the sense that restricted stock and RSUs can be considered as salary if the employee does not participate in any risk of the transaction (eg, if the award is granted for free or with a very reduced cost). Upon involuntary termination of employment, an employee may assert that he or she is entitled to continued vesting and other rights with respect to his or her option, although the risk is low. In order to reduce the risk of claims, the award agreement signed by an employee should provide, among other things, that vesting of an option ceases upon termination of employment, and that the plan and any awards under it are discretionary.

There is no at-will employment in Canada. Generally, if an employee is terminated without just cause, the employee is entitled to reasonable notice of termination of employment under the common law unless expressly limited to statutory or other minimums by contract, or pursuant to civil law in Quebec. Therefore, where an employee is offered stock options as a term and condition of employment, if employment is later terminated without just cause and without reasonable notice of termination, the employee may be entitled to damages in respect of the loss of the stock option award over the reasonable notice period. However, employers may avoid such liability by eliminating eligibility for any unvested or future awards in the terms and conditions of employment and any applicable award policy or plan. To do so, employers must ensure that the terms and conditions of employment or of any award policy or plan expressly and unambiguously eliminate the employee’s entitlement to unvested awards after the effective date of termination (or as of the date the employee is provided with notice of termination) and provide that awards will not form part of nor be taken into account for the purpose of pay in lieu of notice of termination, termination pay, severance compensation or other compensation or damages in respect of the termination of the employee’s employment whatsoever (subject to the statutory minimum notice period during which participation may be required to continue). Employers who wish to limit employee entitlement to an award of stock options in the event of any termination of employment must clearly and unequivocally cover all possible circumstances and must not rely on overly generalized exclusions or limitations. Mere references to “active employment” are unlikely to pass muster.

Offering stock options may trigger certain employer obligations and employee claims. For instance, benefits received from an option may be considered part of the employment relationship and included in a severance payment, if such benefits are routinely offered. Upon involuntary termination of employment, an employee may assert that they are entitled to continued vesting and other rights with respect to their option. In order to reduce the risk of employee claims, the award agreement signed by an employee should provide, among other things, that the vesting of an option ceases upon termination of employment, and that the plan and any awards under it are discretionary.

The payment of wages is restricted to cash, and employers are prohibited from paying wages in the form of negotiable securities. As the universal practice is to explicitly and contractually define stock options as a discretionary, long-term incentive outside the scope of "wages" as defined in labor law, this restriction should not be problematic. In addition to the concern about wages, benefits received from an option may be considered part of the employment relationship and may be included in a severance payment. In order to reduce the risk of entitlement claims, the award agreement signed by an employee should provide, among other things, that the award of an option is not employment compensation, that vesting of an option ceases upon termination of employment and that the plan and any awards under it are discretionary.

Stock options could be granted as an extralegal benefit of the local company, even if the rights are upon stock of a foreign issuer.

No notice or acceptance of the beneficiary is mandatory.  This benefit could be managed as a unilateral extralegal benefit (non-salary payment) to reduce the risks regarding acquired (vested) rights from a labor standpoint in Colombia.  Nonetheless, the main risk is that employees could claim that this benefit, in fact, is an acquired right.  Appropriate labor provisions in the award terms and conditions and executing the grant through a unilateral document from the employer (instead of a negotiated bilateral agreement) may significantly reduce these risks.

Option benefits may be considered part of the employment relationship and included in an average earnings calculations if options are granted to an employee directly by the employing entity.

In order to reduce the risk of employee entitlement claims, the award agreement signed by an employee should provide, among other things, that vesting of an option ceases upon termination of employment, and that the plan and any awards under it are discretionary.

Before January 1, 2019

Stock options are normally regulated by the 2004 Danish Stock Option Act. According to the Act, an employee has unwaivable rights to be granted Stock Options in the event that his or her employment is terminated by the company, except in cases of misconduct. An employee may maintain the right to receive a proportionate share of the RSUs that the employee would have been entitled to, had he or she still been employed at the time of the allotment or at the end of the current financial year. If the Act applies, employers must provide their employees with a translated summary of their rights concerning the stock options. In addition, anti-discrimination rules need to be considered when awarding stock options.

After January 1, 2019

The Danish Stock Option Act was amended in 2018 (applicable from January 1, 2019). The amendments entail that the good and bad leaver limitations no longer apply allowing for the employer and the employee to freely decide on the terms of Stock Options programs in connection with a termination of the employment. The employer may therefore determine such terms to the effect that non-exercised Stock Options will lapse in connection with a termination of the employment regardless of the reasons for the termination of the employment, ie, also regardless of the employee being a "good leaver" according to the current rules.

The amendments also entail that in the award agreement it can be agreed that the employer is entitled to repurchase awarded Stock Options at a "fair market value" when the employee leaves the employer.

Although it is not common, option benefits may be considered part of the employment relationship, and may be included in a severance payment, if options are repeatedly granted to an employee. In order to reduce the risk of claims, the award agreement signed by an employee should provide, among other things, that the award of an option is not employment compensation, that vesting of an option ceases upon termination of employment, and that the plan and any awards under it are discretionary.

Although it is not common, option benefits may be considered part of the employment relationship, and may be included in the end-of-service entitlement, if options are repeatedly granted to an employee. In order to reduce the risk of employee entitlement claims, the award agreement signed by an employee should provide, among other things, that the award of an option is not employment compensation, that vesting of an option ceases upon termination of employment and that the plan and any awards under it are discretionary.

Option benefits may be considered part of the employment relationship and, consequently, may be included in a severance payment for unlawful termination if options are repeatedly granted to an employee. For instance, in some cases concerning unlawful termination, Finnish courts have ruled in favor of employees to include the value of option awards in damages. In order to reduce the risk of employee entitlement claims, the award agreement signed by an employee should provide, among other things, that the award of an option is not employment compensation that vesting of an option ceases upon termination of employment and that the plan and any awards under it are discretionary. In addition, anti-discrimination rules must be considered when awarding options.

Option benefits may be considered part of the employment relationship and may be included in a severance payment if options are repeatedly granted to an employee.  In order to reduce the risk of employee entitlement claims, the award agreement signed by an employee should provide, among other things, that the award of an option is not employment compensation, that vesting of an option ceases upon termination of employment and that the plan and any awards under it are discretionary.

In addition, equality of treatment between employees must be considered when awarding options.  If the employee is terminated without cause and consequently loses their right to exercise their option, the employee will be entitled to specific damages compensating this prejudice.

Option benefits may be considered part of the employment relationship and, depending on negotiations between the parties, may be included in a severance payment. However, please note there are no mandatory severance payments in Germany. In order to avoid that the option benefits being considered part of the employment remuneration we recommend that they are not granted by the German employer, but by a foreign company, in which case it is also possible to agree that the contract shall be governed by foreign law ( eg, option benefits being granted by a US parent company and agreement that the choice of law being US law). If German law governs the agreement, it will not be possible to grant the option benefits on a discretionary basis. In addition, anti-discrimination rules need to be considered when awarding stock options. Also, if German law applies and if one exists, the German works council has to be notified in advance of the planned offering's terms and conditions as the works council has an enforceable co-determination right with respect to the way the option benefits are granted. This can also be avoided if the option benefits are being offered by a US parent company and the transaction documents are governed by US law.

Option benefits may be considered part of the employment relationship and may be included in a severance payment if options are repeatedly granted to an employee. In order to reduce the risk of employee entitlement claims, the award agreement signed by an employee should provide, among other things, that the award of an option is not employment compensation, that vesting of an option ceases upon termination of employment, and that the plan and any awards under it are discretionary. In addition, anti-discrimination rules need to be considered when awarding options.

Payroll deductions are not permitted, except with the written request of the employee and approval of the Commissioner for Labor.

Options benefits under common stock options are generally considered part of the employment relationship. They are normally counted towards wages and all related benefits of employees (including the Mandatory Provident Fund).

To decrease the likelihood of employee entitlement claims, employees should expressly agree in writing that:

• Participation in the option plan is discretionary
• Termination of employment will result in the loss of unvested rights

In addition, anti-discrimination rules need to be considered when awarding options.

Although unlikely, in order to reduce the risk of employee claims, the award agreement signed by an employee should provide, among other things, that the vesting of an option ceases upon termination of employment and that the plan and any awards under it are discretionary. Stock options are shown separately from the usual income of the employee, as the same is received from the parent company. Keeping the award plan and agreement distinct from other employment benefits and documentation would mitigate the risk of employees potentially claiming the awards as part of the damages calculations made in cases of unlawful termination, or including them in the calculation of severance and retirement benefits.

Offering stock options may trigger certain employer obligations and employee claims. Upon involuntary termination of employment, an employee may assert that they are entitled to continued vesting and other rights with respect to their option, if not regulated clearly under the award and/or employment agreement. In order to reduce the risk of employee claims, the award agreement signed by an employee should provide, among other things, that the vesting of an option ceases upon termination of employment and that the plan and any awards under it are discretionary.

Option benefits may be considered part of the employment relationship and may be included in the calculation of severance or retirement payments. To reduce the risk of claims, employees should be notified in writing that:

• Participation in the option plan is discretionary
• Termination of employment will result in the loss of unvested rights and
• The option plan does not form part of the employee’s terms and conditions of employment

In addition, anti-discrimination rules must be considered when awarding options.

Although not common, option benefits may be considered part of the employment relationship and may be included in the calculation of severance or retirement payments. To reduce the risk of claims, employees should expressly agree in writing that:

• Participation in the option plan is a conditional and/or discretionary increment and not a salary component for any intent or purpose, including for the purpose of severance pay.
• Termination of employment will result in the loss of unvested rights.

The chances of an employee making a successful claim are also reduced if the award is contingent upon, for instance, the performance of the employee or the company and if the awards are not regularly granted.

Option benefits may be considered part of the employment relationship and may be included in the calculation of severance or retirement payments.  However, a case-by-case analysis is recommended.  To reduce the risk of claims, employees should agree in writing that:

• Participation in the option plan is discretionary and
• Termination of employment will result in the loss of unvested rights.

In addition, anti-discrimination rules must be considered when awarding options.  Further specific requirements are provided for in case of option benefits granted to certain categories of employees of banks, financial intermediaries and asset management companies.

Although not common, option benefits may be considered part of the employment relationship, and may be included in the calculation of severance or retirement payments. To reduce the risk of claims, employees should agree in writing that:

• Participation in the option plan is discretionary and
• Termination of employment will result in the loss of unvested rights.

In addition, employers should prepare documents concerning the option plan, separately from employment contracts and work rules.

Employment "at will" is not applicable in Malaysia. Generally, if an employee is terminated from employment, the employee has the right to make representations of unjust dismissal to the Industrial Relations Department and such cases are eventually heard by the Industrial Court. Where entitlement to stock options is incorporated as part of the employee's benefits in the employment contract, the employees would generally have a right to make claims for the value of the stock as part of the compensation to be awarded by the Industrial Court. As the Industrial Court of Malaysia has no extra-territorial jurisdiction, there may be difficulties for an employee to make such claims if the stocks are in a foreign parent company. 

In this regard, employers in Malaysia are advised to be cautious about various aspects when issuing stock options or rights to employees. Some of the more critical areas to take note of are:

• Corresponding with employees via the correct entity. Where stock entitlements are in relation to a foreign based parent company, correspondences about entitlement should be between that foreign company and the employee. This is to ensure that the local employer is not seen as the entity that is making promises for the entitlement that would in turn render the claim enforceable against the local employer.

• Carving out the stock entitlement. The stock entitlement where possible should not be made part of the employment contract but granted through separate agreements or correspondences that are separate and distinct subject to the relevant stock entitlement documents.

• Making forfeiture rights clear. The plan documents for the stock entitlement should always make clear the parties' rights upon termination of employment. This can include forfeiture in the case of dismissal with cause, accelerated vesting upon retirement or termination without cause or even call options exercisable upon termination.

Wage deductions to fund purchase of shares/stocks

Where an employer offers its employees the opportunity to purchase its stocks (ie, a Malaysian company offering its employees the opportunity to purchase its shares), wage deductions to fund the purchase are permitted as long as the employee has provided written consent. Wage deductions to purchase stocks in a foreign parent company will however require prior approval of the Director General of Labour. This has become relevant since January 1, 2023 as the Employment Act 1955 which sets out conditions for deductions of wages is now applicable to practically all employees in Malaysia.

Employees should expressly agree in writing that participation in the option plan is voluntary, and if possible, that they pay a symbolic amount, so they are not considered a benefit.

Employees should expressly recognize in writing that termination of employment will result in the loss of unvested rights.

Stock options should not be included in the employment agreement.

If possible, employer (Mexican subsidiary) should avoid paying the spread through payroll.

In order to reduce the risk of employee claims, the award agreement signed by employees should provide, among other things, that vesting of an option ceases upon termination of employment and that the plan and any awards under it are discretionary. In addition, anti-discrimination rules need to be considered when awarding options.

If the Dutch employer has a works council, it may be necessary to notify the works council prior to an award. The approval of a works council may be needed to terminate a plan.

In order to reduce the risk of employee claims, the offering document signed by an employee should provide, among other things, that participation in the plan ceases upon termination of employment, and that the plan and any awards under it are discretionary.

It will be fact-dependent as to whether the benefit is deemed as "salary" for employment law purposes and/or "gross earnings" for calculating holiday pay. The benefit should not give rise to additional superannuation / KiwiSaver contribution obligations.

In Nigeria, participation in any employee share option or scheme is discretionary, and termination of employment typically results in the loss of unvested rights and the provisions of the scheme. This is subject to the terms of the contract of employment or instrument granting the option to the employee.

In general, it is recommended that any awards be included in a separate plan rather than in the employment agreement. In such cases, it is less likely that the awards will be considered to be the individual rights of the employee. The employer will have more flexibility to adopt changes. In order to reduce the risk of employee claims, the plan should provide, among other things, that participation in the plan ceases upon termination of employment, and that the plan and any awards under it are discretionary. In addition, anti-discrimination rules must be considered when awarding stock options.

In order to reduce the risk of employee claims, the award agreement signed by an employee should provide, among other things, that vesting of an option ceases upon termination of employment, and that the plan and any awards under it are discretionary.

Although uncommon, in order to reduce the risk of employee claims, employees should expressly agree in writing that:

• Participation in the option plan is discretionary
• Termination of employment will result in the loss of unvested rights

In addition, anti-discrimination rules need to be considered when awarding options.

Plan benefits may be considered part of the employee’s remuneration. To decrease the likelihood of claims for employee entitlements, in the option agreement evidencing the grant, employees should expressly agree that:

• Participation in the option plan is discretionary and may be revoked at any time by the employer, without the need to present a justification and
• Termination of employment will result in the loss of unvested rights.

In addition, anti-discrimination rules need to be considered when awarding options.

Although not common, plan benefits may be considered part of the employment relationship and may be included in the calculation of severance or retirement payments. To reduce the risk of entitlement claims, employees should expressly agree in writing that:

• Participation in the plan is discretionary and
• Termination of employment will result in the loss of unvested rights

If stock awards are provided by an affiliated company of a Russian employer, it is essential to ensure that the employment agreement entered into between such Russian company and its employee does not contain any references to the stock awards.

Although unlikely, in order to reduce the risk of employee claims, the award agreement signed by an employee should provide, among other things, that vesting of an option ceases upon termination of employment, and that the plan and any awards under it are discretionary. Option benefits could possibly be characterized as salary for damages calculations in the event of unlawful termination.

In order to reduce the risk of employee claims, the award agreement signed by an employee should provide, among other things, that vesting of an option ceases upon termination of employment, and that the plan and any awards under it are discretionary. Option plan benefits could possibly be characterized as salary for damages calculations in the event of unlawful termination.

Option benefits may be considered part of the employment relationship and may be included in severance or retirement payments.  Although uncommon, in order to reduce the risk of employee claims, employees should expressly agree in writing that:

• Participation in the option plan is discretionary and
• Termination of employment will result in the loss of unvested rights.

In addition, anti-discrimination rules must be considered when awarding options.

In order to reduce the risk of employee claims, the award agreement signed by an employee should provide, among other things, that vesting of an option ceases upon termination of employment, and that the plan and any awards under it are discretionary.

Although not common, option benefits may be considered part of the employment relationship, and may be included in the calculation of severance or retirement payments. To reduce the risk of claims, employees should agree in writing that:

• Participation in the option plan is discretionary
• Termination of employment will result in the loss of unvested rights

However, whether a benefit is discretionary depends also on the company’s actual practice and not just on the wording of the plan. In addition, anti-discrimination rules must be considered when awarding options.

Spanish labor courts have ruled favorably for employee claims for option benefits.  To reduce – not eliminate – the risk of claims, employees should agree in writing that:

• Participation in the option plan is discretionary and
• Termination of employment will result in the loss of unvested rights.

In addition, anti-discrimination rules need to be considered when awarding options.

Spanish labor courts have added that the benefit derived from the exercised options must be considered salary in cash.  Due to the foregoing, the benefit for the employee derived from the exercised options must be included in the salary for the purpose of calculation of severance payments.

Option benefits may be considered part of the employment relationship, and may be included in the calculation of severance or retirement payments. To reduce the risk of claims, employees should agree in writing that:

• Participation in the option plan is discretionary
• Termination of employment will result in the loss of unvested rights

In addition, anti-discrimination rules need to be considered when awarding stock options.

Although not common, option benefits may be considered part of the employment relationship, and may be included in the calculation of severance or retirement payments. To reduce the risk of claims, employees should expressly agree in writing that:

• Participation in the option plan is discretionary
• Termination of employment will result in the loss of unvested rights

Although not common, option benefits may be considered part of the employment relationship and may be included in the calculation of severance or retirement payments. To reduce the risk of claims, employees should agree in writing that:

• Participation in the option plan is discretionary and
• Termination of employment will result in the loss of unvested rights.

Generally, option benefits will neither be considered part of the employment relationship, nor be included in the calculation of severance or retirement payments. However, to reduce the risk of claims, employees should expressly agree in writing that:

• Participation in the option plan is discretionary
• Termination of employment will result in the loss of unvested rights

There is a risk that the plan benefits may be considered part of the employment relationship, and included in the calculation of severance payments. In order to reduce the risk of employee claims, employees should expressly agree in writing that:

• Participation in the option plan is discretionary
• Termination of employment will result in the forfeiture of unvested rights

In addition, anti-discrimination rules need to be considered when awarding options.

Given that Ukrainian legislation contains no concept of stock-related incentives, stock options benefits may not be considered part of the employment relationship.

Option benefits may be considered part of the employment relationship and may be included in the calculation of severance or retirement payments. To reduce the risk of claims, employees should agree in writing that:

• Participation in the option plan is discretionary and
• Termination of employment will result in the loss of unvested rights.

In addition, anti-discrimination rules must be considered when awarding options and drawing up plan rules.

In order to determinate the salary nature of this incentive, each situation must be analyzed on a case-by-case basis. Although not common, plan benefits may be considered part of the employment relationship, and may be included in the calculation of severance or retirement payments. To reduce the risk of entitlement claims, employees should expressly agree in writing that:

• Participation in the plan is discretionary
• Termination of employment will result in the loss of unvested rights

Payroll deductions may be problematic.

Although not common, plan benefits may be considered part of the employment relationship, and may be included in the calculation of severance or retirement payments. To reduce the risk of entitlement claims, employees should expressly agree in writing that:

• Participation in the plan is discretionary
• Termination of employment will result in the loss of unvested rights