Employers who give their workers a controlling stake will pay lower capital gains tax, which is normally charged at up to 28% when assets are sold.
In a speech in London today, Clegg will say the Government will inject £50 million from next year to boost new firms set up under employee-owned models.
He also welcomed a report by the Employee Ownership Association (EOA), which makes the business case for more firms opting for employee ownership.
He will say many companies are spending thousands of pounds on "quirky ideas" to motivate their staff, yet "fundamentally" it is the structure of their company which "fails to align incentives".
Clegg will say: "What we want to encourage is for more owners to sell the business on to those people who know the business inside out, who will go the extra mile, the wider family who have worked to build it up and contribute to its success - in other words, the employees."
He will add: "Up and down the country, across public and private sectors, people-centred workplaces are contributing more and more to the economy and, through tough economic times, these firms can outperform others.
"My goal in Government is to help lay the foundations for a stronger economy and a fairer society and employee ownership helps do both. We know our economy needs to be rewired to properly assess and share risk, to properly motivate and reward workers and to think for the long term.
"I am pleased that the scale of employee participation in today's economy is already significant. Companies where employees own a significant stake in the company they work for have a combined annual turnover of £30 billion, over 3% of GDP. The Employee Ownership Association has ambitions for this figure to grow to 10% of GDP by 2020 and I welcome this."
Professor Chris Bones of Manchester Business School said: "A sense of ownership motivates people to work harder (though not necessarily longer) to achieve customer satisfaction and encourages them to stay longer, reducing costs of retraining and recruitment.
"This announcement reflects work done under this and previous governments by David Macleod and his colleagues of the importance of employee engagement to our growth prospects; but it not just welcome for that. It has been part of a radical reform that includes shared parental leave and flexible working for all which is aimed at creating a business environment that enables the sustainable future Britain needs.
"More importantly than that it signals that Clegg and his allies have persuaded the treasury of a much more significant truth: that real wealth creation from the manufacture and trading of goods and services is a much more sustainable model for re-building prosperity than that associated with rising property prices."
He added: "Creating a more significant percentage of the population who can see wealth creation coming from productive activity as opposed to capital gains often in the past generated as a result of borrowing more than the original value of the asset is a very welcome development in government thinking."
The UK currently has about 150 companies with significant employee ownership, including the John Lewis Partnership, and the EOA says the number grew by 10% last year.
However, the coalition has drawn back from adopting a proposal, unpopular with many businesses, for staff to have a statutory right to request shares in the company they work for.
Zoe Bedford, HR and employment solicitor at Turbervilles Solicitors: "This looks like another attempt to bolster support from businesses for the introduction of "employee shareholder" status by giving them more tax reliefs.
"The Government suffered a setback on the day of the Budget when the statutory clause introducing the status was rejected by the House of Lords, but may try to reintroduce the clause in the House of Commons."
Bedford added: "Companies would be exposing themselves to tax complications and significant costs if they adopted such a status. However, if the tax reliefs proceed on their own without the new status, this may be good for both employers and employees."
