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GRI 401: Employment 2016

EFFECTIVE DATE: 1 JULY 2018

Introduction​

GRI 401: Employment 2016 contains disclosures for organizations to report information about their employment-related impacts, and how they manage these impacts. The Standard is structured as follows:

  • Section 1 contains a requirement, which provides information about how the organization manages its employment-related impacts.
  • Section 2 contains three disclosures, which provide information about the organization’s employment-related impacts.
  • The Glossary contains defined terms with a specific meaning when used in the GRI Standards. The terms are underlined in the text of the GRI Standards and linked to the definitions.
  • The Bibliography lists authoritative intergovernmental instruments used in developing this Standard.

The rest of the Introduction section provides a background on the topic, an overview of the system of GRI Standards and further information on using this Standard.

Background on the topic​

This Standard addresses the topic of employment. This includes an organization’s approach to employment or job creation, that is, an organization’s approach to hiring, recruitment, retention and related practices, and the working conditions it provides. The Standard also covers the employment and working conditions in an organization’s supply chain.

An employment relationship is a legal relationship between a worker and an organization that confers rights and obligations to both parties. This relationship is usually the means for determining whether employment or labor law is applicable or whether commercial law is applicable.

These concepts are covered in key instruments of the International Labour Organization, the Organisation for Economic Co-operation and Development, and the United Nations: see the Bibliography.

1. Topic management disclosures​

An organization reporting in accordance with the GRI Standards is required to report how it manages each of its material topics.

An organization that has determined employment to be a material topic is required to report how it manages the topic using Disclosure 3-3 in GRI 3: Material Topics 2021 (see clause 1.1 in this section).

This section is therefore designed to supplement – and not replace – Disclosure 3-3 in GRI 3.

REQUIREMENTS​

  • 1.1 The reporting organization shall report how it manages employment using Disclosure 3-3 in GRI 3: Material Topics 2021.

  • 1.2 The reporting organization should describe:

    • 1.2.1 its policies or practices covering the relationships under which work is performed for the organization;
    • 1.2.2 actions taken to determine and address situations where work undertaken within its supply chain does not take place within appropriate institutional and legal frameworks;
    • 1.2.3 actions taken to determine and address situations where persons working for suppliers are not provided the social and labor protection that they are entitled to receive by national labor law;
    • 1.2.4 actions taken to determine and address situations where working conditions in its supply chain do not meet international labor standards or national labor law;
    • 1.2.5 actions taken to determine and address situations where work undertaken in its supply chain is inadequately remunerated;
    • 1.2.6 actions taken to determine and address situations of disguised employment relationships where workers in its supply chain are falsely considered to be self-employed or where there is no legally recognized employer;
    • 1.2.7 actions taken to determine and address situations where work undertaken in its supply chain that is performed at home is not subject to legally recognized contracts.

GUIDANCE​

Guidance for clause 1.2
Policies or practices covering the relationships under which work is performed for an organization can include recognized employment relationships, the use of employees of other organizations (such as workers supplied by agencies), and the extent to which work is performed on a temporary or part-time basis. A description of policies and practices can include policies and practices with respect to discrimination, compensation, promotion, privacy, human resource development and industrial relations.

Work taking place within an appropriate institutional and legal framework usually entails a recognized employment relationship with an identifiable and legally recognized employer.

Conditions of work can include compensation, working time, rest periods, holidays, disciplinary and dismissal practices, maternity protection, the workplace environment, and occupational health and safety. They can also include the quality of living accommodations where provided, and welfare matters, such as safe drinking water, canteens and access to medical services.

Adequately remunerated work is work where wages and compensation for a standard working week, excluding overtime, meet legal and industry minimum standards, and are sufficient to meet the basic needs of workers and their families, and to provide them with some discretionary income. Actions taken to address situations where work is inadequately remunerated can include:

  • dialogue with suppliers regarding the relationship of the prices paid to suppliers and the wages paid to workers;
  • changes to an organization’s procurement practices;
  • support for collective bargaining to determine wages;
  • determining the extent that overtime is used, whether it is mandatory, and whether it is compensated at a premium rate.

2. Topic disclosures​

Disclosure 401-1 New employee hires and employee turnover​

REQUIREMENTS​

The reporting organization shall report the following information:

  • a. Total number and rate of new employee hires during the reporting period, by age group, gender and region.

  • b. Total number and rate of employee turnover during the reporting period, by age group, gender and region.

  • 2.1 When compiling the information specified in Disclosure 401-1, the reporting organization shall use the total employee numbers at the end of the reporting period to calculate the rates of new employee hires and employee turnover. See Standard Interpretations.

RECOMMENDATIONS​

  • 2.2 When compiling the information specified in Disclosure 401-1, the reporting organization should use data from Disclosure 2-7 in GRI 2: General Disclosures 2021 to identify the total number of employees.

GUIDANCE​

Guidance for Disclosure 401-1
An organization can use the following age groups:

  • Under 30 years old;
  • 30-50 years old;
  • Over 50 years old.

Background
The number, age, gender, and region of an organization’s new employee hires can indicate its strategy and ability to attract diverse, qualified employees. This information can signify the organization’s efforts to implement inclusive recruitment practices based on age and gender. It can also signify the optimal use of available labor and talent in different regions.

A high rate of employee turnover can indicate levels of uncertainty and dissatisfaction among employees. It can also signal a fundamental change in the structure of an organization’s core operations. An uneven pattern of turnover by age or gender can indicate incompatibility or potential inequity in the workplace. Turnover results in changes to the human and intellectual capital of the organization and can impact productivity. Turnover has direct cost implications either in terms of reduced payroll or greater expenses for the recruitment of employees.

Disclosure 401-2 Benefits provided to full-time employees that are not provided to temporary or part-time employees​

REQUIREMENTS​

The reporting organization shall report the following information:

  • a. Benefits which are standard for full-time employees of the organization but are not provided to temporary or part-time employees, by significant locations of operation. These include, as a minimum:

    • i. life insurance;
    • ii. health care;
    • iii. disability and invalidity coverage;
    • iv. parental leave;
    • v. retirement provision;
    • vi. stock ownership;
    • vii. others.

  • b. The definition used for ‘significant locations of operation’.

  • 2.3 When compiling the information specified in Disclosure 401-2, the reporting organization shall exclude in-kind benefits such as provision of sports or child day care facilities, free meals during working time, and similar general employee welfare programs.

Background
Data reported under this disclosure provide a measure of an organization’s investment in human resources and the minimum benefits it offers its full-time employees. The quality of benefits for full-time employees is a key factor in retaining employees.

Disclosure 401-3 Parental leave​

REQUIREMENTS​

The reporting organization shall report the following information:

  • a. Total number of employees that were entitled to parental leave, by gender.
  • b. Total number of employees that took parental leave, by gender.
  • c. Total number of employees that returned to work in the reporting period after parental leave ended, by gender.
  • d. Total number of employees that returned to work after parental leave ended that were still employed 12 months after their return to work, by gender.
  • e. Return to work and retention rates of employees that took parental leave, by gender.

RECOMMENDATIONS​

  • 2.4 When compiling the information specified in Disclosure 401-3, the reporting organization should use the following formulas to calculate the return to work and retention rates:

Return to work rate = (Total number of employees that did return to work after parental leave / Total number of employees due to return to work after taking parental leave) x 100

Retention rate = (Total number of employees retained 12 months after returning to work following a period of parental leave / Total number of employees returning from parental leave in the prior reporting period(s)) x 100

GUIDANCE​

Guidance for Disclosure 401-3
Employees entitled to parental leave means those employees that are covered by organizational policies, agreements or contracts that contain parental leave entitlements. To determine who returned to work after parental leave ended and were still employed 12 months later, an organization can consult records from the prior reporting periods.

Background
Many countries have introduced legislation to provide parental leave. The aim of the legislation is to allow employees to take leave and return to work in the same or a comparable position. The application of legislation varies according to interpretation by government, employers and employees. Many women are discouraged from taking leave and returning to work by employer practices that affect their employment security, remuneration and career path. Many men are not encouraged to take the leave to which they are entitled. Equitable gender choice for maternity and paternity leave, and other leave entitlements, can lead to the greater recruitment and retention of qualified employees. It can also boost employee morale and productivity. Men’s uptake of paternity leave options can indicate the degree to which an organization encourages fathers to take such leave. Men taking advantage of leave entitlements positively impacts women to take such leave without prejudicing their career path.

Bibliography​

This section lists authoritative intergovernmental instruments used in developing this Standard.

Authoritative instruments:

  1. International Labour Organization (ILO) Convention 102, ‘Social Security (Minimum Standards) Convention’, 1952.
  2. International Labour Organization (ILO) Convention 121, ‘Employment Injury Benefits Convention’, 1964.
  3. International Labour Organization (ILO) Convention 128, ‘Invalidity, Old-Age and Survivors’ Benefits Convention’, 1967.
  4. International Labour Organization (ILO) Convention 130, ‘Medical Care and Sickness Benefits Convention’, 1969.
  5. International Labour Organization (ILO) Convention 132, ‘Holidays with Pay Convention (Revised)’, 1970.
  6. International Labour Organization (ILO) Convention 140, ‘Paid Educational Leave Convention’, 1974.
  7. International Labour Organization (ILO) Convention 156, ‘Workers with Family Responsibilities Convention’, 1981.
  8. International Labour Organization (ILO) Convention 157, ‘Maintenance of Social Security Rights Convention’, 1982.
  9. International Labour Organization (ILO) Convention 168, ‘Employment Promotion and Protection against Unemployment Convention’, 1988.
  10. International Labour Organization (ILO) Convention 183, ‘Maternity Protection Convention’, 2000.
  11. International Labour Organization (ILO) Declaration, ‘Declaration Concerning the Aims and Purposes of the International Labour Organization (Declaration of Philadelphia)’, 1944.
  12. International Labour Organization (ILO) Declaration, ‘Declaration of Social Justice for a Fair Globalization’, 2008.
  13. International Labour Organization (ILO), ‘Decent Work’, 1999.
  14. International Labour Organization (ILO) Recommendation 198, ‘Employment Relationship Recommendation’, 2006.
  15. International Labour Organization (ILO), ‘Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy’, 2006.
  16. Organisation for Economic Co-operation and Development (OECD), OECD Guidelines for Multinational Enterprises, 2011.
  17. United Nations (UN) Convention, ‘International Convention on the Protection of the Rights of All Migrant Workers and Members of Their Families’, 1990.

Standard Interpretations​

Standard Interpretation 1 to GRI 401: Employment 2016 on calculating the rates of new employee hires and employee turnover

REQUIREMENTS​

This Standard Interpretation is issued by the Global Sustainability Standards Board (GSSB). Any feedback on the GRI Standards and related Interpretations can be submitted to gssbsecretariat@globalreporting.org for the consideration of the GSSB.

Relevant section Clause 2.1 in GRI 401: Employment 2016

Issue Disclosure 401-1 New employee hires and employee turnover in GRI 401: Employment 2016 requires organizations to report the total numbers and rates of new employee hires and employee turnover during the reporting period, by age group, gender and region.

Clause 2.1 in GRI 401 further requires organizations to use the total employee numbers at the end of the reporting period to calculate the rates of new employee hires and employee turnover.

Feedback from users of the GRI Standards indicated that the required methodology in clause 2.1 is incorrect.

Interpretation Statement​

An organization is not required to comply with clause 2.1 in GRI 401: Employment 2016 (‘The reporting organization shall use the total employee numbers at the end of the reporting period to calculate the rates of new employee hires and employee turnover’).

The organization is free to choose the methodology for calculating these rates.

The organization is recommended to adequately describe data measurements and bases for calculations (see the Accuracy principle in GRI 1: Foundation 2021). When using ratios or normalized data, the organization is recommended to report total numbers or absolute data and provide explanatory notes (see the Comparability principle in GRI 1).