Companies would not be forced to appoint workers to their boards and instead be allowed to choose how they intend to heed the views of employees, according to proposals to overhaul boardroom rules.
The proposals, to be published on Tuesday, appear to confirm that Theresa May’s pledge to put workers on boards – made during her campaign last year to become Conservative party leader – has been abandoned.
Within three months she had started to water down the pledge, while in August the government offered three potential options to give employees a voice in the boardroom. The government said it would ask the Financial Reporting Council – the accountancy regulator that oversees the corporate governance code for all listed stock market companies – to consult on the three options.
A consultation published by the FRC includes all three options – to assign a non-executive director to represent employees, to create an employee advisory council or to nominate a director from the workforce. While it does not list other options, it means that the City corporate code will include a provision for employees’ voices to be heard in the boardroom.
The TUC general secretary, Frances O’Grady, said it was “good that the code recognises the key role workers’ voices play within businesses”.
“The next step is for the corporate governance code to recognise the important role that unions play in the long-term success of companies,” she added.
The code operates across stock market listed companies and operates on a “comply or explain” basis so that companies which ignore its provisions must provide an explanation.
The consultation – open until February – also includes plans that would require firms to publish their gender balance, building upon recommendations in the review by Sir Philip Hampton and Dame Helen Alexander, who died in August, in to boardroom diversity.
The FRC is proposing that these figures include the first layer of management below the board – and their direct reports – and goes further than suggested by including all companies and not just the 350 biggest listings on the stock market.
It does not propose similar disclosure on ethnicity but asks for views on whether it should encourage the release of more information on this issue.
The FRC’s latest proposals would also mean that companies which have a 20% vote against their remuneration report would have to explain how they intend to discuss the dissent with shareholders.
Sir Win Bischoff, chair of the FRC, said: “At this crucial time and as the country approaches Brexit, a revised code will be essential to restoring trust in business, attracting investment and ensuring the long-term success of companies for … wider society.”