Social Metrics : Basic Module
Shel
The disclosures covering social metrics in the basic module are B8, B9 and B10.
The company should disclose the number of employees in headcount or full-time equivalent, disaggregated by:
the type of employment contract (temporary or permanent);
gender; and
country of employment contract i.e if the company operates in more than one country.
Full-time equivalent or FTE is a unit to measure employed persons in a way that makes them comparable, although they may work or study a different number of hours per week. It can be calculated by dividing an employee’s scheduled hours (total effective hours worked in a week) by the employer’s hours for a full-time workweek (total hours performed by full-time employees). For example, an employee who works 25 hours every week for a company where the full-time week is 40 hours represents a 0.625 FTE (i.e. 25/ 40 hours).
Definitions and types of employment contracts may vary depending on the country. If the company has employees working in more than one country, it should use the legal definitions stipulated in the national laws of the countries where the employees are based to calculate country-level data. Such country-level data shall then be added up to calculate total numbers, disregarding differences in national legal definitions.
If the company has more than 50 employees, it should disclose the employee turnover rate as well. Employee turnover refers to employees who leave the company voluntarily or due to dismissal, retirement or death in service. Employee turnover should be calculated as follows:
\[\frac{Number~ of~ employees~ who~ left~ during~ the~ reporting ~ year}{Average~ number~ of~ employees~ during~ the ~ reporting ~ year} ~X ~100\]
Under this disclosure, the company should disclose:
the number and rate of recordable work-related accidents; and
the number of fatalities as a result of work-related injuries and work-related ill health.
A work-related accident is an event that leads to physical or mental harm resulting to injury or ill health. It happens whilst an employee is engaged in an occupational activity or during the time spent at work. Recordable means that the physical or mental harm was diagnosed by a physician or other licensed health care professionals. Work-related injury or ill health can either result in death, days away from work, restricted work or transfer to another job, medical treatment beyond first aid or loss of consciousness. Injuries that do not require medical treatment beyond first aid are generally not recordable.
The rate of recordable work-related accidents of employees can be calculated as follows:
\[\frac{Number~ of~ work~ related~ accidents~ in~ the~ reporting ~ year}{Total~ number~ of~ hours~ worked~ in ~a~ year~by~all~employees} ~X ~200,000\]
Based on the assumption that one full-time worker works 2,000 hours per year, the rate indicates the number of work-related accidents per 100 full-time workers over a yearly time frame.
For example, assume that Company A has 40 employees. Then, the 40 employees work a total number of 80,000 hours (40 x 2,000) in a year. If the company reported three work-related accidents in the reporting year, the rate of recordable work-related accidents is \(3/80,000 ~X ~200,000 = 7.5\).
If the company cannot calculate the number of hours worked directly , it may estimate this on the basis of normal or standard hours of work.
Work-related injuries and ill health arise from exposure to dangers at work. In the case of teleworking1, injuries and ill health are work-related if the injury or ill health is directly related to the performance of work rather than the general home environment.
Injuries and ill health that occur while a person is travelling for work are considered work-related only if the employee was performing work activities in the interest of the employer at the time of the injury or ill health. Accidents taking place when travelling or outside of the company’s responsibility (i.e. regular commuting to and from work), are subject to the applicable national legislation, which regulates their categorisation as to whether they are considered work-related or not.
Mental illness is considered work-related if it has been notified voluntarily by the relevant worker and if an evaluation from a licensed healthcare professional stating that the illness in question is indeed work-related has been issued and notified, too. Health problems resulting from smoking, drug and alcohol abuse, physical inactivity, unhealthy diets and psychosocial factors not connected to work are not considered work-related.
The company may separately present fatalities resulting from work-related injuries and those resulting from work-related ill health.
In this section, the company should disclose the following:
whether the employees receive pay that is equal or above applicable minimum wage for the country it reports in, determined directly by the national minimum wage law or through a collective bargaining agreement;
the gender pay gap. The company may omit this disclosure if its headcount is below 150 employees noting that this threshold will be reduced to 100 employees from 7 June 2031;
the percentage of employees covered by collective bargaining agreements; and
the average number of annual training hours per employee, broken down by gender.
‘Minimum wage’ refers to the minimum compensation of employment per hour or another unit of time. Depending on the country, the minimum wage might be set directly by law or through collective bargaining agreements. The company should refer to the applicable minimum wage for the country it reports on.
For the lowest pay category, excluding interns and apprentices, minimum wage serves as the foundation for calculating entry-level wage. Therefore, entry-level wage includes pay equal to minimum wage as well as any additional fixed payments guaranteed to employees in that category.
The gender pay gap addresses the principle of gender equality, which stipulates equal pay for equal work. The pay gap is defined as the difference in average pay levels between female and male employees expressed as the percentage of the average pay level of male employees. The gender pay gap can be calculated as follows:
\[\frac{Average ~gross~ hourly~pay ~level ~of ~male ~employees~ -~Average ~gross~ hourly~pay ~level ~of ~female ~employees~}{Average ~gross~ hourly~pay ~level ~of ~male ~employees~} ~X ~100\] The average gross hourly pay is the weekly/annual gross pay divided by the average hours worked per week/year.
Depending on the company’s remuneration policies, gross pay is the sum of all the applicable elements listed below:
base salary, which is the sum of guaranteed, short-term, non-variable cash compensation;
benefits in cash, which constitute the sum of the base salary and cash allowances, bonuses, commissions, cash profit-sharing and other forms of variable cash payments;
benefits in kind such as cars, private health insurance, life insurance and wellness programs; and
direct remuneration, which is the sum of benefits in cash, benefits in kind and the total fair value of all annual long-term incentives.
A collective bargaining agreement is all negotiations which take place between an employer, a group of employers or one or more employers’ organisations, on the one hand, and one or more trade unions or, in their absence, the representatives of the workers duly elected and authorised by them in accordance with national laws and regulations. A collective bargaining agreement is crucial in:
- determining working conditions and terms of employment;
- regulating relations between employers and workers; and/or
- regulating relations between employers or their organisations and workers’ organisations.
The employees covered by collective bargaining agreements are those individuals to whom the company is obliged to apply the agreement. If an employee is covered by more than one collective bargaining agreement, it only needs to be counted once.
The percentage of employees covered by collective bargaining agreements is calculated using the following formula:
\[\frac{Number~ of ~ employees ~ covered~ by~ collective~ bargaining~ agreements}{Number~ of ~ employees} ~X ~100\]
The information required by this disclosure requirement may be reported as coverage rates i.e 0-19%, 20-39%, 40-59%, 60-79% or 80-100%.
If none of the employees are covered by a collective bargaining agreement, the percentage is zero.
Footnotes
Teleworking is a model where employees work remotely while communicating with their colleagues through telephone, email or video conferencing.↩︎