How to motivate and retain employees in the 21st century? ESOP over blockchain as a solution

The demography of Slovakia is collapsing. The number of children born is declining, young people are leaving, businesses are facing turnover and lack of loyalty. Can this trend be reversed? One answer is a technologically advanced and tax-efficient employee benefit – a decentralized ESOP via blockchain.

Slovakia is facing a demographic collapse. Technology can help.

In 2023, the fewest children have been born in Slovakia since World War I. Predictions for 2025 speak of a further decline. This trend will have a major impact on the business environment. If Slovakia does not want to lose companies, talent and its future, it must start creating an innovative and stable working environment. One way is to strengthen the relationship between employer and employee – with modern benefits.

One of them is an employee stock ownership plan (ESOP). This model motivates employees to stay longer in the company and links them to its success. The problem? In the traditional world, it’s legally complicated, tax inefficient and often unpredictable.

Okazio: A new ESOP model based on blockchain

In this episode of Highgate Talks, we welcomed Martin Bittara, CEO of Okazio, a platform that is developing a decentralised employee benefit scheme – the so-called ‘DLT-ESOP’, which Okazio has built in conjunction with legal, regulatory, tax and accounting consultancy Highgate Law & Tax and Highgate Accounting.

His essence?

• Smart contract replaces the classic contract – it is pre-programmed so that the benefit is paid only if the employee meets the agreed conditions (e.g. staying in the company for 3 years).
• The funds are pre-reserved and locked in a log – the employee has certainty, the employer has a back check.
• The tokens an employee receives are fully redeemable – they can be exchanged for fiat currency via Okazio.
• Employers and employees can contribute to the scheme together – similar to the 3rd pension pillar.

For the entrepreneur it means: lower turnover, no unnecessary levies, no uncertainties.
For the employee it means: motivation, transparency, trust.

The tax-regulatory aspect: both an advantage and a challenge

Why is this model also advantageous for companies from a tax and compliance perspective?

• Token payout does not occur immediately, but only after the condition is met. Taxation therefore only comes at the time of payment – in line with the “ability to pay” principle.
• As it is a decentralised peer-to-peer system, it does not incur some of the regulatory obligations of traditional platforms (e.g. the Consumer Credit Act).
• Okazio is an applicant for a license under the MiCA regulation, which means greater credibility for both companies and employees. At the same time, however, a MiCA license is not a necessity for this model.
• The solution is internationally applicable – avoiding complications with taxation in different countries. At the same time, it is regulated in a way that is consistent with the laws in EU member states.

As Martin Bittara says: “An entrepreneur can offer his employees a benefit of €100, but it doesn’t cost the company €1,800 as in the case of a classic bonus. This is a fundamental change for cashflow and planning.”

The future of benefits: DLT as a stability tool

Finally, in the podcast we opened up a broader topic: the potential of DLT technologies for the European capital market.
Tokenisation, cross-border payments, institutional trust – all of these can fundamentally change the way companies finance growth and motivate people.

Decentralised solutions like Okazio can be the answer not only to the question of how to effectively motivate employees, but also how to retain companies and talent in Slovakia.

We are the Highgate Group, modern advisors for your law, tax and accounting under one roof.

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