The UK Government Action Plan for implementing the UN Guiding Principles on Business and Human Rights was launched in September 2013 and can be read in full here. Coupled with the obligations for quoted UK companies that were introduced recently and which require the inclusion of information on social, community and human rights issues in company reports for financial years ending on or after 30 September 2013,[1] it appears that the UK Government is acting to embed human rights further into the ethics of UK business culture and operations. However, the UK Government has also recently announced a review of the balance of competence between the UK and EU when it comes to fundamental rights (see consultation paper here), and so the question is whether the UK Government may yet seek to rebalance substantive rights protection and how, if at all, this might affect UK business.

The UK Government has called for any evidence that the impact of the Charter of Fundamental Rights of the European Union (the “Charter”) and the EU’s broader framework of fundamental rights[2] has been either advantageous or disadvantageous to individuals, business, the public sector or any other groups in the UK. Broadly put, the Charter is directly applicable in the UK but both the Charter and European Convention on Human Rights (“ECHR”) only bite on Member States when they are acting within the scope of EU law. The Human Rights Act 1998 (“HRA”) requires public authorities to act compatibly with a number of rights in the ECHR unless there is an Act of Parliament which obliges the authority to act otherwise. National courts must have regard to the case law of the European Court of Human Rights. There is also a broader swathe of international human rights obligations applicable to the UK, including a number of United Nations human rights treaties and International Labour Organisation conventions.

It is clear that rights extend to legal persons as well as individuals and so businesses can benefit from rights protection. In practice, this is most often manifested by businesses acting with a view to protecting their physical and intellectual property in reliance on Charter Article 16 (freedom to conduct a business) and Article 17 (right to property) and ECHR Article 1 of the First Protocol. The English courts have recognised that intellectual property, license rights (and even rights to energy credits yet to accrue[3]) might constitute possessions warranting protection and/or that a business’s freedom to trade goods and services might be inhibited by restrictions on the packaging or advertising of products[4]. However, property rights are not unqualified rights and so it is possible for Member States to justify interference with rights in view of the policy objectives pursued. So, investment in a brand can be overridden by advertising restrictions or packaging requirements where justified by public health policy objectives.

Interference with qualified rights must, however, be demonstrated to be proportionate in order to be justified (i.e. the measure selected should be appropriate and necessary in order to achieve the objectives legitimately pursued[5]). The considerations comprising the analysis of proportionality are as follows:

  1. whether the objective of the measure is sufficiently important to justify the limitation of a protected right;
  2. whether the measure is rationally connected to the objective;
  3. whether a less intrusive measure could have been used without unacceptably compromising the achievement of the objective; and
  4. whether, balancing the severity of the measure’s effects on the rights of the persons to whom it applies against the importance of the objective - to the extent that the measure will contribute to its achievement - the former outweighs the latter.[6]

However, references to adoption of the least intrusive measure and consideration of the impact on those affected by measures do not equate to an opportunity for businesses to force the executive to drop intrusive policies or even to adopt specific measures when implementing those policies. Some applicants have been successful in overturning executive decisions on proportionality grounds, but often the courts will give considerable weight to the judgment of the executive decision-maker in selecting the appropriate measure and find the intrusion on rights proportionate.

Businesses might conclude that ultimately they rarely attain substantive benefit from rights protection but nonetheless bear the burden and constraints of observing human rights responsibilities where appropriate. As noted above, the UK has imposed reporting requirements for listed companies and issued the Action Plan for all businesses in order to motivate compliance with human rights standards. The Action Plan sets out expectations rather than requirements and these expectations are that UK companies will:

  • comply with all applicable laws and respect internationally recognised human rights wherever they operate;
  • seek ways to honour the principles of internationally recognised human rights when faced with conflicting requirements;
  • treat as a legal compliance issue the risk of causing or contributing to gross human rights abuses;
  • adopt appropriate due diligence policies to identify, prevent and mitigate human rights risks, and commit to monitoring and evaluating implementation;
  • consult people who may potentially be affected at all stages of project design and implementation, in a manner that ensures free and informed participation;
  • emphasise the importance of behaviour in line with the UN Guiding Principles to supply chains in the UK and overseas, including through contractual arrangements;
  • adopt or participate in effective grievance mechanisms; and
  • be transparent about policies, activities and impacts, and report on human rights issues and risks as appropriate in annual reports.

This may not create any new obligations for businesses but the Action Plan does state that the Government will consider any negative human rights statement a company has received under the complaint mechanism of the OECD Guidelines for Multinational Enterprises when assessing a project for export credit - a potential stick with which to encourage compliance. The Action Plan also commits to a number of new actions, including:

  • reviewing the degree to which government contracting and purchasing of goods and services is executed with respect for human rights and making recommendations to ensure compliance with the UN Guiding Principles;
  • ensuring that agreements facilitating investment overseas by UK or EU companies incorporate the responsibility of businesses to respect human rights and do not undermine the host country’s ability to either meet its international human rights obligations or to impose the same environmental and social regulation on foreign investors as it does on domestic firms;
  • developing guidance to address the risks posed by exports of information and communications technology that are not subject to export control but which might have impacts on human rights, including freedom of expression, online; and
  • promoting new project activity on raising awareness and tackling the negative impacts of business activity, including on the human rights of groups like indigenous peoples, women, national or ethnic minorities, religious and linguistic minorities, children, persons with disabilities, and migrant workers and their families, by tasking our diplomatic missions in countries where these are concerns.

These actions have the potential to influence and shape the conduct of international trade if adopted with sufficient rigour by the UK Government. The Action Plan appears therefore to stand as a serious statement of intent by the UK Government to embed human rights culture in the business operations of UK companies operating at home and abroad. A doubt as to that intent might be raised by the parallel review of whether fundamental rights are being used by the EU to expand its competence does. However, that review may do no more than signal that the UK Government would prefer that it has the last word (or at least, the UK to courts have the last word) over the interpretation and application of rights in England and Wales and the circumstances in which rights trump policy objectives. We await the outcome of the review and its analysis of the evidence submitted by respondents on whether fundamental rights are advantageous or disadvantageous to individuals and business in the UK - and, if so, whether any action is required to redress that balance. We will provide an update in a future Public Law Group newsletter.