1 October, 2019
EMPLOYEE AND WORKFORCE REPORTING – 2019 ANNUAL REPORTS
As the reporting season approaches it is worth a reminder of the new requirements on workforce and employee reporting.Implementation of any reforms to address these new obligations may well be underway and it is important to ensure that the updated measures from the UK Corporate Governance Code 2018 as well as other corporate law and regulations are reported on appropriately.
The UK Corporate Governance 2018 Code (‘2018 Code’) states that the Board needs to understand the views of the company’s key stakeholders and report on how they have considered these in Board discussions and decision making.Engaging with the workforce can, as recommended by the Code, be achieved by having a director from the workforce; a workforce advisory panel; a designated non-executive director or combination of these.The Board Effectiveness Guidance 2018 explains that the overall aim is for meaningful and regular dialogue with the workforce.However, if the Board does not use one of these methods it should explain what alternative arrangements are in place and why.
As our January blog noted, The Companies (Miscellaneous Reporting) Regulations 2018 (the ‘ 2018 Regulations’) which came into force from 1 January 2019 requires all companies with 250 UK employees or more to detail in their annual report how directors have engaged with employees and the effect of their regard for employee interests on principal decisions made by the company in the financial year.
The 2018 Regulations requires certain companies to report on how boards have had to regard to s172 of the 2006 Companies Act being to promote the success of the company, and in particular to give details in the strategic report of how directors have had regard to employee interests as well as how they have built relationships with other stakeholders.
For quoted companies with more than 250 UK employees, there needs to be a pay ratios table in the upcoming report setting out the CEO:UK employees pay ratios, as well as explanations in the directors’ remuneration report.
The 2018 Code states that the Remuneration Committee should review workforce remuneration and detail how this, along with other factors, have been considered when setting the policy for executive director remuneration.As many companies will be putting their remuneration policy for approval at the 2020 AGM there could be increased scrutiny in this area.New provisions about aligning pension contributions with the workforce will also need to be addressed.
There are different reporting requirements depending on the type of company and should you require any further guidance of which parts apply please contact Anne-Marie Palmer (email@example.com; 07803 171 644) if you would like to discuss further.
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Company registered in England and Wales number 8254957