What does average number of employees mean in company accounts?
How is the average calculated?
Section 411 of the Companies Act 2006 sets the method. For each month of the financial year, count the people employed under a contract of service at any time in that month, whether for the whole month or not. Add the monthly counts together and divide by the number of months in the financial year.
Example (illustrative): a company employs 4 people for the first 6 months and 10 people for the last 6 months. The monthly counts add up to (4 x 6) + (10 x 6) = 84, and 84 divided by 12 gives an average of 7.
Three consequences:
- It is a headcount, not full-time equivalents. Two part-time staff count as two.
- Directors usually count if they have a contract of service with the company, which is why many one-person companies report 1.
- Contractors and agency workers do not count, because they are not employed under a contract of service with the company.
Who has to disclose it?
Every company. Section 411 requires the notes to the accounts to state the average number of persons employed in the financial year. Companies outside the small companies regime must also break the number down by category, such as production and administration, and disclose staff costs split into wages and salaries, social security costs and pension costs. Small companies, including micro-entities, only have to give the total.
Where do you find it in real accounts?
In the notes, usually under a heading such as "Employees" or "Average number of employees", and in micro-entity accounts often as a one-line note. In iXBRL filings it is tagged AverageNumberEmployeesDuringPeriod. It is a period figure, so it belongs to the duration context for the financial year rather than the balance sheet date, and some software tags it with a scale that has to be ignored, because a headcount is never fractional. Our iXBRL parsing guide covers these details.
What does our data show?
Most UK companies are tiny. Among active companies whose latest machine-readable accounts are dated 1 January 2024 or later, 88.5% state an employee number and the median is one. By band:
| Employees in latest accounts | Companies |
|---|---|
| None | 915,023 |
| 1 | 924,593 |
| 2 to 9 | 1,077,589 |
| 10 to 49 | 178,233 |
| 50 to 249 | 27,714 |
| 250 or more | 3,295 |
| Not stated | 408,900 |
The median is higher in labour-intensive industries: 3 in accommodation and food service and 2 in manufacturing, against 1 in construction. Large employers are under-represented here because many large groups file PDF accounts that are not machine-readable. Companies with more staff are also less likely to show negative net assets: 25.5% of companies with no employees do, against 9.8% of those with 50 to 249 (negative net assets study).
Why the figure matters
- Company size. Average employees is one of the three size tests, alongside turnover and balance sheet total. For financial years starting on or after 6 April 2025, a micro-entity has no more than 10 and a small company no more than 50. Our company size checker applies the tests.
- A sense of scale when turnover is not published, which is the case for most small companies.
- A cross-check. A company claiming a large workforce on its website but reporting 0 or 1 employees in its accounts may be using contractors, or may not be what it says.
To see the employee number from each of a company's past filings, search the company.
Sources
- Companies Act 2006, section 411: information about employee numbers and costs
- Companies Act 2006, section 382: companies qualifying as small
- Companies Act 2006, section 384A: companies qualifying as micro-entities
Check any UK company in seconds. Register details and the latest balance sheet figures for 5.6 million companies, free. Full financial history since 2008 as a one-off pack or through the API.
Search companies