Reforms are due to come into effect that will mean employers will be required to report on how their directors have engaged with the company’s employees and had regard to their interests.

The Companies (Miscellaneous Reporting) Regulations 2018 come into force on 1 January 2019, and will apply to the financial years of companies beginning on or after that date. Broadly speaking, the regulations will apply to any company (whether quoted or unquoted) with more than 250 UK employees.

The new rules mean that the directors’ report must describe action taken during the financial year to introduce, maintain or develop arrangements aimed at:

  • Providing employees with information on matters of concern to them as employees.
  • Consulting employees so that their views are taken into account in making decisions which affect their interests.
  • Encouraging employee involvement in the company’s performance through share schemes or by some other means.
  • Achieving a common awareness of the financial and economic factors affecting the company’s performance.

Under the regulations, unless such disclosure would be severely prejudicial to the company’s interests, the directors’ report must also outline how the directors engaged with employees on the key decisions taken by the company during the financial year, and how the directors paid regard to the interests of employees.

While companies have some time before the legislation comes into force, they should consider whether the new rules will apply to them and review what steps are taken within the business to engage with employees.

If you need to discuss these issues further please do not hesitate to contact a member of our Employment team on 0161 941 4000, or by email

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