Do freelancers/contractors count in workforce disclosures?

When small and medium-sized enterprises (SMEs) prepare workforce disclosures for the Corporate Sustainability Reporting Directive (CSRD) or the Voluntary Sustainability Reporting Standard for SMEs (VSME), one question comes up again and again: do freelancers and contractors count?

The short answer is: no, not in your core workforce disclosures. But you may choose to mention them separately.

What the standards say

Under the VSME Basic Module – Workforce: General characteristics (B8), SMEs must disclose the number of employees in headcount or full-time equivalents, broken down by contract type, gender, and country.

This means:

• ✅ Employees on your payroll are counted.
• ❌ Freelancers and independent contractors are not, because they are self-employed.
• ❌ Agency staff provided by a third party are not, because they belong to the agency’s workforce.

If you use the Comprehensive Module (C5), you may additionally disclose:

• the number of self-employed people working exclusively for you, and
• temporary workers provided by employment agencies.

This gives banks and clients a clearer view of your reliance on non-standard labour, but it’s optional.

Why the distinction matters

• Accuracy: Including freelancers in employee totals would overstate your workforce size.
• Comparability: Large clients and banks need consistent data across suppliers, which is why the standard separates “own workforce” from “workers in the value chain”.
• Transparency: If your business relies heavily on contractors, you can still mention this in narrative form to show your workforce model.

Practical guidance for SMEs

1. Count only employees on your payroll for B8 disclosures.
2. Exclude freelancers, consultants, and agency workers unless you are using the Comprehensive Module.
3. Be transparent if contractors are a big part of your model — add a note in plain language.
4. Stay consistent year-on-year. Don’t change your method unless you formally move from Basic to Comprehensive reporting.
5. Check requests from banks/clients — they may want to see contractor numbers even if the Basic Module doesn’t require it.

Example

A digital agency has:

• 12 employees on payroll (10 full-time, 2 part-time)
• 5 freelancers working on design projects
• 3 developers hired via an external agency

Basic Module disclosure (B8): Headcount = 12 employees (or ~11.5 FTE).

Optional Comprehensive Module (C5): 5 freelancers working exclusively for the company, and 3 agency workers.

This way, the report is both correct and transparent.

Key Terms

• Corporate Sustainability Reporting Directive (CSRD) — An EU law that requires large companies — and eventually some medium-sized ones — to report on their environmental and social impacts. Smaller suppliers are not directly in scope but may be asked for CSRD-style data by banks or bigger clients.
• Voluntary Sustainability Reporting Standard for SMEs (VSME) — A simplified framework designed to help SMEs share sustainability information. It is voluntary but can help SMEs respond to client or bank requests.
• Basic Module — The minimum set of sustainability disclosures under the VSME. It covers essential topics such as energy use, greenhouse gas emissions, waste, workforce data, and basic governance issues.
• Comprehensive Module — An extended version of the VSME reporting standard. It includes additional details on strategy, transition plans, and targets. Banks or large clients may request this level of detail.
• Employee (for CSRD/VSME purposes) — Someone under a contract of employment with the reporting undertaking.
• Freelancer/Contractor — A self-employed person working on a project or service basis; generally not included in workforce disclosures unless reported under the Comprehensive Module.
• Agency worker — Someone employed by a third-party staffing agency; not counted in the SME’s workforce headcount.