Firms can use a number of different methods of profit-sharing to reward staff financially. According to Ms Gemma Jacobson, director of personal finance at KPMG, the following are the main variations.

Approved profit sharing: These must be available to all employees and typically give the employee shares for nothing or convert a cash bonus into shares.

Up to £10,000 a year can be taken tax free on condition it has been held onto for three years previously.

Save as You Earn (SAYE): These must also be available to all employees. An employee can save up to £250 out of after tax income each month. After three years it will earn income plus a bonus which are free of income tax and DIRT.

Share options: These are normally only available to senior executives and employees the company is particularly keen on retaining. However, income tax is normally payable on any gains, even without selling your shares.

Profit sharing: cash or shares can simply be given to the employee, but these are then liable for income tax at the top marginal rate as a benefit in kind (BIK). If there is a restriction that they cannot then be sold for a number of years, the BIK is reduced on a sliding scale.

Employee Share Options Schemes (ESOPS): These were introduced for Telecom Eireann employee, but are being used by other semi-States. They are a collective holding of shares for a group without names beings specified. If the shares are held for three years they can pass out up to £10,000 a year tax free, with only capital gains tax being payable.

Share subscription: If an Irish company issues shares, its employees can get life time tax relief of up to £5,000 depending on how much they subscribe for.