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Level 2 · Decision guide·EU Voluntary Standard 2026 · Disclosure guides

C5 Workforce Characteristics: Turnover, Management and Governance Populations Explained

Definitions, boundaries, formulas, small-population controls, comparatives and evidence ownership for employee turnover, management ratios and specified non-employee workers.

Who this is for A 15-minute read for reporting teams working through Business model, policies and workforce disclosures, and for reviewers testing whether the evidence behind it holds.

Published passport

Current as at 10 August 2026
RK Reviewed by Dr Ross KurinkoLinkedIn Strategic ESG Advisor · IFRS S1 & S2 / GRI / ESRS expert GRI Certified Global Trainer · PhD, University of Cambridge · ESG-AI expert 15+ years on FTSE 100 & Fortune Global 500 disclosures Canary Wharf, London LRA educational guidance · Not issued or endorsed by European Commission

Edition written against

—

Regulatory status must be rechecked after scrutiny and publication in the Official Journal.

Published

10 Aug 2026

Knowledge Hub guide

Last reviewed

10 Aug 2026

Short answer

The answer, before the reasoning

Do not use one broad “workforce” denominator. Turnover concerns employees and an average annual employee population.

The optional management ratio concerns a defined management level. C9 concerns the governance body. The optional non-employee counts concern only the specified exclusive self-employed and agency-worker groups. Lock each boundary and method before extracting data; otherwise a technically correct formula can still produce the wrong disclosure.

Technical status note. The Commission adopted C(2026) 5011 final on 3 July 2026. As at 1 August 2026, the delegated act was under European Parliament and Council scrutiny and had not yet completed the process leading to application. Recheck the Official Journal version, entry into force and any corrections before publication or client use.

Use note. This material separates requirements in the 2026 Voluntary Standard from London Reporting Academy implementation practices and illustrative wording. It does not replace the official text, legal analysis or entity-specific review.

Why population boundaries are the real calculation risk

Workforce metrics often fail before the formula is applied. One HR export may include employees on long-term leave, secondees, apprentices and agency workers; a payroll file may exclude unpaid employees; a management list may include the board; and procurement may count every contractor. If these lists are combined without a controlled definition, turnover and diversity ratios become incomparable and difficult to evidence.

C5 is therefore best implemented as a population-governance exercise. The reporting team defines who is in each population, which date or average is used, who owns the source and how changes are reviewed. The published metric is the end of that process, not the beginning.

In practice

Quick orientation

Question Controlled answer
Employee turnover Required under C5 for undertakings with more than 10 employees; voluntary for 10 or fewer. Formula: employee leavers ÷ average employees × 100.
Management ratio Optional women-to-men ratio at management level. Define the management population and keep it separate from C9 governance.
Governance population Reported under C9, not inside the C5 management ratio unless the undertaking's management definition genuinely includes the same people and the distinction is explicit.
Non-employee workers Optional counts of self-employed people working exclusively for the undertaking and temporary workers supplied by an employment agency.
Comparatives From the second reporting year, prior-period comparatives are provided except for metrics disclosed for the first time.
Common confusion Using closing headcount as the turnover denominator or reporting a percentage for a very small group without counts and context.

What the 2026 Standard requires and permits

The undertaking discloses its employee turnover rate calculated for the reporting period. This datapoint is voluntary for undertakings with 10 employees or fewer.

The undertaking may disclose the ratio of female to male employees at management level.

The undertaking may disclose the number of self-employed persons without employees who work exclusively for the undertaking and the number of temporary workers provided by undertakings primarily engaged in employment activities.

The Basic Module B8 employee information and the C5 calculations should use a consistent employee definition and reporting boundary.

The women-to-men ratio for the governance body is a separate C9 disclosure and requires a separate population control.

What C5 does not require

One universal legal definition of employee or manager across all jurisdictions; national law or practice and the undertaking's controlled definitions remain relevant.

A particular monthly, quarterly or opening/closing averaging method for the employee denominator in the 2026 text.

The inclusion of all contractors, consultants, platform workers or supplier personnel in paragraph 60.

The publication of names or identifiable personal information.

A percentage where the denominator is zero or where a tiny population makes the result misleading without counts and context.

The mixing of management and governance-body populations merely because senior individuals sit in both groups.

Figure 1. Employees, management, governance and specified non-employees are separate controlled populations.

In practice

Four populations to define before calculation

Population Boundary question Typical source owner — Disclosure use
Employees Who has an employment relationship under applicable national law or practice and is within the reporting boundary? HR / payroll. — B8 workforce counts and C5 turnover.
Management level Which organisational level is treated as management and why? Is the definition stable across entities and years? HR plus executive governance. — Optional C5 women-to-men ratio.
Governance body Which board or equivalent body has governance responsibilities at the reporting date? Company secretariat. — C9 gender-diversity ratio.
Exclusive self-employed persons Which self-employed individuals have no employees and work exclusively for the undertaking? Procurement / legal / HR. — Optional C5 paragraph 60 count.
Agency workers Which temporary workers are supplied by employment-agency businesses and are within the selected counting basis? HR / procurement / agency provider. — Optional C5 paragraph 60 count.

Employee turnover: definition and formula

Compatible official implementation guidance describes leavers as employees who leave voluntarily, through dismissal, retirement or death. The rate is calculated by dividing the number of employees who left during the year by the average number of employees during the year and multiplying by 100.

Choose and disclose a stable averaging method

Illustrative turnover calculation

Rule

Formula

<p>Employee turnover rate (%) = Number of employees who left during the reporting period ÷ Average number of employees during the reporting period × 100.</p>

In practice

Method How it works When useful — Control
Monthly average Sum the 12 month-end employee counts and divide by 12. Preferred implementation practice where monthly HR data are reliable. — Check acquisitions, disposals, seasonal work and month-end anomalies.
Pay-period average Average controlled employee counts for each pay period. Useful where payroll is the primary complete source. — Ensure unpaid employees and off-cycle populations are treated consistently.
Opening/closing average (Opening employee count + closing employee count) ÷ 2. Pragmatic fallback for a stable workforce where detailed history is unavailable. — Disclose the limitation; avoid where seasonality or rapid growth makes it misleading.

Hypothetical scenario

Illustrative figures - not company data

<p>An undertaking records 9 employee leavers during 2025. Its 12 monthly employee counts total 554, so the monthly average is 554 ÷ 12 = 46.17 employees. Turnover = 9 ÷ 46.17 × 100 = 19.49%, reported as 19.5% under the undertaking&#x27;s rounding policy.</p>

Illustrative only. It shows how the decision is made, not wording that can be copied or relied on.

In practice

Check Illustrative result
Leaver population 9: 4 resignations, 2 dismissals, 2 retirements and 1 death. Internal transfers within the reporting group are excluded.
Average denominator 46.17 employees using 12 month-end counts.
Rate 19.49%, rounded to 19.5%.
Reconciliation Opening count + joiners - leavers + other movements = closing count, with differences explained.
Evidence HRIS leaver report, monthly headcount file, movement reconciliation, method note and reviewer recalculation.

Management ratio: definition before arithmetic

C5 permits the undertaking to disclose the ratio of female to male employees at management level. Compatible official guidance treats management as the organisational level below the board unless the undertaking uses its own definition. Where an entity-specific definition is used, document it, apply it consistently and make the disclosure understandable.

Hypothetical scenario

Illustrative calculation

<p>At the reporting date, the defined management population contains 4 women and 6 men. The women-to-men ratio is 4:6, simplified to 2:3. Expressed as women per one man, it is 4 ÷ 6 = 0.67:1. Publish the counts alongside the ratio so the scale is visible.</p>

Illustrative only. It shows how the decision is made, not wording that can be copied or relied on.

In practice

Boundary decision Good control
Management level Approved organisation levels or role criteria; no ad hoc list created for reporting.
Reporting date Use a specified date, normally the reporting-period end, unless another controlled basis is disclosed.
Dual roles A director who is also an executive is classified consistently in C5 and C9, with the two population purposes still kept distinct.
Gender categories Follow the datapoint wording and applicable data-protection/employment context; do not infer gender from names.
Zero denominator Do not divide by zero. Report the female and male counts and explain that a numerical ratio is not meaningful.

Management is not the governance body

A board member can also be an employee or manager. That overlap does not permit the two denominators to be blended. Each disclosure has its own information purpose and evidence owner.

In practice

C5 management population C9 governance-body population
Operational or executive management level defined by the undertaking. Board, supervisory board or equivalent governance body.
Optional ratio of female to male employees at management level. Gender-diversity ratio among the governance body.
Usually sourced from HR organisational data. Usually sourced and controlled by the company secretariat.
May be a larger population and may include several organisational levels. Often a small fixed population at the reporting date.
Definition should be stable and disclosed where necessary. Legal/governance composition and appointment records determine the population.

Specified non-employee workers under paragraph 60

Employment-status classification can be legally sensitive and jurisdiction-specific. Reporting teams should use HR, procurement and legal records and should not create a reporting label that contradicts the underlying contractual or legal position.

Figure 2. The calculation is controlled through the population definition, source record, method and reviewer - not through the formula alone.

In practice

Group Include when Do not automatically include
Exclusive self-employed persons without employees The individual is genuinely self-employed, has no employees and works exclusively for the undertaking under the selected reporting basis. All freelancers, consultants, directors, subcontractor staff or sole traders with other clients.
Temporary agency workers The worker is supplied by an undertaking whose principal activity is employment placement or temporary employment, and the counting basis is defined. Employees of every service provider, outsourced facility team or independent contractor.

In practice

Small populations, privacy and meaningful presentation

Situation Recommended treatment
Population of 1-4 people Show counts and context; consider whether a percentage or ratio creates false significance or identification risk.
Zero women or zero men in management Report counts. Use 0:x or x:0 only if the convention is defined; do not calculate a division-based ratio with a zero denominator.
One leaver in a very small workforce Show the rate and the count, and explain the denominator and period; one event may produce a large percentage.
Sensitive personal data Use approved HR data, access controls and aggregation. Do not infer attributes or expose identifiable records.
Cross-country group Apply a group methodology while respecting national definitions and explain material boundary differences.

Comparatives and method changes

From the second reporting year, the Standard requires prior-period comparatives except for metrics disclosed for the first time. A comparable number requires more than repeating last year's rate: the population, boundary, date basis and averaging method must also be comparable.

In practice

Change Control and disclosure consequence
Acquisition or disposal Assess whether the reporting boundary changed and whether the comparative should be restated or the change explained.
New HR system Reconcile old and new populations; test duplicate and missing employees.
Management definition changes Explain the change and, where practicable, recalculate the comparative on the new basis.
Averaging method changes Document why the new method is more reliable and quantify the effect where practicable.
Metric first disclosed this year State that no comparative is presented because it is the first year of disclosure.

In practice

Evidence ownership model

Datapoint Primary owner Evidence — Independent control
Employee leavers HR. Termination records, reason codes and employee IDs. — Reconcile to payroll movements and opening/closing headcount.
Average employees HR/payroll. Monthly or pay-period counts and method file. — Finance or reporting recalculation.
Management population HR with executive approval. Organisation chart, role/grade criteria and reporting-date extract. — Check against approved definition and prior year.
Governance body Company secretariat. Appointment records and board register. — C9 population reconciliation.
Exclusive self-employed Procurement/legal. Contracts, exclusivity evidence and status assessment. — Legal classification and duplicate review.
Agency workers HR/procurement. Agency invoices, roster or provider confirmation. — Period/date and double-counting check.

Hypothetical scenario

Illustrative scenario - not company data

<p>A professional-services firm has 48 employees at the start of 2025 and 45 at year-end. Monthly counts total 554 and 9 employees leave. Management is defined as directors and heads of function below the statutory board: 4 women and 6 men at year-end. The statutory board has 2 women and 3 men. The firm also uses 3 exclusive self-employed specialists and 7 agency workers at year-end.</p>

Illustrative only. It shows how the decision is made, not wording that can be copied or relied on.

In practice

Hypothetical example: professional-services firm

Disclosure Illustrative calculation / result Boundary note
Employee turnover 9 ÷ (554 ÷ 12) × 100 = 19.5%. Employees only; internal group transfers excluded; monthly average.
C5 management ratio 4:6 = 2:3 (0.67 women per man). 10 people below the statutory board under the approved definition.
C9 governance ratio 2:3 (reported separately under C9). Five statutory board members at year-end.
Exclusive self-employed 3 people. No employees of their own and exclusive to the firm under reviewed contracts.
Agency workers 7 people. Workers supplied by a temporary employment agency at year-end.

Illustrative C5 disclosure with annotations

Why the wording is useful

It states both the leaver numerator and the average denominator.

It explains the averaging method and who is included as a leaver.

It defines management and keeps the statutory board in C9.

It shows counts as well as the ratio, making the small population visible.

It identifies the two permitted non-employee groups and explains the missing comparative.

Hypothetical scenario

Illustrative wording - adapt to the undertaking's facts

<p>“Nine employees left the undertaking during 2025. The average employee population was 46.17, calculated from 12 month-end employee counts. The employee turnover rate was therefore 19.5%. Leavers include voluntary departures, dismissals, retirements and deaths; internal transfers within the reporting group are excluded. At 31 December 2025, the management population - defined as directors and heads of function below the statutory board - comprised four women and six men, a women-to-men ratio of 2:3. The statutory board population is reported separately under C9. At the reporting date, three self-employed persons without employees worked exclusively for the undertaking and seven temporary agency workers were supplied by an employment-agency business. Counts and classifications were reconciled by HR, payroll, procurement and the company secretariat. This is the first year the non-employee counts are disclosed; no comparative is presented for those datapoints.”</p>

Illustrative only. It shows how the decision is made, not wording that can be copied or relied on.

In practice

Weak versus stronger disclosure

Weak wording Why it is weak Stronger pattern
“Turnover was 20%.” No numerator, denominator, averaging method, population or rounding basis. State leavers, average employee population, formula, period and exclusions.
“Women represented 40% of leadership.” Leadership is undefined; C5 asks for a women-to-men management ratio. Define management, show female and male counts and calculate the ratio.
“Our workforce includes 50 contractors.” Paragraph 60 groups are not identified and employment status may be misstated. Report only the specified exclusive self-employed and agency-worker groups under controlled definitions.
“Board and management diversity was 2:3.” Two populations are blended. Report C5 management and C9 governance separately.

In practice

Common mistakes and corrections

Mistake Symptom Correction
Closing headcount denominator Turnover spikes or falls because growth/seasonality is ignored. Use a documented average; monthly or pay-period data where reliable.
Uncontrolled leaver reasons Retirement, death or dismissals are inconsistently included. Define leavers and reconcile reason codes.
Management-by-title guess The list changes when titles are renamed. Use approved organisational levels or role criteria.
Board included in C5 by default C5 and C9 use the same denominator without explanation. Maintain separate population registers and owners.
All contractors counted Service-provider staff and freelancers are mixed into paragraph 60. Apply the two specified group tests and legal review.
Tiny ratio without counts A one-person change appears as a dramatic trend. Show counts, denominator and context; avoid misleading precision.
Comparative method drift Prior-year and current-year rates use different boundaries. Restate where practicable or explain the method change.

Rule

Myth

<p>“C5 is easy: extract year-end headcount and divide leavers by it.” Reality The denominator is the average number of employees during the year, and the result depends on a controlled employee and leaver definition. Year-end headcount can be a misleading denominator, particularly in a growing, shrinking or seasonal undertaking. Population governance and reconciliation are as important as the arithmetic.</p>

Readiness

C5 calculation and evidence checklist

  • The employee definition and group/reporting boundary agree with B1 and B8.
  • Leaver events and exclusions are documented and reconciled to headcount movements.
  • The average-employee method is selected, justified and retained consistently.
  • The turnover calculation is independently recalculated and rounded under a policy.
  • The management population has an approved definition and reporting date.
  • Female and male counts are published with the ratio, especially for small populations.
  • C5 management and C9 governance populations have separate registers and owners.
  • Zero denominators and very small populations are handled without misleading division or identification risk.
  • Paragraph 60 counts include only the two specified groups and have contract/status evidence.
  • Comparatives use the same boundary and method, or changes are explained/restated.

Self-check

  1. Can HR reproduce the leaver numerator and the monthly average from source records?
  2. Can a new reviewer identify exactly which roles form the management population?
  3. Would the C9 governance denominator remain correct if a director also has an employment contract?
  4. Can procurement prove that each reported self-employed person is exclusive and has no employees?

Frequently asked questions

Should internal transfers count as leavers?

A transfer within the same reporting group would normally not be treated as leaving the undertaking, but the boundary and HR movement logic should be documented. A transfer outside the reporting boundary may be a leaver for the reporting entity.

Can we use opening and closing headcount to calculate the average?

The 2026 text does not prescribe the averaging method. Opening/closing average can be a pragmatic fallback for a stable workforce, but it should be disclosed and may be misleading where headcount changes materially or seasonally.

What if there are no men or no women in management?

Report the counts and explain the composition. Do not perform a division with a zero denominator. A ratio convention such as 0:x or x:0 may be used only if it is clearly defined and not misleading.

Are consultants included in paragraph 60?

Not automatically. The paragraph covers the specified exclusive self-employed persons without employees and temporary agency workers. Other consultants or contractor personnel may be relevant elsewhere, but should not be relabelled to fit this datapoint.

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