Ensuring decent working conditions and fair employment for all employees is our primary target and an integral part of the company values and work on developing our social responsibility. We are committed to promoting decent work and fair employment conditions in our own operations and across our value chain.
Working conditions and employment
Decent and fair employment conditions
Our Code of Conduct forms the basis for respecting and promoting decent and fair working conditions at UPM. It is complemented by a more comprehensive global Human Resources Rules that defines in more detail the principles of working conditions, labor practices and decent work as described by the International Labor Organization (ILO) what UPM is committed to and what is expected of our employees. Wherever we operate, we comply with international, national and local laws and regulations, and respect international agreements concerning human and labour rights and freedom of association.
All UPM employees have the right to have written and understandable information specifying their terms of employment. UPM complies with legislation and respective collective bargaining agreements regarding all their regulations, including regulations concerning working hours. Overtime is voluntary and compensated to employees according to legislation and collective bargaining agreements. We take work/life balance seriously and strive to ensure that our workplace practices are developed so that where possible, attention can be paid to individual needs to combine work and family.
Active dialogue with labour unions
We conduct both formal and informal consultations with unions and actively promote employee participation and consultation, organised in accordance with international and national rules and regulations. To encourage an open, international dialogue, between corporate management and UPM employee representatives, UPM has a co-operative body, the UPM European Forum, which focuses on issues related to changes within the company and the business environment in general. The forum organises regular meetings for employee representatives from business units operating in Europe. To promote employee participation, consultation and dialogue between UPM Business Area and country management, and employee representatives and employees on national level, there are co-operative bodies in UPM countries, operating based on country-specific rules, regulations and UPM practices.
In the context of labour unions, freedom of association means that employees have the freedom to form/or join labour unions and to bargain collectively. We do not collect information or report on our employees’ union membership at a global level due to differences in national legislation in our various operational countries. The percentage of employees covered by collective agreement mechanisms was 61% in 2019.
We are committed to providing our employees with fair compensation and a salary required decent living. UPM observes minimum wages defined by legislation and collective agreements. Our commitment to fair compensation is stated in our Code of Conduct and further specified in our respective policies and rules on compensation and benefits.
UPM rewards and recognises high performance. Our approach to compensation consists of a base salary, benefits and incentives, which are determined by UPM’s global rules, local legislation, general agreements, local market practice, the level of the position and individual performance. Gender, age, ethnic origin and nationality have no role in defining salaries and wages.
Intangible recognition is also part of the total rewards portfolio. This means that UPM provides, for instance, a safe and healthy working environment, interesting and meaningful work and good leadership and career opportunities.
In 2019, we initiated a global process to review the base salaries of our employees against local living wage standards in all 47 of our countries. Based on the results, all of our employees’ base salaries are considered to be above the local living wage based on the selected standards.
We acknowledge that there are different local living wage standards and we will therefore continue developing our process in 2020 to include possible alternative standards.
UPM continuously reviews differences between male and female average salaries. The average male and female salaries do not differ a lot and there is variance in both directions, as assessed in UPM’s main countries of operations of salaried employees.
In addition to monitoring the gender pay, UPM regularly also analyses female representation in the workforce and career progress, as both these factors have an impact to the development of pay equality.
UK Gender Pay
In accordance with the UK Equality Act 2010, we publicly disclose our gender pay gap information concerning our operations in the UK. The gender pay gap is the difference in the average hourly wage of all men and women across a workforce. All public bodies with 250 or more employees are required to publish gender pay gap data on UK Government and company websites showing how large the pay gap is between their male and female employees. The gender pay gap is not the same as unequal pay, which is paying men and women differently for performing the same (or similar) work. Unequal pay has been unlawful in UK since 1970.
We want to recognize all our employees for their performance. All our employees belong to a unified annual Short-Term Incentive (STI) scheme covering group- and business-level targets as well as personal and team performance targets. The annual incentives paid in 2019 for the 2018 STI plan were EUR 61 million. For recognizing significant individual or team success, we have a separate Achievement Award system in place. This practice is designed to support UPM’s high performance culture and to recognise individuals and teams for outstanding contribution, significant achievements and exceptional performance.
In addition to the short-term incentive plan, we provide two long-term incentive plans. These include Performance Share Plan (PSP) for senior executives and a Deferred Bonus Plan (DBP) for other key employees. The annually launched plans cover approximately 400 employees.