Construction industry fastest growing sector for employee ownership

According to the latest UK Employee Ownership (EO) Business Register from the EOA and WRCEO for May 2025, construction is the fastest growing sector for employee ownership, growing by 6580% between 2014 and 2025.

As of 2025, the UK EO sector comprises approximately 2470 employee-owned businesses, collectively employing around 358000 people, with construction accounting for 14% of all EO businesses.

Fiona Bell, partner and EOT specialist at RSM UK, said: “Construction is the fastest growing sector for employee ownership, with our clients reporting increased employee engagement, profitability and retention, as well as a great opportunity for original owners to leave a legacy business on their terms. But, construction has the added risk of insolvency, accounting for the highest number of insolvencies above any other sector, due to tight margins and being locked in to fixed price contracts, as well as cash flow issues and labour shortages, which can cause a domino effect throughout the supply chain.

“We have therefore seen news about employee-owned companies in the construction industry which have failed. Transitioning to employee ownership poses a risk if the company is overvalued and the employee ownership trust commits to paying more than the business can afford, adding to the debt burden or cash flow strain. However, the Autumn Budget 2024 introduced several key tax changes to reduce this insolvency risk, including mandatory market valuation and trustee due diligence.”

She added: “In addition, when employees have a share in the business, they’re more invested in its success, which can be a boost to financial resilience, leading to improved cost control and decision making which protect margins. Employee-owned firms also tend to be more cautious with spending and have better management of working capital. The scheme further helps mitigate labour shortages and turnover of staff by enhancing staff retention and morale. Given the scope of housing and infrastructure projects to deliver in the next 10 years, it’s likely we’ll continue to see an upward trajectory of construction firms transitioning to employee ownership.”