#1102 1929 · John Lewis Partnership (John Spedan Lewis) · Department stores / retail (Waitrose)
John Lewis put ownership itself into a trust for staff, not just a discretionary bonus
the problem
A founder's goodwill toward staff can be reversed by his heirs, a buyer, or himself
background
John Spedan Lewis took over running his father's London department store business in the 1910s, troubled that a small number of shareholders — his own family — captured most of the profit while shop staff worked long hours for modest wages. Starting in 1919 he set up a Staff Council, and from 1920 he began sharing a portion of profits with employees as a discretionary bonus. Both moves depended entirely on his continued goodwill: a council with only advisory power could be ignored, and a bonus scheme could be trimmed or cancelled the moment profits tightened, ownership passed to an heir, or the business was sold.
The obvious next step for a generous owner is simply to keep being generous — raise the bonus, formalize the council, write it into policy. But policy is not structure: none of it survives a change of ownership, a change of heart, or a change of era, because the underlying shares, and the power that comes with them, still sit with one family. Lewis needed a way to make the arrangement outlast his own willingness to keep it.
what everyone would do
Most founders who want to reward staff introduce a profit-sharing bonus or an advisory staff forum and leave ownership and control exactly where they were. It costs nothing structurally, feels generous, and can be reversed by the next owner, the next downturn, or the founder's own change of mind, at which point staff discover their stake was never real.
what they saw
A bonus is a policy that can be reversed; a trust is a structure that cannot. Lewis moved the shares into an irrevocable trust, turning temporary generosity into a permanent claim outlasting him.
the move
In 1929 Spedan Lewis signed the First Trust Settlement, transferring his personal shares in John Lewis & Co. and Peter Jones into a trust held for the benefit of the "Partners" — every person employed in the business — in exchange for interest-free bonds repayable out of future profits over 30 years, converting himself from sole proprietor into a trustee obligated to run the company for the Partners' benefit rather than his own. In 1950 he went further with a Second Trust Settlement, making the arrangement irrevocable even by himself, permanently surrendering his own power to undo it. Built into the same structure, staff elect representatives to a Partnership Council, descended from the 1919 Staff Council, with constitutional authority to question and hold accountable the Chairman and the Partnership Board; and every Partner, from shop floor to head office, receives an annual bonus paid as the same percentage of salary across all levels, funded directly out of that year's profit rather than set at management's discretion.
why it works
Because the shares sit in a trust rather than with an individual or a conventional shareholder base, no single owner can simply decide to stop sharing profits or dissolve the arrangement — the trustees are legally bound to run the business for the Partners' benefit. Layering an elected Partnership Council with real constitutional power on top of the trust means the economic stake is matched by a voice that can question management in real time, so the two reinforce each other instead of one depending on the other's goodwill.
the payoff
About 80,000 Partners jointly own John Lewis and Waitrose through an irrevocable trust; the bonus once reached 24% of salary.
where it breaks
The model requires a founder willing to give up personal enrichment from a future sale, since shares locked in trust cannot later be sold to a private buyer at a premium, which is precisely why so few founders choose it. It also needs enough profitability to fund a bonus that feels meaningful — the arrangement strains visibly in the lean years, as John Lewis itself has shown by paying no bonus at all for several recent years in a row.
what came after
Nearly a century later the Partnership remains one of the largest employee-owned businesses in the world, having weathered the Depression, wartime bombing of its stores, and repeated recessions without the trust structure being reversed — because after 1950 it legally could not be. It is routinely cited in the UK as the reference model for employee ownership, and its structure influenced the design of the UK's Employee Ownership Trust, a tax-favored ownership form introduced in 2014 that lets other founders transfer their companies into trust for employees along similar lines.
references
- [1]John Lewis PartnershipRutgers Center for Law and Employee Ownership (CLEO), 2023cleo.rutgers.edu
- [2]Chart: The history of John Lewis Partnership bonusesRetail Week, 2026retail-week.com