Climbdown as firms won’t have to put employees on their boards

COMPANIES are to be ‘nudged’ to make a named non-executive director on their boards responsible for employees and diversity.

The plans, set to be announced as early as this week, follow a pledge by Prime Minister Theresa May to reform business.

But the proposals are likely to be seen as a climbdown from suggestions that companies would be forced to have worker representatives on their boards.

It is understood that No10 wants to issue a consultation document imminently and at least before the Tory party conference in a fortnight.

When May launched her leadership campaign in July, she said: ‘If I’m Prime Minister we’re going to have not just consumers represented on company boards, but workers as well.’ The comments prompted fears among some businesses that boards might be legally forced to include workers’ representatives, but it is understood the Government would rather urge firms to take employees and diversity more seriously, rather than bring in changes to the Companies Act. It is thought that firms could be encouraged to volunteer to appoint a non-executive to be in charge of corporate social responsibility issues.

The Department for Business, Energy & Industrial Strategy declined to comment.

Simon Walker, director-general of the Institute of Directors, said: ‘Directors must fully engage in this debate.’

The proposals are likely to come under the scrutiny of the Business Innovation and Skills Committee of MPs, which announced last week that it would be investigating company boards and executive pay.