Purpose In this study, we examine the relation between employee treatment and annual report readability, which is measured as a reading difficulty score. Design/methodology/approach We use regression analysis to explore the impact of employee treatment on annual report reading difficulty. Findings We find a significant negative relation between employee treatment and reading difficulty, which suggests that annual reports of firms with better employee treatment are easier to read and understand (i.e. more readable). Originality/value Our study contributes to a more thorough knowledge of annual report readability and our findings may be of relevance to accounting standard setters and investors.