Being a B Corp brings great advantages in terms of employee recruitment and retention as well as embedding a sense of purpose in your business and colleagues. But does it place your HR practices under greater scrutiny? How can employers embed purpose and ethics (and celebrate great cultures) without increasing legal risk?
As an employment lawyer and our firm’s B Corp lead, these questions often arise with the businesses I work with.
What Does It Mean to Be a B Corp Employer?
Becoming a B Corp means a business has gone through a rigorous process to meet standards set globally. It is the gold standard for ethical business and requires not just a ‘tick box’ exercise to accredit, but a change in legal constitution to balance people, planet and profit. It requires continual improvement but also gives access to a global network of businesses sharing the same passion.
The standards have changed recently but in both the original and updated versions, policies, practices and treatment of workers is scrutinised. In the new standards (applicable to most businesses from this year), all B Corps must comply with the requirements of the Fair Work Impact Topic which requires companies to offer good quality jobs and create positive workplace cultures. To do this, companies need to:
- set clear expectations of workers
- implement fair wage practices
- incorporate worker feedback in decision-making; and
- monitor and improve the culture in their workplaces.
What this means for compliance varies with the size of business, but the minimal requirements for all B Corps with workers include:
- clear employment contracts which comply with the national statutory requirements (in the UK set by the Employment Rights Act 1996),.
- The company tells workers how it sets their wage and what benefits they are entitled to.
- The company implements fair wage practices for its lowest-paid employees.
- The company pays employees a living wage or a collectively bargained wage or calculates its living wage gap, creates a closure plan and meets two additional criteria.
For all but Micro businesses there are additional requirements around shirt certainty and maintaining workplace culture. For further details see the Fair Work section of the updated B Corp guidance.
How Employment Practices Are Assessed Under B Corp Standards
In practice, what it means usually is that B Corps hold themselves to higher standards of ethical HR practices compared to other employers. They value strong employee engagement and satisfaction, so are very careful to make sure any HR changes land well and disputes are quickly and carefully managed. B Corps can be sensitive to legal challenges given that every three years they also must report to B Corp any claims or ongoing disputes including with employees. These form part of the risk assessment undertaken by B Corp to assess the ethical nature of those seeking to join or remain in the movement.
This sensitivity has been increased somewhat by a number of high profile B Corps falling from grace and having their B Corp status removed, due to significant worker complaints and cultural issues.
But does this mean that B Corps are not able to take action to manage their business and are held hostage by this fear? Not in my experience. Those that do this well tread carefully, listen to their workers and build strong cultures which are resilient to change and value what they have. This can sometimes mean also taking steps which can feel hard for colleagues, like removing a benefit, changing working patterns or making redundancies. The key to doing this well is early warning, transparency, seeking views, listening and treating people with respect and dignity, even if delivering difficult messages. If done well, this strengthens your culture – as people really see that culture or values in action.
A further challenge in very ethical businesses can be where employees can have unrealistic expectations or where colleagues start to take for granted the benefits or approach of their employer. My favourite example of that was an employee complaining they received a cream tea in the post during covid (including a pot of jam), when they had spent the weekend making their own jam! Again, communication is the key around this, and seeking to engage the staff in decision making and help them understand some of the commercial drivers and trade offs that can be necessary. For example, if everyone gets a sabbatical, who mans the phones and supports the customer? Or if money is spent on increased benefits, that this may impact salary increases if finances are tight. Having staff forums, works councils or employee ownership trustees or representatives can really help as colleagues then have a better opportunity to understand this and communicate it to others. And sometimes you have to call out when people are getting complacent – getting new starters to say how they see your culture with fresh eyes can really help on that.
Overall, the B Corp commitment places employers under a brighter spotlight, but it is one that offers real opportunity. When businesses ground their decisions in transparency, dialogue and respect, they can navigate even the most challenging HR issues without increasing legal risk. In fact, these moments often reinforce, rather than undermine, the values at the heart of the business. By holding themselves to high ethical standards and engaging their people honestly, B Corps can model what good work looks like – building cultures that are fair, resilient and genuinely purpose led. These aspects can also chime with Judges looking at cases, although of course compliance with legal requirements is also essential. Far from restricting employers, the B Corp framework provides a principled pathway for making commercially necessary decisions in a way that strengthens culture rather than eroding it.
You can find out more about the many ways Stephens Scown can help businesses and individuals and about all our goals for 2025/2026 in our latest impact assessment.