Top-down or bottom-up? "Comply or explain" for worker-directors in the UK

Premium-listed companies have been put under pressure to make their boards representative of their employees by the revised UK Corporate Governance Code. There is now a "comply or explain" requirement on all UK premium-listed companies to appoint a director from the workforce, or alternatively to have a formal workforce advisory panel or appoint a designated non-executive director for workforce relations.

This notion is far from new; the revised Code reflects a trend in continental Europe for over two decades. Germany, France, Finland, Austria, Denmark, Sweden, Hungary and Norway – to name but a few – all have a regulatory frameworks that require some level of employee representation on the boards of certain companies. Thousands of companies in continental Europe now have worker-director positions and data suggests that this has directly impacted on business by increasing productivity.

In the UK, a few premium listed companies have opted to move ahead of the regulatory requirement and have had worker-directors for some time. If you would also like to lead the market and stay ahead of the pack, or simply want to understand how the updated regulatory requirements may impact on you, resources such as the Hogan Lovells Business Integrity app can be useful starting point. Our app provides a quick healthcheck to ensure your company's purpose and positive impact is reflected in its governance structures and contractual documents to drive sustainable long-term profitability.


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