Clear direction - An executive overview of global labour law

Clear direction An executive overview of global labour law Section 1 The pressure is growing: the globalisation of labour relations 2 Section 2 A brief introduction to global labour standards 4 Section 3 The key trade union, employer and other bodies in global labour relations 6 Section 4 Global trade unions and international framework agreements 8 Section 5 Responding to pressures on global labour standards: dealing with corporate campaigns 10 Section 6 Responding to pressures on global labour standards: putting respect for human rights into practice 12 Section 7 Risk analysis: identifying gaps between national laws and global labour standards 14 Appendix 17 Contents Global labour law An executive overview 1 As one of the world’s leading law firms, Eversheds’ ability to deliver a high standard of integrated service across all jurisdictions has been tested and proven to work. Our distinctive culture has innovation and deep client relationships at its core. Eversheds’ employment team, the largest internationally with more than 220 employment lawyers, offers the best of both worlds in terms of lawyers who are committed locally but connected globally. That means an unrivalled combination of local knowledge with the specialists, resources and capability of a global business. We offer a guarantee of quality and consistency wherever you work with us as well as the benefit of centralised control over your legal budget. Global labour law Globalisation has resulted in some employers dealing with a variety of national and international trade unions, with different forums for employee representation, including works councils, and widely differing national labour laws and cultures. More recently, multi-national employers are coming under pressure to demonstrate compliance with ILO and other global labour standards, including in their supply chain. Our renowned labour law team has a strong track record in dealing with labour and employee relations nationally, across borders and globally. This includes working with An integrated approach to your global labour law challenges clients to manage relationships with national, European and global works councils, to negotiate with national and global trade unions, to pro-actively respond to ILO labour standards and to build positive employee relations. With our help, you can minimise risk and avoid disruption from damaging labour problems and disputes. Areas of expertise: – global labour relations strategy – international labour standards, including ILO standards and the UN Guiding Principles – corporate campaigns and protest – human rights policies and training – cross-border mass redundancies/lay-offs and restructuring – cross-border strikes and other industrial action – national, global and European works councils – global and transnational trade union agreements – negotiating with national and global trade union experts – collective bargaining agreements – claims for trade union recognition – establishing employee consultation groups – information and consultation structures. Philippe Despres +33 (0) 1 55 73 40 64 [email protected] Frank Achilles +49 89 545 65 215 [email protected] Contact For further information, please contact: Martin Warren +44 20 7919 4745 [email protected] Marc Meryon +44 20 7919 0900 [email protected] Thomas Player +44 29 2047 7574 [email protected] Global labour law An executive overview Section 1 2 Introduction Global labour relations and practices are under increasing scrutiny. In developed countries, the focus ranges from modern slavery and trafficking to allegations of precarious work and low pay. In addition, where companies operate in both the US and Europe, there is a growing tendency for trade unions to campaign against unfavourable differences in labour relations between the continents. In developing countries, allegations of sweatshop factories, dangerous working conditions and child labour have been made against a wide range of companies, particularly those reliant on foreign supply and value chains. The resulting impact to reputation, sales and employee morale can be hugely detrimental, reflecting an increased social awareness amongst customers, investors and other stakeholders who are quick to disassociate themselves from tainted brands. The number of employers who have stumbled in this area is growing fast as trade unions, NGOs, the EU, governments, regulators and international bodies such as the UN throw their weight behind an increased drive for minimum global labour practices and remedies for those affected. Businesses should be cautious about blaming the failure of governments to protect their own workers’ human rights as a reason not to act. In summary: the issues facing business The pressure is growing: the globalisation of labour relations Trafficking, slavery, child labour Unsafe working conditions Sweatshops and inequality Growing pressure on companies to respect human rights globally Responsibility goes beyond compliance with national laws Attention on human rights in global value chains A hot spot for global labour relations Operational challenges How to embed respect for human rights in practice: – getting the right policy in place – implementing due diligence – grievance mechanisms – tackling opaque supply chains – how will this be led and funded? Competitive environment A business-only issue or a sector issue? – Collaborate to drive up sector standards? – Go it alone – costs, risks? – A competitive advantage? Reputation Demands for corporate transparency: – customers, investors, employees, regulators, trade unions and NGOs expect companies to know and show that they respect human rights globally – risks to brand if get it wrong – adverse PR, boycotts, campaigns, share price fall, etc. Legal/HR This is more than CSR: – a growing body of global labour standards, national laws, free trade agreements, etc – cross-border litigation risks – trade union agreements, procurement terms, worker disputes and more. Key issues and risks: human rights and business Global labour law An executive overview Section 1 3 The issues – Key factors – Some countries have weak labour laws or a poor history of enforcement. In response, international bodies such as the UN have developed labour rights with the aim of creating global minimum human rights in the workplace. – These minimum human rights include upholding the right to associate (the right to join a trade union, participate in union activities and bargain collectively) and eliminating forced labour, child labour and discrimination. – The right to associate is interpreted by most trade unions to include neutrality in response to union organising, an interpretation rejected by some employers. – The UN Guiding Principles (UNGPs) on Business and Human Rights are the authoritative global standard; they provide a blueprint for companies to demonstrate respect for human rights and are reflected in the OECD, ISO26000, World Bank and Global Compact standards as well as being incorporated into country National Action Plans. – The UNGPs expect businesses to ‘know and show’ that they comply, which includes embedding a policy commitment to respect human rights and a due diligence process to identify, mitigate and remedy adverse impacts, including in the supply and value chain. – While the UNGPs are not legally binding, businesses are increasingly under pressure to comply. These pressures include reputational risk, including negative campaigning by trade unions and NGOs, legal risk, including the risk of litigation, complaints to the OECD and breaching procurement terms, financial risk, reflecting investor and customer sensitivities and operational risk, arising from labour disputes and disruption to supply chains. – Developing countries are lobbying to introduce a legally binding global treaty on business and human rights, while others groups want the right to sue a company where it is headquartered, for human rights abuses perpetrated in other countries. – Increasingly, many governments are requiring greater transparency from businesses when it comes to human rights, in particular, introducing new regulations requiring human rights disclosure as part of annual corporate governance reporting. – Global trade unions, sometimes in collaboration with charities and other NGOs, are actively targeting businesses they believe have weak points in their global labour practices. – Through such campaigns, some trade unions are seeking to agree International Framework Agreements (which typically commit businesses to observing global human rights standards for employees and contractors), to negotiate international recognition and bargaining rights and to build membership in new countries and employers. – Global trade unions prioritise freedom of association as a key human right. Some assert that trade union presence is a prerequisite to improving human rights in the workplace. Hitching both together in this way carries the risk that some non-unionised employers may be labelled as anti-human rights by trade unions. – Following the 2013 Bangladesh factory collapse, two global trade union federations, IndustriALL and Uni Global, responded by urging international brands sourcing from Bangladesh to sign an Accord on Building and Fire Safety. Over 170 brands have agreed to the Accord which requires annual funding of up to $500,000 per signatory and, importantly, has provision for legally enforceable, and potentially unlimited, penalties for non-compliance. – Concluding a legally enforceable agreement in this way reflects an ongoing intention by unions to push for legally binding commitments from businesses in relation to global labour standards. The rest of the guide will examine some of the issues raised in this introduction more closely, including the key global players making their presence felt in this area, the role of trade unions and IFAs, the nature and scope of the UNGPs and other global standards, as well as considering how businesses should respond in practice. Global labour law An executive overview Section 2 4 Why do global labour standards matter? As a general rule, employers look to national and state regulation in order to understand the rights of, and duties owed to, their workers in the countries where they operate. However, there are exceptions and employers are increasingly having to consider labour standards from other sources. This is particularly relevant for businesses operating in developing countries with weak labour laws or a poor history of enforcement. The UN, ILO and OECD have led the field in creating labour standards and formulating business guidance with global application. While they are not ordinarily legally enforceable against the employer, employers with global footprints and supply chains are coming under pressure from governments, regulators, shareholders, investors, customers, trade unions and NGOs to evidence the steps they are taking towards compliance – or risk adverse contractual, financial, reputational and operational consequences. Employers should note that some governments and the European Union are taking regulatory action to change the way businesses address human rights’ risks beyond their jurisdictions. For example, by means of corporate governance human right reporting requirements, free trade agreements terms and state procurement conditions and by legislation such as the Dodd-Frank Act, California Transparency in Supply Chains Act and Modern Slavery Bill. Key global labour standards: the role of ILO The International Labour Organisation (ILO) is recognised as the global competent body to set and deal with international labour standards. It has created a comprehensive range of work and social policy standards (called Conventions – legally binding, or Recommendations – non binding), ranging from maternity protection and equal pay to the treatment of seafarers, which its 185 member states are expected to implement domestically. However, reflecting concerns about the uneven implementation by countries of ILO’s standards, member states came together in 1998 to agree a core set of four fundamental labour standards which all states have an obligation to uphold, arising from the very fact of their membership. These fundamental standards are: freedom of association and the effective recognition of the right to collective bargaining, the elimination of forced or compulsory labour, the abolition of child labour and the elimination of discrimination in respect of employment. The fundamental ILO labour standards are the benchmarks against which the human rights impacts of business are assessed. As such, they form a key part of the UN Global Compact, the UN Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises. For further information on ILO, refer to section 3. For further information on ILO labour standards, the UN Global Compact, UN Guiding Principles and OECD Guidelines, please refer to the Appendix. A brief introduction to global labour standards Global labour law An executive overview Section 2 5 The factors driving employers to respond to global labour standards A range of positive and negative factors are currently influencing how businesses respond. These include: – a genuine desire to respect labour standards globally – ‘to do the right thing’ – reputational risk should labour abuses and concerns be publicised – the prospect of consumer boycotts resulting from such adverse publicity – CSR and governance pressure from investors, shareholders, regulators and Western governments – legal risks, including procurement terms incorporating compliance with UN and other labour standards – worker demands and disputes over low standards – a desire for a level playing field as offered by a legitimate global governance structure around labour standards – a way to regain some control over contractors’ and suppliers’ working practices – a concern to avoid complicity in labour abuses caused by contractors and suppliers – trade union ‘naming and shaming’ corporate campaigns that target specific employers or sectors with the aim of securing global agreements to uphold labour standards – the threat of another Bangladesh Rana Plaza type disaster, with attendant loss of life, happening somewhere else in the world and in another sector such as mining or food production. What are ILO LSs? – They set out basic principles and rights at work with universal, global application. They are either Conventions (legally binding international treaties) or Recommendations (non-binding guidelines). How are they created? – They are adopted by a UN tripartite working party (comprising governments, employers, employees). How are they used? – Member states’ national laws are expected to conform with ILO LSs. – Businesses are under pressure to adhere to them (IFAs, codes of conduct, procurement/finance/trade terms, etc). How are they enforced? – ILO supervision and complaints systems identify non-compliance in member states. Pressure is applied but there are no legally enforceable penalties. – Business non-compliance may result in contractual disputes or complaints taken to the ILO or other bodies. An overview of ILO labour standards (ILO LSs) Global labour law An executive overview Section 3 6 Global trade union players There are a number of different global trade union organisations and, to avoid confusion, the key players are listed below: – ITUC – International Trade Union Confederation. It has 308 national affiliates, such as the UK’s TUC, and claims to represent 175 million workers. It works closely with ETUC, a separate organisation, at the European level – GUFs – Global Union Federations. GUFs coordinate national and regional trade unions by sector. Five GUFs which are particularly active across the private sector are detailed in the table below. GUFs with a particular interest in the public sector include Public Services International and Education International – TUAC – The Trade Union Advisory Committee is an interface for trade unions with the OECD. It has consultative status with the OECD and its various committees. ITUC and the GUFs, in particular, have similar aims involving global campaigning and international cooperation between trade unions to increase worker power in multinationals. Recent mergers are helping them to gain a monopoly position as the global voice of trade unionism. The key trade union, employer and other bodies in global labour relations IndustriALL Uni Global ITF Global BWI IUF Represents 50 million workers across manufacturing. Represents 20 million workers in the service sector. The International Transport Workers’ Federation (ITF) represents 4.5 million transport workers. Represents 12 million building and wood workers. Represents 12 million workers in the food chain. It is active in the mining, energy and manufacturing sectors and was formed in June 2012 following a merger of 3 GUFs, including the International Metalworkers’ Federation. It is active in the following subsectors: cleaning, security, commerce, finance, gaming, graphical & packaging, post & logistics, temp & agency workers. It is active in the following transport subsectors: sea-going vessels, docks, civil aviation, railways, road transport, urban transport, fisheries and inland navigation. It is active in the construction, building materials and forestry sectors. It is active in the agriculture, tobacco, food and beverages, hotels, restaurants and catering services sectors. IndustriALL prioritises establishing, monitoring and improving global agreements (IFAs) with multi-national companies and has signed at least 40 such agreements. UNI has signed more than 43 global agreements (IFAs) with multinational companies to agree to workers’ rights standards for all of these companies’ workers in Africa, the Americas, Asia Pacific and Europe. ITF has been slow to embrace global agreements (IFAs), focussing instead on its Flag of Convenience campaign. However, it has joined forces with UNI to put pressure on a global logistics company to enter into an IFA. BWI has signed more than 18 global agreements (IFAs) with the aim of using them to assist affiliate unions in securing recognition and collective bargaining with multi-national employers. The IUF has concluded a small number of global agreements (IFAs) with multi-nationals and prioritises the extension of those agreements to other employers. www.industriallunion.org/ www.uniglobal union.org/ www.itfglobal.org/ www.bwint.org www.iuf.org 6 Key GUFs in the private sector Global labour law An executive overview Section 3 7 How are trade unions organising globally? Often ignored, the GUFs are bringing together national trade unions into a global representative body and are now playing a leading role in the reinvention of trade unions on the global stage. National trade unions and GUFs are increasingly: – collaborating or merging to mobilise resources globally – pressurising companies to agree global agreements – campaigning for union-friendly laws across borders – mounting corporate global campaigns, for example, around global labour standards and anti-union practices, often using social media to act quickly, cheaply and effectively – fighting against temporary and casual work, including the use of agency workers – fighting for access to workplaces and employer neutrality in response to union organising – actively growing membership in new countries, particularly developing countries – using the global labour standards as a lever against companies (eg bringing complaints under the OECD guidelines). Global employer organisations Since its creation in 1920, the International Organisation of Employers (IOE) has been representing the worldwide business community in international labour and social policy forums with the aim of ensuring that such policies promotes the viability of business. In meetings of the ILO, including its Governing Body and International Labour Conference, the IOE acts as the Secretariat to the Employers’ Group. The IOE has a membership of 150 national employer organisations from 143 countries across the world. In addition, there are other regional employer organisations, for example, Business Europe represents business interests in the EU. Also, BIAC (Business and Industry Advisory Committee) represents the business community in the OECD and USCIB (United States Council for International Business) officially represents the global interests of American business. Other global players NGOs, voluntary organisations and alliances between charities, trade unions and NGOs (sometimes including employers) are also active in this area, for example, the Ethical Trading Initiative, the Fair Labour Association, Worker Rights Consortium, Worldwide Responsible Accredited Production (WRAP) and many more. The International Labour Organisation The leading independent global player is the ILO, responsible for drawing up and overseeing international labour standards. It is the only ‘tripartite’ United Nations agency that brings together representatives of governments, employers and workers to jointly shape policies and programmes promoting ‘decent work for all’. Created in 1919, as part of the peace process following World War I, it believes in the importance of social justice in securing peace and the need for cooperation to obtain similarity of working conditions in countries competing for markets, given the world’s economic interdependence. The ILO accomplishes its work through three main bodies (The International Labour Conference, the Governing Body and the Office) which comprise of governments’, employers’ and workers’ representatives. International labour standards and the broad policies of the ILO are set by the International Labour Conference, which meets annually. International labour standards are backed by a supervisory system that helps to ensure that countries implement the conventions they ratify. The ILO regularly examines the application of standards in member states and points out areas where they could be better applied. A complaint may be filed against a member state for not complying with a ratified convention by another member state, a delegate to the International Labour Conference or the Governing Body in its own capacity. Upon receipt of a complaint, the Governing Body may form a Commission of Inquiry, consisting of three independent members, which is responsible for carrying out a full investigation of the complaint, ascertaining all the facts of the case and making recommendations on measures to be taken to address the problems raised by the complaint. There is a special procedure for complaints about violations of freedom of association. The ILO set up the Committee on Freedom of Association (CFA) and complaints may be brought against a member state by employers’ and workers’ organisations. If it finds that there has been a violation of freedom of association standards or principles, it issues a report through the Governing Body and makes recommendations on how the situation could be remedied. Governments are subsequently requested to report on the implementation of its recommendations. 7 Section 4 8 Global trade unions and international framework agreements Adding to the pressure: trade unions and global agreements (IFAs) As well as pressure from customers, Western governments, NGOs and others to address poor global labour practices, businesses are being targeted by GUFs to enter into global framework agreements, often known as IFAs. As a minimum, an IFA commits a company to respect workers’ rights based on the ILO standards, including the right for workers to organise and bargain in free trade unions. These rights to build local trade unions and their membership and to secure recognition and collective bargaining are key, in the view of the GUFs, to raising working conditions and pay, particularly in developing countries and supply chains. By tying trade union rights and working conditions together in this way, it can prove challenging for businesses to resist trade union organising without being seen to also resist moves to tackle poor working conditions. What is an IFA? An IFA is typically an agreement between a multinational company and one or more GUFs, on behalf of local country unions representing employees anywhere in the world. They are increasing in number and their scope is typically global, often extending to suppliers and contractors and is summarised in the table on the following page. Benefits and risks: why do businesses agree IFAs? Some companies agree to an IFA in response to trade union campaigning or complaints to the OECD. Others agree an IFA as part of their global labour strategy. In either case, companies have an expectation that an IFA might improve their reputation and risk management, provide a step towards compliance with the UN guiding principles (UNGP), while also improving labour relations and social dialogue. As a voluntary agreement, companies hope to control the IFA, not be controlled by it. However, IFAs can also result in costly administration (including monitoring and auditing), strains on supplier relationships, resistance from local management, pressure for neutrality in union organising campaigns, an increased risk of transnational union negotiation and bargaining and potential legal complications. In particular, the EU Commission is currently undertaking a study into whether to provide for legal mechanisms to support IFAs which could indirectly result in ‘legalising’ IFAs previously intended to be non-binding. 8 Global labour law An executive overview Section 4 9 Content Enforcement Common IFA clauses: – to observe international (eg ILO) standards including the right to: – form and join a trade union – bargain collectively – non-discrimination in employment – no child labour or forced labour – observe decent wage and working conditions – adhere to good environmental standards – support worker education and training – extend all commitments to contractors – permit trade unions to monitor compliance – commit to timely information and consultation with worker representatives. IFAs may also include: – an agreement for union access to the workplace, as well as neutrality in union organising campaigns – a commitment that any off-shoring must be the subject of prior discussion with employee representatives – guarantees of no compulsory redundancies – controls on the use of agency and temporary workers. – ordinarily, IFAs are voluntary agreements and there are no legal mechanisms or penalties for non-compliance – however, unions are increasingly seeking to make them binding by adding an international arbitration clause for disputes and breaches – the transformation of IFAs into legally enforceable agreements is a significant and serious change and employers should seek advice before taking this step – even non-binding IFAs can be indirectly enforced by global trade unions, for example, by mounting negative PR campaigns, localised industrial action and by bringing complaints under the international standards such as OECD. IFA content and enforcement Global labour law An executive overview 9 Global labour law An executive overview Section 5 10 Responding to pressures on global labour standards: dealing with corporate campaigns In a globalised world, labour relations have no national borders and multinationals face pressures, sometimes co-ordinated and aggressive, to evidence fair labour standards and respect for human rights across their global operations, including in their business relationships. What is a corporate campaign? Corporate campaigns are increasingly employed by trade unions and NGOs to systematically target companies to change their global labour practices, sometimes relabeling trade union rights as ‘human rights’ to grab stakeholder attention. For example, a campaign might be accompanied by a formal complaint to the OECD or ILO a well as demands that the company takes action in relation to any specific, local issues raised, such as changing the working conditions for a group of identified employees. Trade unions will also typically demand that the company enters into an international framework agreement (IFA), which contains commitments to adhere to ILO labour standards and neutrality in response to trade union organising (for more on IFAs, see section four). Corporate campaigns can present serious reputational and other challenges to companies and need to be taken seriously. Companies with a consumer brand or those undertaking public procurement are particularly at risk, due to sensitivities to adverse attention and publicity. A corporate campaign can include the systematic targeting of an employer’s customers, investors, suppliers and individual employees to maximise adverse reputational PR and build pressure on an employer to comply with the campaign’s demands. A corporate campaign may include: – direct action against a company and its employees, including demonstrations, flash mobs and the harassment of senior employees – direct action against suppliers, customers, shareholder, investors and other third parties, such as demonstrations at shareholder meetings – indirect action against the employer, including negative online and media campaigns – collaboration with other campaigners, for example, other trade unions and NGOs – calls for the intervention of civil authorities such as governments and regulators – employers on the receiving end of a corporate campaign need to recognise it as such and respond strategically to avoid being on the back foot. A range of tactics, both legal and non-legal, should be deployed to safeguard the employer’s interests and prevent unnecessary escalation and damage. Global labour law An executive overview Section 5 11 Corporate campaigns: deciding strategy and tactics Are there valid grounds for the campaign? – Evidence for/against? – Need for immediate action? – Legal/commercial risks? – Retain lawyers Premises (direct action) – Review security – Preserve access – Consider CCTV, fencing, police, divert traffic – Health and safety risks Options range from: – engage with the campaigners – agree location for any protests – agree resolution – collaborate for a joint solution. To: – seek arbitration or conciliation – litigate/threaten litigation – legal defence of formal complaints – counter campaign appealing to media and stakeholders. Protect the business Prevent immediate harm Propose resolution Reputation – Media briefings – Stakeholder engagement – Online/digital strategy Third parties (direct action) – Warn third parties – Briefings, communication, reputation management People – Employee engagement – Ensure key personnel are prepared (training needs?) Online/digital campaign – Implement counter online strategy – Be pro-active, not reactive – Be alert: combating defamation Global labour law An executive overview Section 6 12 Putting principles into practice: summary agenda for action Preparation – This is not a one-off: prepare for an ongoing commitment. – There are no off-the-shelf solutions: each business is different and so are its human rights challenges. – Avoid reinventing the wheel, if possible. There may be scope to share learning with other organisations. – Identify key support: top-level commitment is essential. – Appoint the right team and leader: the team may need to be cross-functional (CSR, Risk, HR, local management, health and safety and more). – Organise human rights training and education. Policy commitment – What does the company say publicly about its commitment to respect human rights? – Formulate a policy. Beware of making a commitment that is not implemented locally. – The UNGPs expect the policy or policies to apply across the company’s activities and to its business relationships (contractors, suppliers, etc). Embedding the policy – Disseminate the policy. Ensure workers and business partners understand the importance the company attaches to respect for human rights. With business partners, consider education, screening, inspections, incentives, leverage and potentially ending the relationship. Due diligence – assessing impacts – Identify and assess any negative impacts on human rights caused or contributed to by the business. This is not just a desktop exercise: the UNGPs emphasise the need to engage with those potentially affected. – Prioritise, for example, reflecting higher risk geographies, sectors and business partners, based on the severity and likelihood of risks to people, not the company. Integrate and take action – The company is expected to integrate human rights into its decision making, as opposed to it remaining a one-off due diligence, divorced from daily activities. – Take action: where the due diligence identifies actual or potential human rights problems caused by the company, it should stop or prevent them happening. Where it contributes to such problems, through business relationships, it should consider how best to cease or prevent its contribution. Track performance – Track how effective the company’s efforts are: be prepared to communicate this externally, such as through corporate governance reporting mechanisms. Remedying complaints – Put in place, or participate in, fair and transparent mechanisms to address human rights grievances early and to remedy them directly including hotlines, mediation and stakeholder meetings. Translating the ILO labour standards and UNGPs into practical steps for businesses can prove challenging. The issues involved straddle company departments, countries, cultures, jurisdictions and the value chain, with the result that even taking the first step can appear overwhelming, causing some companies to baulk. Our legal and HR experts can help, providing practical and strategic advice and consultancy services, such as training and advice on due diligence, policies and grievance mechanisms, negotiating with global trade unions, advising on corporate campaigns, providing local expertise on labour standards across the world and representing employers in the resolution of disputes. Responding to pressures on global labour standards: putting respect for human rights into practice Global labour law An executive overview Section 6 13 Policy commitment Embedding respect Communicating performance Integrating and acting on potential impacts Remediating actual impacts Operationallevel grievance mechanism Tracking performance Assessing impacts The core elements of the corporate responsibility to respect human rights: from the EU Commission’s human rights guidance. Putting principles into practice: challenges and obstacles It is generally recognised that implementing the UNGPs will encounter numerous barriers and businesses should prepare accordingly. Typical challenges include: – making the case for human rights in a way that is accessible and relevant to workers – securing the support of top level management – delays caused by working cross-functionally – getting commitment and ownership amongst those responsible for human rights – becoming overwhelmed by the size and complexity of the tasks – finding ways to conduct meaningful communication with stakeholders – addressing global supply chains, including how to deal with non-compliant contractors and suppliers – balancing transparency with risk, for example, a fear that disclosing steps taken to respect human rights will result in action by pressure groups – frustration at the time needed to gain traction and deliver results – putting in place assorted grievance mechanisms which are accessible, given that there is no ‘one-size-fits-all’ grievance solution. Research from the World Business Council for Sustainable Development (“Scaling up action on human rights”) provides analysis of some of the barriers encountered by its members when addressing human rights issues and identifies, amongst other actions, the need for companies to collaborate to address grey areas, to engage a critical friend, to link human rights to internal strategic priorities and to prioritise where necessary. Global labour law An executive overview Section 7 14 Risk analysis: identifying gaps between national laws and global labour standards We offer comprehensive global audit and compliance services, which are particularly relevant to companies conducting a risk analysis in the human rights and labour standards field. The summary of Chinese discrimination law below is just one example of a country comparison which can be replicated across different countries and labour topic areas, or tailored for a bespoke service: Snapshot risk rating: workplace discrimination in China While some anti-discrimination laws exist, enforcement/remedies are weak. However, high profile claims with adverse employer publicity are beginning to emerge. Medium risk Low risk High risk Who is protected? Job applicants and some workers. What are the protected characteristics? Race, ethnicity, gender, religion, migrant status, disability, carriers of infectious diseases (eg people with hepatitis B or HIV). What is unlawful discriminatory treatment? No discrimination in recruitment on the grounds of race, ethnicity, gender, religion, migrant status, disability or infectious disease (some exceptions apply). No discrimination during employment against women and the disabled. Employers must prevent and prohibit sexual harassment against female workers. Employer penalties? Small fines may apply. Claims for damages may be made under tort law. In summary, Chinese employment discrimination laws have improved, however, they do not meet ILO standards and there is evidence that some entrenched, cultural discriminatory practices remain. Global labour law An executive overview Section 7 15 Red flags: specific risks highlighted 1. Companies must hire disabled employees as directed by local regulations (approx. 1.5% of total headcount) or pay into a disabled fund (eg 1.6% of average payroll). 2. The retirement age for employees is 60 for men, 50 for women (or 55 for some). It can impact on cultural expectations and the treatment of older workers and women. 3. Employers are fined for illegally testing job applicants for hepatitis B (a common practice). China’s compliance with ILO Discrimination Convention 111 The ILO has identified the following potential areas of non-compliance: China has not expressly outlawed discrimination on the grounds of colour, national extraction, social origin or political opinion; it has not included a definition of discrimination in law; the differences in retirement age between men and women may be discriminatory; pregnancy and maternity discrimination is not sufficiently addressed; the enforcement of non-discrimination provisions may be inadequate. China does not outlaw age or sexual orientation discrimination. “The employment tender has really paid off. I am very impressed with Eversheds.” General Counsel, Rexel Northern Europe 16 Global labour law An executive overview Global labour law An executive overview Appendix 17 ILO Conventions are relevant to businesses because: – trade unions frequently ‘name and shame’ individual companies when taking complaints to the ILO – many IFAs, CSR codes and some procurement terms carry commitments to uphold ILO standards. However, because ILO standards are aimed at governments and often require further action and clarification in order to be given force at national level, such promises expose businesses to uncertainty and may even conflict with national laws in some countries – many countries have implemented the standards into national laws and are therefore legally binding – the UN Guiding Principles for Business and Human Rights cite the ILO Fundamental Principles as a benchmark against which to assess the human rights impacts of businesses. ILO conventions – ILO conventions are international treaties, aimed at governments, and create legally binding obligations in those countries which ratify them. Ratifying countries commit themselves to applying the convention in their national law. – With the adoption of the Declaration on Fundamental Principles and Rights at Work in 1998, ILO member states decided to uphold a set of core labour standards regardless of whether they had ratified the relevant conventions. Freedom of association and the right to collective bargaining sit alongside commitments to eliminate forced and child labour and to eliminate discrimination. – An ILO supervisory system monitors their implementation. – An extract from Articles 1 and 4 of Convention on the right to organise and collective bargaining is set out on the right: “Workers shall enjoy adequate protection against acts of anti-union discrimination in respect of their employment. Such protection shall apply more particularly in respect of acts calculated to: (a) make the employment of a worker subject to the condition that he shall not join a union or shall relinquish trade union membership; (b) cause the dismissal of or otherwise prejudice a worker by reason of union membership or because of participation in union activities outside working hours or, with the consent of the employer, within working hours. Measures appropriate to national conditions shall be taken, where necessary, to encourage and promote the full development and utilisation of machinery for voluntary negotiation between employers or employers’ organisations and workers’ organisations, with a view to the regulation of terms and conditions of employment by means of collective agreements.” The key global labour standards summarised: ILO, UN and OECD Appendix Global labour law An executive overview Appendix 18 UN Guiding Principles for Business and Human Rights (UNGPs) – In 2011, the UN endorsed a new set of global guiding principles for all businesses designed to ensure that companies do not infringe human rights in the course of the their transactions and that they provide redress when infringements occur. – The guiding principles (UNGPs) outline how states and businesses should implement the UN “Protect, Respect and Remedy” Framework in order to better manage business and human rights challenges. The Framework is based on three pillars: – the state duty to protect human rights – the corporate responsibility to respect human rights – the need for greater access to remedy for victims of business-related abuse. – The ‘Corporate Responsibility to Respect’ principles provide a blueprint for companies on how to know and show that they are respecting human rights. – The UNGPs expect businesses to avoid infringing the human rights of others through their own activities and to seek to prevent indirect infringements, for example, arising from suppliers and other business relationships. – The following extract from the UNGPs outlines some of the key actions a business is expected to take: “In order to meet their responsibility to respect human rights, business enterprises should have in place policies and processes appropriate to their size and circumstances, including: (a) a policy commitment to meet their responsibility to respect human rights (b) a human rights due-diligence process to identify, prevent, mitigate and account for how they address their impacts on human rights (c) Processes to enable the remediation of any adverse human rights impacts they cause or to which they contribute.” “In order to identify, prevent, mitigate and account for how they address their adverse human rights impacts, business enterprises should carry out human rights due diligence. The process should include assessing actual and potential human rights impacts, integrating and acting upon the findings, tracking responses, and communicating how impacts are addressed.” The UNGPs are relevant to businesses because: – the UNGPs are recognised as the authoritative framework against which business behaviour and human rights will be judged – the proactive due diligence (know and show) approach marks a major change and is practically challenging and more demanding – the UNGPs expect businesses to address human rights impacts in their supply chain and in other business relationships (such as with contractors) where there is a direct link to their activities, for example, using any leverage – governments in developed countries are actively promoting business compliance with the UNGPs, including incorporating a know and show approach in corporate governance reporting, issuing national guidance and legislation based on the UNGPs and the EU publishing detailed sector guidance on compliance. Global labour law An executive overview Appendix 19 The Compact is relevant to businesses because: – as the largest voluntary CSR type initiative in the world, companies benefit from access to practical tools, guidance, expertise and the sharing of best practice with other businesses to help them improve standards – disclosure is regarded as critical to the success of the Compact and failure by participating businesses to communicate results in a change in participant status and possible expulsion. The UN Global Compact – The UN Global Compact is an initiative for businesses that are committed to aligning their operations and strategies with ten principles in the areas of human rights, labour, environment and anti-corruption. – With over 8700 corporate participants, the Compact incorporates a transparency and accountability policy known as the Communication on Progress (COP). Participating companies are required to make an annual COP, as a commitment to transparency. – The human rights and labour principles are set out below: “Businesses should support and respect the protection of internationally proclaimed human rights and make sure that they are not complicit in human rights abuses.” “Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining; the elimination of all forms of forced and compulsory labour; the effective abolition of child labour; and the elimination of discrimination in respect of employment and occupation.” Global labour law An executive overview Section 1 20 OECD Guidelines for Multinational Enterprises (MNE) – The Guidelines are recommendations addressed by governments to multinational enterprises operating in their countries. They provide a global framework for responsible business conduct covering all areas of business ethics, including labour and human rights as well as responsible supply chain management (plus tax, competition, disclosure, anti-corruption and the environment). – While observance of the Guidelines by employers is voluntary and not legally enforceable, adhering governments are committed to promoting them. – The Human Rights Guidelines were updated in 2011 and their wording now reflects the UN Guiding Principles. The Employment and Industrial Relations Guidelines are comprehensive and cover the promotion of information, consultation and co-operation with worker representatives, facilities for employee representatives, respect for freedom of association and collective bargaining, as well as for employment rights including freedom from discrimination. The OECD Guidelines are relevant to businesses because: – despite their voluntary nature, NGOs and trade unions can bring a complaint against an employer under the Guidelines which would be subject to a non-judicial review procedure, the outcome of which can be published – an increasing number of OECD complaints are being made by trade unions against multi-nationals requiring companies to devote management time and legal resource to preparing their response – as a result, some companies prefer to settle complaints to avoid cost and reputational damage, sometimes agreeing to an IFA as part of the settlement. Global labour law An executive overview 21 Section 1 ©Eversheds LLP 2015 © Eversheds International 2015. All rights are reserved to their respective owners. Eversheds International is an international legal practice, the members of which are separate and distinct legal entities EHRG.1069 07/15 eversheds.com