Nestlé in society Creating Shared Value and meeting our commitments 2015

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Nestlé in society: Creating Shared Value Nutrition, health and wellness Rural development Water Environmental sustainability Human rights and compliance Our people G4-10, Employment G4-DMA, G4-LA1, Labor/management relations G4-DMA Labour relations Nestlé has built a culture based on the values of trust, mutual respect and dialogue. Our management and employees work daily to develop and maintain positive individual and collective relationships. We expect them to do so, as a core part of their job. We see good labour relations as imperative to our growth. As a large global business, we operate in a wide range of countries, each with their own laws, rules and culture. It can sometimes prove challenging when developing positive labour relations. It is inevitable that some disputes will occur. We proactively seek to prevent labour disputes through open dialogue, training and local and regional initiatives. For more information on labour relations and human rights, please also see Human rights and compliance. Our workforce We treat our people fairly and with respect, providing them with good labour conditions. Our Policy on Conditions of Work and Employment sets goals and minimum requirements for work arrangements and conditions in all the countries where we operate. It has been developed in line with the ILO Core Conventions, and the OECD Guidelines for Multinational Enterprises. Despite our best efforts, it is difficult to ensure that all of our people work under the same conditions. The challenges we face are varied, and include local disparities in employment legislation that differs from our preferred conditions and international standards. This can include a lack of local legislation on working conditions. Our Employee Relations Policy requires strict compliance with the law, but it also guides our actions where local legislation is more lenient or if there is no applicable law. Total workforce 2015 335 213 2014 339 456 2013 333 214 Does not include joint ventures. Headcount definition is following international accounting standards (IFRS). Total workforce by region (2015) EMENA 106 173 AMS 105 409 AOA 70 006 The Nestlé Employee Relations community We maintain a network of more than 60 professionals around the world, comprising our global Employee Relations (ER) community. The role of these experts has evolved significantly and they are now responsible for labour relations and the implementation of the Policy on Conditions of Work and Employment. They also champion the Nestlé Management and Leadership Principles and the Nestlé Corporate Business Principles, among other areas directly affecting employee trust and engagement. In March 2015, we held our first global ER training course, a pilot designed to reinforce the need to earn and maintain trust within Nestlé and with external organisations. The week-long course brought together 52 members of the ER community, including ER professionals, HR business partners and HR managers. Sessions covered the whole ER spectrum with keynotes from Nestlé executives, thought-provoking insights and new learnings from external global organisations. Presentations were made by representatives of the International Organisation of Employers, the International Union of Food Workers (IUF) and the United Nations High Commissioner for Human Rights. Training activities were held around conflict and crises management, and influencing and negotiation. The pilot was successful and very well received by participants. The course has become part of our core curricula, with the next one scheduled for 2016. Rate of new employee hires (%) Group 2013 2014 2015 Total rate of new employee hires 10.7 10.3 11.1 EMENA* n/a 29 29 AMS* n/a 44 43 AOA* n/a 27 29 Covers Nestlé employees registered in the HR system (approximately 84% of all employees). * Excludes temporary employees. New employee hires in 2015 by age and gender New hires* 60 965 Group Percentage 50 6 Women 40 Men 60 * Includes temporary employees. Nestlé in society – Creating Shared Value and meeting our commitments 2015 274
Nestlé in society: Creating Shared Value Nutrition, health and wellness Rural development Water Environmental sustainability Human rights and compliance Our people G4-10, Market presence G4-DMA, Employment G4-DMA, G4-LA1, G4-LA2, G4-LA4 Rate of employee turnover by region (%) Group 2013 2014 2015 Total rate of employee turnover 11.1 11.7 12.5 EMENA 8.3 10 11.2 AMS 13.5 14 14.2 AOA 11.1 10 11.6 Covers Nestlé employees registered in the HR system (approximately 84% of all employees). Working conditions Nestlé promotes the continuous improvement of our working conditions. It is our goal that no one working at Nestlé should be subject to differences in conditions as a result of their employment status. We have developed and introduced Working Conditions Action Plans with our markets. The plans support compliance with our Policy on Conditions of Work and Employment and, to date, 66% of our markets have fully implemented them. This calculation is based on 106 countries, with Nestlé in the United States counted as four separate entities (Nestlé USA, Nespresso, Nestlé Waters and Purina). By the end of 2016, we expect an implementation of more than 90%. While we favour permanent employees for core activities, we also use temporary employees to meet the short-term needs of the business. When we outsource work to service providers, our Policy on Conditions of Work and Employment and Supplier Code clearly set out the minimum standards relating to labour standards (such as working hours and wages) and the safety and health of employees, which we expect all of our service providers to meet. Limiting working time We monitor the working time of our employees according to local law, addressing issues as they arise. Since 2012, we are seeking to limit working time to a maximum of 60 hours a week across our operations including overtime. More than 85% of our markets have implemented the 60-hour weekly schedule (in 25 of those markets it is a legal requirement) and we use commonly occurring Group Audit findings to prioritise improvement projects and training. Minimum notice period Before making operational changes that could substantially affect our employees, we provide a period of notice outlining the proposed changes. While a minimum period and provisions for consultation and negotiation are specified in collective agreements in 28 countries, in others, it depends on local laws. On average, the period is 38 days. Total Rewards Policy As an Employer of Choice, Nestlé wishes to provide comprehensive and competitive employee rewards. Our global Total Rewards Policy outlines the employment package we provide for employees. It broadly covers: • Fixed pay; • Variable pay; • Employee benefits; • Personal growth and development; and • Work–life environment. The principles outlined in the policy provide the common framework within which individual markets can create competitive local programmes that meet business needs and comply with local legislation. The approach is designed to attract, retain and engage talented employees. To support our policy, line managers and HR professionals use an online Total Rewards Learning Centre when dealing with performance and rewards (including compensation and benefits). This was supplemented in 2015 by new Total Rewards training for HR business partners, enabling them to assist line managers more effectively on reward topics. In 2014, we launched a Total Rewards toolkit portal, designed to help local business operations ensure their rewards programme is competitive, compelling, cost effective and well understood. This on-demand solution is being reinforced in Europe, the Middle East and North Africa, where countries will be required to use the toolkit as a mandatory element in developing their annual People Plans. Delivering a living wage We recognise that in some countries, the legal minimum wage levels do not fulfil the basic needs of a worker. As stated in our policies, Nestlé commits to verify periodically that our lowest level of salaries (and benefits) comply with local laws and importantly that they are competitive, allowing employees to cover their needs according to local standards of living. Back in 2013, we started a programme with Business for Social Responsibility (BSR), to identify gaps in how the living wage is treated across our operations. It seeks to: • Establish and validate the living wage rates (gross per annum in local currency); • Identify all Nestlé regular and temporary employees (directly hired) with salaries below these rates; and • Establish appropriate action plans to adjust remuneration. The results of six pilots in 2013 demonstrated that some living wage gaps existed and we implemented corrective actions. For the wave 1 roll-out in 2014, 29 countries were covered. In 2015, we expanded the programme to 38 additional countries for the wave 2 roll-out across the countries where Nestlé operates. By the end of 2015, the company’s living wage analysis had been completed in a total of 73 countries (between the launch of the programme in 2013, and the wave 2 roll out in 2015). The five countries where some employees have been identified with remuneration below the established living wage rates during the 2015 roll-out exercise will have the employees’ remuneration adjusted by 1 April 2016. The roll-out will be completed in all countries where we operate by the end of 2016. Nestlé in society – Creating Shared Value and meeting our commitments 2015 275
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