🎯 Objectives and Scope of ESRS S1

ESRS S1 has five main objectives.

Undertakings must enable users to understand:

• Significant positive and negative impacts on the own workforce, actual and potential.
• Actions to prevent, mitigate or remediate negative impacts, and how risks and opportunities are addressed.
• Material risks and opportunities that arise from impacts on, and dependencies on, the own workforce.
• Short‑, medium‑ and long‑term financial effects linked to these risks and opportunities.
• The extent of alignment with European and international human rights and labour standards.

The standard covers three main sustainability areas:

• Working conditions – secure employment, working time, adequate wages, social dialogue, freedom of association, works councils, collective bargaining, work‑life balance, health and safety.
• Equal treatment and opportunities – gender equality and equal pay for work of equal value, diversity, inclusion of persons with disabilities, training and skills development, measures against violence and harassment.
• Other work‑related rights – child labour, forced labour, adequate housing and privacy.

📜 Interaction with ESRS 2 and Other Frameworks

ESRS S1 relies strongly on ESRS 2:

• Strategy disclosures (SBM‑2 and SBM‑3) explain how workforce‑related impacts, risks and opportunities inform the business model.
• Management disclosures on policies, actions, metrics and targets (MDR‑P, MDR‑A, MDR‑M, MDR‑T) apply to the own workforce topic.

The content is aligned with international standards, including the International Bill of Human Rights, core International Labour Organization conventions, the European Convention on Human Rights, the Charter of Fundamental Rights of the European Union, the OECD Guidelines for Multinational Enterprises and the United Nations Guiding Principles on Business and Human Rights.

Undertakings with an average of 750 or fewer employees may, in their first year of reporting, omit certain ESRS S1‑specific disclosures but must still meet relevant ESRS 2 requirements.

🛡️ Policies, Engagement and IRO Management

ESRS S1 structures management information around four disclosure requirements:

S1‑1 Policies related to own workforce

• Description of policies that govern the identification, assessment, management and remediation of material impacts, risks and opportunities concerning workers.
• Indication of how these policies align with internationally recognised standards.

S1‑2 Processes for engaging with own workforce

• Explanation of how the undertaking involves employees, non‑employee workers and their representatives when identifying and assessing impacts.

S1‑3 Processes to remediate negative impacts and channels to raise concerns

• Overview of grievance mechanisms and other channels available to workers, plus processes to provide or support remedy.

S1‑4 Actions, resources and effectiveness

• Information on key actions taken and planned, expected outcomes, financial resources allocated, any preconditions, and evidence of effectiveness in managing material issues.

These disclosures link directly to ESRS 2 management requirements and are often dependent on materiality.

📊 Metrics and Targets: Overview

Under S1‑5, undertakings disclose targets related to the own workforce and report performance against them.

Quantitative metrics (S1‑6 to S1‑17) then cover:

• Workforce composition of employees and non‑employees.
• Collective bargaining coverage and social dialogue.
• Diversity metrics.
• Adequate wages and social protection.
• Inclusion of persons with disabilities.
• Training and skills development.
• Health and safety performance.
• Work‑life balance.
• Remuneration indicators, including gender pay gap and remuneration ratios.
• Incidents, complaints and severe human rights impacts.

The following sections highlight three areas that typically require significant data preparation.

💶 Adequate Wages (ESRS S1‑10)

ESRS S1‑10 asks whether people in the own workforce receive an adequate wage relative to applicable benchmarks.

Undertakings must:

• State whether all employees are paid an adequate wage.
• If not, disclose the share of employees paid below the adequate wage benchmark in each country.
• On a voluntary basis, provide equivalent information for non‑employees in the own workforce.

To determine adequacy, the undertaking:

1- Calculates the lowest wage for the lowest pay category, by country or region, excluding interns and apprentices and including fixed additional payments guaranteed to all workers in that category.

2- Compares this figure with an adequate wage benchmark, which is based on minimum wage legislation, collective agreements or recognised living‑wage benchmarks, depending on whether the country is inside or outside the European Economic Area.

Clear methodology descriptions and transparent assumptions are crucial for this disclosure.

🩺 Health and Safety Metrics (ESRS S1‑14)

ESRS S1‑14 focuses on both the coverage and the performance of the health and safety management system.

Undertakings report:

• Share of the own workforce covered by a health and safety management system and, where relevant, by an audited or certified system.
• Number of fatalities due to work‑related injuries and ill‑health in the own workforce and, where material, among other workers on the undertaking’s sites.
• Number and rate of recordable work‑related accidents.
• Cases of work‑related ill‑health and days lost because of accidents, ill‑health and fatalities, with separate data for employees and non‑employees.

Work‑related incidents include accidents and illnesses arising from exposure to hazards at work, home‑office accidents linked to work tasks, certain business‑travel incidents, and diagnosed work‑related mental health conditions.

Undertakings must apply consistent rules for accident rates and days lost.

💼 Remuneration Metrics and Pay Equity (ESRS S1‑16)

Remuneration disclosures provide insight into pay structures and equality:

• Gender pay gap – percentage difference in average gross hourly pay between male and female employees, broken down by employee category, country or segment, and by basic salary plus complementary or variable components.
• Annual total remuneration ratio – ratio between the total annual remuneration of the highest‑paid individual and the median annual remuneration of all employees (excluding that individual).
• Adjusted remuneration ratio – on a voluntary basis, undertakings may disclose a ratio adjusted for purchasing power differences between countries.

Contextual information is needed to explain how remuneration data were compiled and any changes in scope or methodology.

Remuneration must cover base salary, variable cash payments, benefits in kind and the fair value of long‑term incentives.

🤝 How ComplyMarket Supports ESRS S1 Compliance

Implementing ESRS S1 own workforce reporting requires coordinated input from sustainability, human resources, finance and legal functions, along with reliable data systems.

ComplyMarket supports undertakings by:

• Mapping existing workforce policies, processes and data against ESRS S1 disclosure requirements.
• Designing materiality‑based approaches to sensitive topics such as adequate wages, health and safety and pay gaps.
• Assisting in the development of calculation methods, targets and documentation that align with ESRS and international standards.
• Reviewing draft disclosures for completeness, internal consistency and readiness for external assurance.

With a structured approach to ESRS S1 own workforce reporting, companies can demonstrate responsible employment practices, manage social risks and meet evolving European Union sustainability expectations.