The Government has launched a campaign to encourage employees to take a stake in the companies that employ them.

It wants to give help and advice to small and medium-sized companies on how to set up their own Share Incentive Plan.

The scheme, previously known as the All-Employee Share Ownership Plan or Aesop, allows workers to buy up to £1,500 worth of shares in their employer each year, before tax and National Insurance contributions are deducted from their salary.

Employers can give staff two free matching shares for every share they purchase up to a value of £3,000.

The shares are held in a trust for five years and, if employees keep them in the plan for the full term, they are not subject to income tax, National Insurance or capital gains tax when they are sold.

Chancellor Gordon Brown said: "The Share Incentive Plan is a key component of the Government's productivity agenda. Research in the US and UK has shown the link between share ownership and increased productivity. There is no better incentive for employees than for their work to be recognised and for them to share in their firms' success.

"Employee share ownership is a milestone in removing the old 'them and us' culture in industry."

About 470,000 companies with one million employees are already part of the scheme.

CBI director general Digby Jones said: "Share ownership can be an invaluable tool for giving employees a direct stake in the business, improving involvement and boosting productivity."

John Monks, TUC general secretary, also welcomed the move, saying employees deserved a share in the financial success of their companies.

George Cox, director general of the Institute of Directors, said: "This is a far-sighted move by Government to encourage employees to take a financial stake in the company they work for.

"It adds an important dimension to their involvement in their company's fortunes."