Questions & Answers
In the phase-in section, companies with 750 or more employees shall start reporting from the first year. The question is how to calculate the number of employees for this. Should it be done on a headcount or a full-time-equivalent basis?
- Phase-in less than 750 employees
- phase-in requirements
Background
The question received, ‘In the phase-in section, companies with 750 or more employees have to start reporting from the first year. The question is how to calculate the number of employees for this. For, e.g., if I count by head count that a company has 800 employees, the company must comply with ESRS and start reporting from the first year. But, if I count employees by FTEs, it is 700. So, the company can opt for phase-out’, was modified to the above question to be more precise.
ESRS 1 Appendix C: List of phased-in Disclosure Requirements has six phase-in provisions applicable for ‘undertakings or groups not exceeding on their balance sheet dates the average number of 750 employees during the financial year (on a consolidated basis where applicable)’.
Answer
The ‘average number of employees’ shall be calculated in line with the size criteria as stipulated in the Accounting Directive (Directive 2013/34/EU) Article 3.
The Accounting Directive in Article 3 used the term ‘average number of employees during the financial year’. This is exactly the same term used in ESRS 1 Appendix C, aligning ESRS to the wording and requirement used in the Accounting Directive. The Accounting Directive has been transposed in the national laws of the Member States and it is expected that, based on this transposition, each Member State or country has a well-established guidance and practice for how to calculate the average number of employees during the financial year. The requirements transposed in national law shall be applied to determine the number of employees for the ‘750 employee phase-in’ provision.
Accordingly, also considering connectivity with financial statements, the number calculated for and reported in financial statements shall be consistent with that used for ESRS 1 Appendix C, i.e. the ‘750 employee criteria’.
See also ESRS 2 paragraph 17 relating to the use of the ‘750 employee phase-in provision’ and the applicable Disclosure Requirements when making use of that provision.
Relations
Paragraph | Content |
|---|---|
Appendix C - List of phased-in Disclosure Requirements | |
Appendix C - List of phased-in Disclosure Requirements | |
Appendix C - List of phased-in Disclosure Requirements |