LABOUR AND BUSINESS IN THE GLOBAL MARKET
International Confederation of Free Trade Unions
Part
1 Codes of conduct: opportunities and challenges for trade unions
Part 2 Whose code?
Part 3 Trade unions
and codes :some principles
Part 4 Elements of a
code of labour practice
Part 5 The
meaning of implementation and monitoring
Part 6
Guidelines for implementation and monitoring
Part 7 A
sample implementation and monitoring agreement
Part 8 A way forward
Part 1. Codes of Conduct: opportunities and challenges for trade unions
Trade unions have long been concerned about the power of transnational corporations (TNCs) and were among the first to demand codes of conduct addressing the behaviour of TNCs. In the 1970’s trade unions joined the calls for a United Nations Code of Conduct for Transnational corporations. Through the ILO trade unions participated in the formulation and adoption of the Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy during this period and through the Trade Union Advisory Committee to the OECD (TUAC) influenced the development of the OECD’s Guidelines for Multinational Enterprises. For over twenty years trade unions have worked to make the ILO Declaration and the OECD Guidelines meaningful instruments.
International business resisted attempts to codify its responsibilities and throughout the 1980’s and 1990’s used its growing political influence to push for raw pro-market policies of liberalization, deregulation, privatisation and against trade unions. It was therefore surprising that, beginning in the early 1990’s, some companies adopted their own codes of conduct. These codes addressed the labour practices of subcontractors and suppliers of the respective companies and were meant to be applied regardless of the countries where these suppliers and subcontractors were located. This new development holds both opportunities and challenges for trade unions. This paper considers these opportunities and challenges and makes some recommendations on the approach trade unions should consider taking towards company codes of conduct.
These codes were almost always adopted in response to negative publicity concerning the working conditions under which the brand-name products of these companies were made. The adverse publicity generally involved allegations or evidence of exploitation and abuse of workers including the use of child labour, less than sustainable wages, unsafe working conditions, and harsh treatment such as the physical abuse of women workers. This negative publicity was often associated with campaigns by trade unions or by non-governmental organisations (NGOs) such as religious, human rights, development or consumer organisations.
Among the most important factors influencing the decision by companies to adopt and publicise codes of conduct covering labour practices is evidence that significant numbers of consumers do not want to buy products made by exploited and abused labour and the widely held belief by business that a company’s reputation and the image of its brand-name products are significant assets damaged by evidence of exploitative and abusive practices. Another factor is the growing amount of information available about working conditions in developing countries and the likelihood that this information will become increasingly available in the future.
Most of the companies adopting codes are involved in the marketing or the manufacture of brand-name clothing and footwear and organise production internationally through outsourcing to subcontractors and suppliers. Companies and industry associations in other labour-intensive industries, such as the toy industry, also adopted codes in response to negative publicity. The exploitation almost always involved workers employed formally or informally by subcontractors or suppliers mainly in developing countries, often with low rates of unionisation. Indeed, the situations in which exploitation led to negative publicity always involved environments where trade union rights were suppressed and where there were no secure and independent trade unions.
Yet, very few of these early codes of conduct included respect for trade union rights. Many of the U.S.-based companies that were the first to adopt codes were, in both principle and practice, opposed to trade unions. Both the demands of campaigning organisations, and the public relations responses of the companies, focused on manifest abuses and exploitation but rarely on the underlying causes including the suppression of trade unions. Indeed, many companies were outsourcing to countries where trade union rights as defined by the International Labour Organisation (ILO) were not fully observed in law or practice. Some NGOs campaigning against abuse and exploitation did not address the issue of the oppression of workers.
The experience is that independent and secure trade union are the most effective means of ending or of preventing the exploitation and abuse of workers. Codes of conduct are not as efficient as what workers can do for themselves when they are allowed to join free trade unions and to bargain collectively with their employer in the knowledge that their rights are secure and protected. The objectives of codes are best achieved when governments respect the trade union rights of workers. Self-promulgated codes that do not mention trade union rights give the impression that it is possible to protect workers’ interests without respecting their right to organise into independent trade unions. This impression is reinforced where codes merely pledge the company to respect national laws and practice.
Almost all of these codes were attempts to fend off bad publicity. Not surprisingly, trade unions were disappointed with both the content of the codes and by the failure of companies proclaiming their codes of conduct to follow them up. Getting companies to carry out actively the promises in a code (to implement the code) has been frustrating. This has led to demands that compliance with codes of conduct must be monitored to ensure that the code provisions are being respected. Monitoring compliance with codes of conduct is now the subject of an extensive debate that also holds many opportunities and challenges for trade unions.
Despite these disappointments, the codes of conduct adopted since the early 1990’s constituted a major breakthrough: they were a formal acknowledgement of responsibility by companies for the labour practices of sub-contractors and suppliers. This has been a long-sought objective of trade unions and the central issue in a number of disputes and campaigns beginning at least as early as 1980 with the IUF campaign over Coca Cola franchises. One moral argument for companies to adopt codes of conduct is that the pressure on governments to weaken or ignore labour standards is caused by international business activity. The organisation of business activity with its elaborate systems of outsourcing, alliances, joint ventures and franchising has made it easy for companies to absolve themselves from any responsibilities towards the people who do the work.
The interest and publicity surrounding codes of conduct covering labour practices may provide important opportunities for trade unions in their efforts to come to grips with globalisation. Codes of conduct covering labour practices are a means to promote awareness and acceptance of international labour standards as well as to raise the issue of the responsibility of business in a global economy. To the extent that codes are actually implemented, they can help end some of the worst forms of exploitation and abuse. At least as important, codes may be able to promote an environment where workers can join and create independent, secure trade unions. Of course, without the active involvement of trade unions these opportunities will not be realised. Where such codes are negotiated between trade unions and companies they could constitute the beginning of an international framework for industrial relations in a global economy.
The current interest in codes by some companies and by many NGOs also poses challenges for trade unions. The first challenge is whether trade unions should become involved with codes of conduct. Company policy with respect to labour practices, whether set forth as a code or not, would seem to be a central concern for trade unions. Yet most companies adopting codes have avoided involving trade unions and some trade unions have shown little interest in codes. Another challenge is the relationship of codes to collective bargaining. There is the danger that codes may be used as a substitute for collective bargaining or to discourage collective bargaining. The trade union role with respect to a code after it has been adopted also holds many challenges.
Companies, especially those producing consumer products dependent on a brand name, will continue to adopt codes regardless of whether there is trade union involvement. They want to protect their image. This is certainly true for the clothing and footwear sectors as well as in the sporting goods and toy industries. Whether codes of conduct will in the end be a positive development for workers and their trade unions will depend on what trade unions make of them.
This document seeks to provide guidance and make recommendations as to how trade union organisations can relate to codes of conduct covering labour practice. Part 2 addresses codes of conduct as negotiated agreements between trade unions and companies as well as other forms of codes and agreements. Part 3 considers other challenges for trade unions posed by codes including the relationship of codes to collective bargaining and the relationship between trade unions and the NGOs that are involved with codes.
Part 4 makes some recommendations concerning the content of a code of conduct and Part 5 contains a basic code developed by the ICFTU/ITS Working Party on Multinational Companies that trade unions can use as a benchmark in negotiating with companies or in working with NGOs that are campaigning for codes. Part 6 contains some definitions used in discussing the implementation and monitoring of a code of conduct and describes some developments in this area. Part 7 contains some guidelines concerning the implementation and monitoring of codes of conduct. Part 8 includes a sample agreement between trade union organisations and a company covering the implementation and monitoring of a code of conduct. Finally, Part 9 contains some general conclusions and suggests the need for further international trade union cooperation.
A code of conduct is a written statement of principles with respect to behaviour. There are many kinds of company codes of conduct. Companies have adopted codes of conduct that address issues such as the environment, consumer rights, product safety, and ethical business practices. It is where companies adopt codes of conduct that concern labour practice that trade unions are presented directly with a challenge that requires a response and which is the subject of this paper. As used here, the terms "codes of conduct" and "codes of labour practice" are interchangeable.
In the context of this document a code of conduct is a set of standards concerning labour practices that would apply to international business activity. These codes are adopted by companies that operate in more than one country or which outsource internationally and they are meant to apply to the companies’ suppliers and subcontractors regardless of the country in which they are operating. These codes occupy a vacuum created by the absence of an enforceable international regulatory framework covering labour practices. Trade unions have sought, and will continue to seek, regulation of corporate behaviour including the intergovernmental regulation of international business activity. As used here the term does not refer to those instruments of governmental or of intergovernmental organisations which concern labour practices and are sometimes called codes of conduct. Nor does it refer to the ILO’s Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy or to the OECD Guidelines for Multinational Enterprises.
Neither does the term "codes of conduct" refer to statements of personnel policy that companies or industry associations might adopt in a national or local context. Nor does it refer to any national or industry-wide agreements with employer organisations or agreements achieved through any form of tripartite cooperation and meant only to apply nationally. The international dimension is essential to this discussion and no guidance or recommendations with respect to what trade union organisations should seek in the context of their national industrial relations or political frameworks is offered.
In order to avoid confusion this paper does not distinguish between a code of conduct that might be adopted as an objective of a campaign and a code of conduct that is voluntarily adopted by a company. A few NGOs attempt to use other terms, such as "charter", to indicate that the set of principles is a campaign demand. It is, however, important to indicate the ownership of any code of conduct. Where a code is a campaign demand, the code belongs to the campaigning organisations. Where a code is unilaterally adopted by a company, it is the property of a company (and presumably company policy). Where a code is the result of a negotiated agreement, it is the property of all the parties to the agreement.
Although some companies have adopted codes following consultations with trade unions or NGOs, most of these codes, and indeed, almost all codes of conduct adopted so far, are unilaterally-adopted codes of conduct which are more often called voluntary codes of conduct. When a code is a result of an agreement between a company and other organisations it could be called a negotiated code of conduct, but only if the agreement confers rights to the parties to the agreement allowing them to make claims where the agreement is not observed.
The difference between voluntary or unilaterally-adopted codes and negotiated codes should not be confused with whether a code is a binding code or a non-binding code. Employers emphasize that the ILO’s Tripartite Declaration and the OECD’s Guidelines are voluntary and therefore impose no legal obligation on companies. Not every non-binding instrument is unilaterally adopted - it is possible to negotiate recommendations. Under certain specific circumstances a negotiated code could be legally binding. A company could make observance of its own code a legally enforceable obligation in contracts with suppliers and sub-contractors.
Employer policy with respect to labour practices ought to be negotiated with the workers concerned through collective bargaining involving secure and independent trade unions. The ICFTU/ITS Working Party on Multinational Companies has recommended that all codes of labour practice should be negotiated codes of conduct involving both the company and appropriate trade union organisations. For the purposes of this paper, the term "appropriate trade unions" means, among other things, bona fide trade unions that are controlled by their members.
Codes of conduct need not be, and in fact rarely are, complicated. Where a company is prepared to accept a code based on recognised labour standards then negotiating a good code could be relatively easy. Reaching agreement on how a company will live up to the promises in a code and to check that the promises are being kept is more difficult. The ICFTU/ITS Working Party on Multinational Companies also recommends that a separate agreement establishing an implementation plan should be negotiated between companies adopting codes and appropriate trade unions. (see Parts 7 and 8)
Although it should be obvious that codes of labour practice should be negotiated between companies and trade unions, there are in fact several problems. One is that the codes of conduct being considered here are meant to apply to business operations conducted internationally where there is no industrial relations framework to facilitate collective bargaining or mechanisms to ensure that agreements are enforced. Another is that these codes are meant to be extended to the subcontractors and suppliers of a company. The nominal employer may not be a party to the negotiations. Perhaps most importantly, these codes of conduct are meant to address exploitation and abuse that exists largely because there are no trade unions and trade union rights are not respected.
These problems in turn raise the question of whether in any situation there is an appropriate trade union organisation to negotiate codes of conduct. Past experience, although limited, has shown that there is. Both national trade unions and international trade union organisations have negotiated framework agreements with companies that applied to their international activities. These international trade union organisations, grouped by industry or economic sector, are the international trade secretariats (ITS).
In the context of international trade union work there are two kinds of framework agreements. The first is a written understanding between a transnational corporation TNC and an international trade union organisation (such as an ITS) covering any subject. An early example of a framework agreements is the 1988 agreement between the International Union of Food, Agricultural, Hotel, Restaurant, Catering, Tobacco and Allied Workers’ Associations (IUF) and France-based TNC Danone. This agreement set forth union company cooperation in four areas and that pledged the company and the IUF to implement trade union rights as defined by ILO Conventions Nos. 87, 98 and 135. Five subsequent implementation agreements based on the 1988 agreement have been signed. Of particular note is the 1994 agreement consisting of a joint charter guaranteeing full exercise of trade union rights throughout the entire operations of this global company. In June 1995 the IUF signed a similar agreement with the ACCOR hotel and catering chain on trade union rights that also applies throughout the global operations of this company.
See also an agreement between IFBWW and IKEA on Rights of Workers
Other examples of this kind of framework agreement could include certain kinds of agreements establishing information and consultation arrangements mandated by the European Works Council Directive. Where these agreements go beyond the legal requirements, such as by including worker representatives from countries where this EU Directive does not apply, such agreements could be considered framework agreements. It is expected that the structures established as a result of this Directive will result in more framework agreements on a variety of topics.
A second kind of framework agreement is an agreement, (including a collective agreement recognised in national law) between a trade union and a company, concerning labour practices of the company or of its suppliers and subcontractors in other countries. An example of this second kind of framework agreement is the 1995 agreement between the Clothing Manufacturers Association of the USA and the Amalgamated Clothing and Textile Workers Union (now UNITE) which contains labour standards that apply to all international outsourcing.
See also an agreement between the Italian trade unions and Artsana
It may be that few national trade union organisations will be in a position to negotiate agreements that apply to the international activity of a company. It is reasonable to expect that most framework agreements will be achieved by the ITS or through structures, such as international trade union company councils, created by an ITS for this purpose. For trade unions choosing this approach, such framework agreements between TNCs and ITS could be seen as the first building blocks in an international system of industrial relations. Some trade unionists will not share this view. They may support agreements made on behalf of workers in other countries where trade union rights are not respected but will nevertheless be reluctant to promote international collective bargaining. In any event, it is clear that the ITS in the industry is always an appropriate trade union organisation to negotiate agreements with companies over internationally applicable labour practices.
Although in most situations, framework agreements are clearly superior to unilaterally-adopted codes of conduct, the two are not mutually exclusive and could even be complementary. A company which has already adopted a code of conduct may negotiate implementation and monitoring arrangements with a trade union organisation or may negotiate improvements in the existing code.
Trade unions may decide not to negotiate framework agreements but, nevertheless, encourage companies to adopt codes. Similarly some trade union organisations that have been consulted or have participated in developing codes of labour practice covering international production have chosen not to sign an agreement with the company adopting a code. The reason is that the trade union did not want to appear to be giving a seal of approval to the company activities over which the trade union has no control.
The greater the number of contractors, sub-contractors and suppliers obliged to observe a code, or the greater the number of workplaces covered by a code (where the code’s scope of application is large) the greater the limitations on the nature, variety and detail of a code’s provisions (the code’s scope of content). In companies where the union density is relatively high and the extent of outsourcing relatively low, the possibilities of a variety of trade union demands, and hence the possibility of a code of conduct containing a broad scope of content, could exist.
In situations where the union density is relatively low or where outsourcing is extensive, it is unlikely that any trade union organisation would be able to achieve an agreement with a company that would resemble a collective bargaining agreement. It is more likely that a company might refuse to bargain with a trade union representing a small percentage of its workforce (or the workforce of its suppliers) and may choose to announce its own code -on behalf of the non-union workers. One of the most serious challenges for trade unions posed by codes is that the situations where a code of conduct could do the most good are often the situations where a code of conduct would be the most difficult to negotiate.
For this reason and others that will be considered in the next part, the ICFTU/ITS Working Party on Multinational Companies recommends that codes of labour practice, whether they are formally negotiated or not, should reflect all of the core standards of the International Labour Organisation including the right to organise (ILO Convention No. 87) and the right to bargain collectively (ILO Convention No. 98).
Part 3. Trade unions and codes: some principles
This part considers how codes of conduct can be part of a trade union strategy to respond to globalisation and it provides some general principles. In this context the crucial importance of using internationally-recognised labour standards is apparent. Also examined is whether codes can be applied in certain countries. Other trade union concerns, such as the possibility that codes of conduct can be used as a substitute for collective bargaining and the relationship of NGOs to codes of conduct, are considered. Finally, the challenges of implementing and monitoring of codes of labour practice are noted.
Codes of labour practice as one trade union response to globalisation
Codes of conduct are a means of addressing the negative social consequences of globalisation. These consequences assume greater importance owing to the failure of governments to co-operate to reduce the downward pressure on labour standards caused by international competition. For trade unionists the absence of a universal and comprehensive international framework for business activity including minimum social standards has been frustrating. Through public pressure, campaigns for codes seek to hold businesses accountable for labour practices in the absence of an enforceable international framework. Codes cannot substitute for national law but are a means of transcending national boundaries to mobilise pressure where it can be applied to help workers in difficulty. The international character of codes calls for international trade union co-operation.
Codes of conduct and campaigns for these codes complement the campaign for incorporating labour standards into trade and investment agreements. This is especially true where codes of conduct are based on internationally-recognised labour standards. Where business adopts standards that are similar to the social clause, it strengthens the case for acceptance by governments and where they do not, it strengthens the case for intergovernmental co-operation. Either way, codes of conduct can be the basis of campaigns that keep the issue of international labour standards before the public and governments. In addition, adherence to codes may lead to concern in the business community about the effects of unfair competition on the violation of workers’ rights. Trade union involvement with codes of conduct is a step towards developing global trade union/company relationships and an international system of industrial relations. The development of company Works Councils at the European level and other such consultative arrangements may provide a useful platform for promoting the adoption of codes and for trade union monitoring of code implementation.
Some codes refer to the need for companies to adhere to national law and practice. This can be a problem where such laws are inferior to international labour standards, particularly with regard to trade union rights. Indeed, since most of the acute problems of exploitation and abuse arise where workers are not free to organise and bargain, such provisions can undermine what should be one of the main objectives of codes, which is to enlarge the opportunities of workers to create or join unions.
This does not mean that codes of conduct should seek to set higher standards for international business activity. Companies should be expected to observe their own code and not just to apply it to their sub-contractors and suppliers. Sub-contractors and suppliers should observe minimum labour standards whether or not their business partners have adopted a code. Both the OECD Guidelines and the ILO Declaration clearly address this potential misunderstanding. Paragraph 7 of the Guidelines states that "The Guidelines are not aimed at introducing differences of treatment between multinational and domestic enterprises; wherever relevant they reflect good practice for all. Accordingly, multinational and domestic enterprises are subject to the same expectations in respect of their conduct wherever the Guidelines are relevant to both." Paragraph 11 of the Tripartite Declaration states "The principles laid down in this Declaration do not aim at introducing or maintaining inequalities of treatment between multinational enterprises and national enterprises. They reflect good practice for all. Multinational and national enterprises, wherever the principles of this Declaration are relevant to both, should be subject to the same expectations in respect of their conduct in general and their social practices in particular."
The point of reference for the provisions of codes should therefore be ILO standards supported by the relevant ILO jurisprudence. The role of the ILO as a source of good practice needs to be developed, using the principles contained in the Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy. Furthermore the ILO can be a means for securing trade union involvement in the negotiations and in the implementation of codes of conduct. Reference to international standards also avoids any danger of codes of conduct being attacked as protectionist and is the most solid basis for defining minimum global labour practices throughout a company or industry.
Codes of conduct are, in effect, a market response to the liability of social inequality in a global market. Companies that adopt them presumably do so out of concern to attract and retain customers, as well as out of a general sense of corporate social responsibility. By creating a tangible link between corporate labour practices and the market for the companies products, codes can improve the observance of international standards generally, if they are followed and not allowed to gather dust on the shelf.
Codes and globalisation - some principles
(i) Codes of labour practice are not a substitute for international inter-governmental cooperation - but they can be an element in a long-term strategy to achieve a comprehensive international framework for international business activity. Well-conducted campaigns for codes of conduct lead to increased public knowledge and acceptance of international labour standards, and put pressure on international business to respect basic standards of behaviour in the treatment of workers. Because most codes are brought about by pressure in consuming nations that result in applying standards in producing nations, they cannot by their nature overcome all the problems created by the lack of legal enforcement. Only multilaterally-negotiated agreements by governments can achieve the universal application of core labour standards.
(ii) Codes of labour practice must be based on international standards universally applied. Trade unions should promote the inclusion of core international labour standards defining human rights at the workplace in all codes of labour practice. Amongst these standards the ICFTU emphasises trade union rights because their observance is critically important to the participation of working women and men in actions that directly concern their livelihood and conditions of work and to the effective monitoring of codes by those they are intended to benefit. Codes of conduct should not pledge to observe national law and practice because in most relevant cases such law and practice falls short of ILO and other internationally recognised standards. Such references to national law and practice are often used to evade compliance with superior standards.
(iii) Codes of labour practice must reflect all core ILO labour standards. Core standards include the two key conventions on freedom of association (Convention No. 87 on Freedom of Association and Convention No. 98 on the Right to Organise and Collective Bargaining). They also include Convention No. 29 on Forced Labour, Convention No. 105 on the Abolition of Forced Labour, Convention No. 138 on the Minimum Age for Employment, Convention No. 100 on Equal Remuneration and Convention No. 111 on Discrimination in Employment and Occupation. When necessary, interpretation of the meaning of these standards should be based on ILO findings. Of course the core standards do not address some of the most common forms of exploitation and abuse which may have led to demands for a code of conduct in the first place. Therefore accepted international principles and standards covering wages, hours and working conditions including health and safety are also provided for in the ICFTU-ITS basic code of labour practice found in Part 5. This ICFTU-ITS code, which emphasises trade union rights, also references ILO Convention No. 135 which protects workers’ representatives.
If codes of labour practice are to be part of a trade union strategy on globalisation, then the application of codes of conduct in countries where non-democratic governments disregard the human rights of their subjects is a central question. Some trade unions have urged boycotts of trade and investment with countries, such as Burma. Indeed, it is difficult to imagine how any code of labour practice could be applied in that country, especially if the code includes respect for freedom of association, and the right to collective bargaining. It is also difficult to imagine how monitoring compliance with a code could be performed in the presence of extreme political repression.
An example of the significance of this problem is provided by the international toy industry which concentrates the majority of its production in China, a country that does not permit independent trade unions and does not observe in practice many other internationally-recognised labour standards. Because of its size and importance, this "China question" is an exceptionally difficult subject for companies considering codes of conduct.
It may be useful to recall that one of the earliest codes of conduct, the one adopted by the giant US-based clothing maker Levi-Strauss, is accompanied by "Guidelines for Country Selection." Among other provisions, these Guidelines provide that the company "will not initiate or renew contractual relationships in countries where there are pervasive violations of basic human rights." The company maintains that it observes its Guidelines and does not produce in China or Burma. It should be recalled that one of the earliest voluntary codes of conduct for companies, the Sullivan Code, sought to use the behaviour of international business to exert a positive influence in South Africa where the rights of workers were oppressed systematically under the apartheid regime.
Codes are meant to apply to companies, not governments. Some have argued that ILO standards address the behaviour of governments and it is difficult to transpose their obligations to the behaviour of private business. With respect to the core ILO Conventions this transposition does not seem to pose any real problem with the possible exception of the Conventions on freedom of association and on the right to collective bargaining (Conventions No. 87 and No. 98). Yet even with respect to these two Conventions, ILO jurisprudence and practice places at least an indirect obligation on employers. This is reflected in the conclusions of the tripartite ILO Committee on Freedom of Association and by the adoption of these conclusions by the tripartite ILO Governing Body.
Some companies maintain that they would be willing to include the right to organise and to bargain in their codes but that governments would prevent them from respecting these rights. Some of these companies have therefore proposed as an alternative language, respect of "the lawful exercise of freedom of association." Alternatively some trade unionists, borrowing language from the OECD Guidelines for Multinational Enterprises, have suggested that codes could require employers to adopt an "open and positive attitude towards independent worker representation". In the United States where the practice is for companies to actively campaign against trade unions in the run-up to union certification elections some trade unions have negotiated "neutrality agreements" in which companies pledge not to interfere in any way in the decision by workers to unionise. In any event it is clear that companies need not, and should not, collaborate in government repression. Companies can always recognise that freedom of association should be respected.
Another proposed solution to this problem has been made by the US-based NGO the Council on Economic Priorities (CEP). The CEP established an advisory body consisting of representatives of companies, trade unions and NGOs in order to develop auditable standards of labour practice. The first issue of these standards, referred to as SA 8000, provides, as one criterion for auditing compliance with the freedom of association, that "The company shall, in those situations in which the right to freedom of association and collective bargaining are restricted under law, facilitate parallel means of independent and free association and bargaining for all such personnel;" Of course care must be taken that employer-dominated organisations are not created.
The ability of companies to respect standards or to insist that standards be respected in countries that do not respect trade union rights remains to be seen. In the end the answer may well depend on whether effective monitoring arrangements can be introduced. The ICFTU-ITS basic code in Part 5 does not address the country selection problem directly. It does however require the company, prior to placing orders with subcontractors and suppliers, to assess whether the provisions of the code can be observed. This is, of course, a minimum recommendation and where it is possible to achieve an agreement on more definitive language - for instance pledging a company not to invest in or engage suppliers or subcontractors operating in countries that do not respect freedom of association and the right to bargain collectively, it should be taken. Trade unions may wish to consider incorporating criteria for country selection in negotiated implementation and monitoring agreements.
Codes of labour practice and collective bargaining
The relationship of codes to collective bargaining is one of the most controversial issues among trade unionists familiar with the subject. Some trade unionists view codes as another item on a list of potential subjects that might be collectively bargained, but other trade unionists see them as an infringement on established collective bargaining relationships. Some trade unionists dismiss codes as public relations statements or as a distraction from the proper bargaining role of trade unions while other trade unionists see codes of conduct as a precursor to collective bargaining, helping to establish an environment that will ultimately enable workers to form secure, independent unions capable of bargaining.
Despite these differences, all trade unionists certainly agree that Codes of labour practice are not a substitute for the functions of secure and independent trade unions and they are not a substitute for collective bargaining. The objectives of codes are best achieved when governments respect the trade union rights of workers. Standards, even when observed, cannot replace the representation function of trade unions at the workplace, nor do standards cover all of the legitimate concerns of workers. Codes of labour practice supplement action by workers themselves where their rights to join free and independent trade unions and to bargain collectively with their employer are secure and protected. Where codes of labour practice are not negotiated, they should emphasise issues that are more appropriate for collective bargaining, but contribute to the promotion of collective bargaining and help establish sound industrial relations practice.
Some trade unions and NGOs want to negotiate codes of labour practice reflecting the "special situation" or "unique circumstances" in their respective country or region. To the extent that this would mean settling for less than the minimum international standards it would defeat the value of a code of labour practice. Although it is reasonable to expect that the content of codes will vary from company to company and between industries, the basis for these differences should centre on the relevancy of the various international standards and established best practice. For instance, in some codes it may be especially appropriate to reflect certain health and safety standards.
Trade unions and Non-Governmental Organisations
Closely related to the questions of the relationship of codes to collective bargaining is the question of the role of NGOs in codes of conduct. NGOs have often been the leading organisations in campaigns for codes and they have brought the issues of exploitation and abuse in labour practices to the attention of the public in many countries. These NGOs have helped to establish links between economic development and human rights on one hand and the interests and concerns of consumers, most of whom must work for a living, on the other. Moreover, NGOs in countries where independent and secure trade unions are suppressed have sought to speak out on behalf of workers. In these situations, and others, trade unions have benefited from the close cooperation with NGOs such as Human Rights Watch and Amnesty International.
However, trade unions can benefit greatly and learn from the expertise of many NGOs in campaigning and raising consumer awareness as well as from the public credibility of many NGOs and their networks of contacts around the world.
There are a considerable number of NGOs working on codes of conduct at national and international levels and, in a number of cases, trade unions, including international trade union organisations, are formally or informally working with them. This cooperation needs to be based on a clear understanding of the different roles and competencies of trade unions and NGOs and differences in the interests of their respective constituencies.
The principal trade union concern with NGO involvement in codes of conduct is the potential for intrusion by non-trade union organisations into two of the most basic functions of trade unions, which are negotiating collective agreements and enforcing those agreements. Some companies have clearly sought to engage in dialogue with NGOs as a substitute for dealing with trade unions. And some NGOs appear willing to provide cover for companies in exchange for their support. It is not difficult to imagine how companies might play various NGOs off against each other in this respect. Some NGOs see themselves as "alternative workers’ representatives" and use codes to establish relationships with companies that want to avoid trade unions. In some countries there is a real danger of allowing codes and company-NGO relationships to discourage or prevent the development of genuine trade unions.
The different perceptions of trade unions and some NGOs are apparent in several issues in the debate over codes of conduct. An example of this is the informal sector. Some NGOs are concerned that compliance with codes may end established informal economic relationships. On the other hand, the experience of trade unions is that the basis for almost all protections afforded to workers under law requires the recognition of the formal employment relationship. Trade unions would view the formalising of informal employment arrangements as a positive step in economic development.
Trade unions and NGOs may also have a different approach to labour standards. For trade unions, these are minimum conditions that should always be observed. Trade unions would not want employers to use codes of conduct as maximum conditions. For trade unions, collective bargaining is the best means to go beyond minimum standards and should therefore always be encouraged. Some NGOs see codes as a process for introducing incremental improvements in the conditions of workers. They may, for instance, be prepared to settle for something less than a minimum standard in a code at first and change the terms of a code over time eventually producing a code that goes beyond minimum standards. This system of incremental improvements achieved through constantly-changing standards is sometimes called continuous improvement. This should not be confused with establishing procedures within fixed time limits that would allow a subcontractor the possibility to come into compliance with a minimum standard. But continuous improvement, that is "changing the goal posts" would be a poor substitute for collective bargaining and when combined with an ongoing relationship between a company and an NGO could interfere with the ability of workers to form their own independent trade unions.
NGOs should be encouraged to base campaigns for codes of labour practice on minimum international labour standards and to always include the right of workers to organise and to bargain collectively. Demands that are more appropriate to collective bargaining should be avoided and NGOs should not participate in arrangements with companies that have the effect of substituting for independent trade unions.
The challenge of implementing and monitoring codes
Campaigns for codes can be and have been used to bring pressure on companies that have a high profile, but a vulnerable public image, to gain public attention for exploitative practices and embarrass these companies into addressing a given situation. The problem is maintaining pressure when the publicity spotlight fades. This has led to the demand by both trade unions and NGOs seeking codes that codes must be actively and consistently implemented by companies and, most importantly, that they be monitored to ensure that they are actually being observed. Because codes are meaningless without monitoring, companies adopting codes always claim that they are being monitored. Companies adopting codes should not make claims concerning their code that are not based on a verified and accredited system of independent monitoring.
The challenge of monitoring codes may not be fully appreciated. Recently one US-based retailer estimated that it had production agreements with approximately 13,000 contractors who in turn had agreements with an average of five subcontractors each. This means that the implementation and monitoring of a code of conduct for this company would involve approximately 65,000 contractors and subcontractors - and even more workplaces. This would suggest that it would be more efficient and logical to organise monitoring through the manufacturers and not through the retailers and merchandisers that have adopted a code. However it is the retailers and merchandisers, some of which are "virtual" companies without any manufacturing facilities and with very few employees, that are in a position to enforce codes of conduct.
Part 4. Elements of a code of labour practice
The ICFTU was requested by trade union organisations, notably the International Textile, Garment and Leather Workers’ Federation (ITGLWF) to develop a "model code" that could be used by trade unions for guidance. The reason for these requests was that a number of companies and NGOs were promulgating codes which ignored trade union rights. Some also avoided other international standards.
Following extensive consultations and discussion the ICFTU/ITS Working Party on Multinational Companies agreed on a basic code of conduct that could be used by trade unions as a benchmark when considering codes of labour practice. This ICFTU-ITS basic code is a relatively short list of key principles meant to correct the deficiencies in various codes.
This basic code is meant to be accompanied by an agreement between the company and an appropriate trade union organisation, spelling out how the code will be implemented and monitored. Keeping the code separate has the advantages that come from clearly separating principles from their application. These advantages are readily apparent in negotiations and later when problems arise and there is need for interpretation. Furthermore, a concise code of conduct is easier to promote and to understand. It lends itself well to posting in workplaces and avoids the impression that the code is obtuse and contains "loopholes."
The basic code of labour practice is similar to the code prepared by the ICFTU, the ITGLWF and the International Federation of Commercial, Clerical, Professional and Technical Employees (FIET) and subsequently adopted by the Federation Internationale de Football Associations (FIFA). It is limited to labour standards and practices and does not include other important concerns such as the environment, consumer interests or responsible business practices with respect to illicit payments or fair competition. The challenge that codes present to trade unions is to ensure that those codes assume the unique competency of trade unions as the only legitimate representatives of workers.
The basic code goes beyond the core ILO standards which concern human rights. Because codes of labour practice are meant to prevent exploitation they cannot ignore the basic issues of wages, working hours and working conditions. Therefore this code includes provisions derived from ILO standards in these areas. Because one purpose of the ICFTU-ITS basic code is to promote trade union rights this code also reflects the intention of Convention No. 135, the Workers’ Representatives Convention.
The ICFTU-ITS code is intended for companies that directly employ people and that sub-contract work to subcontractors and suppliers in other countries. It can also be used by industry associations or employer organisations. Although the adoption of codes by industry associations may have several advantages including wider application and the possibility of some kind of industry sanction, there may be obstacles in this approach. Industry associations may be unable, or even legally prevented, from requiring member companies to adopt or to observe its code.
The ICFTU-ITS basic code has three parts: a preamble, the main body containing the provisions of the code and a closing section. The preamble establishes three principles: First, the company accepts responsibility for those who do its work, including workers involved in contracting and subcontracting agreements; Second, the company pledges to observe the core ILO labour standards and to ensure that workers are provided with fair wages and decent working conditions; and Third, the company pledges to make observance of the code a condition of any agreements that it makes with contractors and suppliers and requires them to extend this obligation to their subcontractors. The preamble also contains definitions of the terms used in the code.
The main body of this code is based on the same core ILO Conventions that constitute the standards which the ICFTU has advocated for a trade and labour standards provision in the World Trade Organisation. These include prohibitions against child labour, forced or bonded labour and discrimination. They also include freedom of association and the right to collective bargaining. This is followed by the basic labour conditions - wages, hours and working conditions (including health and safety) and their formulation in the code is also derived from ILO standards.
This section also addresses the issue of regular employment relationships. Increasingly employers avoid the obligations of the employer in an employment relationship by treating workers as "independent contractors" when in fact their situation is the same as that of regular employees. The ILO is in the process of developing an international standard on this subject.
The closing section provides the most important obligations contractors, subcontractors, suppliers and licensees must undertake in implementing the code, and pledges the company to enforce its code using a range of sanctions up to, and including, termination of any agreements. In order to ensure that the code is not used by contractors and suppliers to discourage collective bargaining, this part also states that the code establishes only minimum standards that must not be used as a ceiling or to discourage collective bargaining. Finally, this part also contains a reference as to how the meaning of the code will be interpreted.
Although the basic code in Part 5 does not mention it, it is recommended that copies of all codes that are to be posted in workplaces or otherwise made available to the workers concerned, should always contain information on how workers can report failures to comply with the code on a confidential basis. This kind of information would appear as the final section of a code and the reasons for the importance of including such a section are given in the sample implementation and monitoring agreement found in Part 8.
The debate over codes of conduct has shifted dramatically. The content of codes are not as controversial as they were only one year ago. Progress has been made in getting international business to acknowledge the existence and legitimacy of international labour standards and there is a recent and growing recognition by both companies and NGOs that codes of conduct on labour practices must reflect all of the core ILO international labour standards including respect for trade union rights. There is the growing recognition by companies that if codes are to be meaningful, they must be seen to be implemented and there must be a viable system of monitoring compliance. The most extensive debate now centres on how codes will be implemented and monitored.
Of course, most companies and industry associations that have adopted codes claim that they are both implemented and monitored. Given the difficulties that would be present in this endeavour, and the lack of transparency by companies concerning their implementation and monitoring programmes, there is little reason to take these claims seriously. However, a few companies are now actively exploring how to develop independent monitoring by commercial consultants. A number of NGOs are making serious efforts at working out practical systems of independent monitoring. Currently there are at least four instances where NGOs are addressing this issue in cooperation with trade unions and companies.
Part 6 examines some of the terms and concepts concerning implementation and monitoring and briefly describes some of the activities involving trade unions, NGOs and companies now taking place.
Implementation refers to the whole range of activities that could be taken by a company to give effect to its code of conduct. One means of determining whether a code is implemented is where within the company responsibility for the code rests. Too often codes of conduct have been public relations responses and their "implementation" has been left to the public relations department or an agency. The most important test is whether observance of the code becomes an enforceable and an enforced part of agreements with contractors, subcontractors, suppliers and licensees. Implementation programmes involve everything from important details such as ensuring that the code of conduct is posted in workplaces to such complicated jobs as establishing and operating monitoring programmes.
Implementation and monitoring are often confused. Monitoring, which means to watch or check, and in this context to watch or check that the terms of the code of conduct are being respected, is one aspect of implementing a code. Some companies claim that they monitor subcontractor/supplier compliance with their code of conduct though their quality control programmes. This is sometimes called internal monitoring and is contrasted with external monitoring which would be conducted by an organisation other than the company. Some companies have engaged professional accounting or quality control firms to perform audits that include labour practices. Where external monitoring is performed by an organisation not controlled by the company and the results of the monitoring process are not controlled by the company and the monitors do not report exclusively to the company, then this kind of external monitoring would be considered independent monitoring. In this sense, free trade union organisations monitoring compliance with a code of conduct would be performing independent monitoring.
Independent monitoring is the main issue surrounding voluntary codes of conduct. It is the basis by which consumers and workers can have a degree of confidence in a code of conduct. If codes are to have any meaning they must be implemented and if implementation is to have any meaning there must be independent monitoring. In order to succeed there must be a reason to trust the accuracy and impartiality of monitoring.
The experience with independent monitoring has been limited. At present there are only a few examples of independent monitoring programmes that have been established in conjunction with a code of conduct. These cases have involved locally-based NGOs and the monitoring has been on a small scale involving one factory or one subcontractor. There is little to suggest that the kind of arrangements used so far could be expanded to adequately cover the requirements of a large retailer or merchandiser. And there is nothing to suggest that independent monitoring programmes could be successful without the involvement of trade unions. Indeed, trade unions now monitor the IUF-Dannone agreement.
The issue of the trade union role in independent monitoring raises many of the same questions as the relationship of codes to collective bargaining. These questions will be addressed in Part 7.
In some sectors, such as clothing and footwear, the level of union organisation is low and outsourcing has resulted in elaborate chains of production involving many thousands of contractors and subcontractors engaged by companies that have adopted codes. Under these circumstances some trade unionists believe that it will not be possible for trade unions to monitor a code covering the suppliers of a single retailer or merchandiser and that another approach is required. One such approach is to develop a professional social auditing service, analogous to the accounting profession, for independent monitoring which then may be performed by either commercial or non-profit enterprises. Standards would have to be developed for this new profession.
Standards will be required for independent monitoring and there will have to be some way of certifying the quality of independent monitoring. NGOs actively working on the problem now use terms to distinguish some of the processes that would have to be involved. The first question in this way of thinking is how to transpose the provisions of a code of conduct into auditable standards that can then be used by independent monitors. This would be the criteria used to report on whether a certain provision of a code was being observed - in other words a checklist for inspectors.
Verification is comparable to what outside or external auditors do in the accounting profession. With respect to codes of conduct, verification could take place on two levels. First it would involve checking on the company’s system of internal monitoring. It could also mean checking on any locally-based independent monitors. Verification is then the process, that would involve yet-to-be-developed standards and procedures, for monitoring the monitors. Trade unions that do not chose to monitor a code directly may choose to verify either an internal or an external monitoring programme or, as the case may be, both kinds of monitoring programmes. Independent monitoring is the means by which both compliance with a code is verified and by which other monitoring systems are verified.
Accreditation is comparable to the process in the accounting profession by which auditors are certified for professional standards and conduct. With respect to codes of conduct covering labour practices, this process would involve yet-to-be-developed standards and procedures for training, competence and independence.
There are no mechanisms for accreditation of social auditors. Some companies have confused the issue of professional accreditation by over-extending the analogy with the accounting profession. These companies have engaged various commercial enterprises, including quality-control firms and accounting firms, to conduct external monitoring of their codes of labour practice. Both the companies engaging these firms, and the firms that they have engaged, may be confident that professional standards for social auditing exist or are achievable through their efforts alone. Should this claim be made at this time, it would be dubious. Standards for professional conduct in the monitoring of labour practices are more appropriately derived from the best practice of the Labour Inspectorate and trade union practice with respect to the enforcement of collective agreements. These are the institutions that serve as repositories of the fundamental expertise needed. If a social auditor profession is to be developed, then the International Labour Organisation and the international trade union movement would have an essential role to play in this development. Some have suggested that the ILO would be the most appropriate organisation to train and certify social auditors, whether the candidates would eventually work directly for companies, for commercial or non-profit social auditing firms, for NGOs or even for trade unions.
Certification is used by some NGOs to describe the process by which a recognised label, indicating that a product has been made or produced under conditions set out in a code of conduct, is allowed to be used. In this area there is experience through the activity of the social labelling (fair-trade marketing) organisations. These organisations are mainly concerned with the trading relationships between small producers in developing countries and consumers in developed countries. In addition to such issues as food security, the environment and sustainable and equitable development generally, labour practices are included in the concerns of these various groups which certify labels for various, mainly commodity, products. These organisations have relationships with trade union organisations in several countries and contacts with international trade union organisations have also been established.
The experience of the fair-trade marketing organisations and experience with environmental labels ("eco-labelling") should be taken into account when developing a social certifying labour practice. It should also be noted that social labelling has been considered by the European Union and was featured in the ILO Director General’s Report to the 1997 International Labour Conference.
Some trade unionists are reluctant to assume any responsibility for certification. In their view the role of trade unions is to monitor workplaces on behalf of workers and not on behalf of a company in order to provide it with a written certificate that the company is not abusing or exploiting workers.
Finally, monitoring requires standards of reporting. Here the principal issue is who receives the reports of the independent monitors. Problems in this area centre on questions of commercial confidentiality and on procedures that might be undertaken where a subcontractor or supplier fails to observe the code before any information can be made public. In the end the transparency of reports is essential to independent monitoring and certification. To continue with the accounting profession analogy, it is useful to recall that the reports of outside financial auditors are made public.
Implementation and monitoring: ongoing trade union - NGO - business co-operation
At present there are at least four instances where representatives of companies, NGOs and trade unions are attempting to reach agreement on how independent monitoring can be conducted:
In the United States a special Presidential task force, the White House Apparel Industry Partnership, was created in August 1996. Consisting of representatives from companies, NGOs and trade unions, the task force announced an agreement on 14 April 1997 in a ceremony held at the White House with President Clinton. The main elements of the agreement include a code of conduct, a pledge by the participating companies to develop a system of internal monitoring for their companies, a pledge by the participating companies to allow inspections by independent external monitors and a commitment to establish an association to monitor the agreement, to recruit other companies into the programme and to "ensure that the independent external monitors will be accountable."
Also in the United States the US-based NGO, the Council on Economic Priorities (CEP) has established an Standards and Accreditation Agency Advisory Board for the purpose of "developing a single international standard for labour and human rights" together with a process to assist companies to demonstrate compliance with that standard. The Advisory Board, consists mostly of representatives from corporations and NGOs but also includes several trade union representatives.
In the United Kingdom the Ethical Trading Initiative (ETI) is a partnership initiative involving NGOs companies, trade unions, and government to establish a common framework within which companies can monitor labour standards in their suppliers. The long term goal of the ETI is to establish "a framework of principles, institutions and processes within which companies and other organisations …can work together to implement codes of conduct…" ETI is meant to serve as a forum for the various kinds of organisations and as a means of conducting pilot studies in monitoring involving NGOs and companies. The ETI is receiving both support from the British government’s Department for International Development and cooperation from its Department of Trade and Industry.
In the Netherlands a working group called the Fair Trade Charter on Clothing consisting of NGOs grouped in the Clean Clothes Campaign, the Dutch development NGO NOVIB, together with the FNV and two FNV affiliates, are continuing discussions with three industry associations representing producers and retailers. The objective is to establish a foundation jointly controlled by trade unions, NGOs and business that would oversee the implementation and monitoring of a code of conduct for the manufacture of clothing.
As the discussion in Part 6 makes clear, the implementation of codes of labour practice is a complex subject. It is also a new subject - one that is constantly changing. These guidelines are offered in this context. They will undoubtedly evolve.
As already noted, the issue concerning the relationship of trade unions to implementation and monitoring is as controversial among trade unionists familiar with the subject as the relationship of codes is to collective bargaining. Some trade unionists believe that only trade unions should monitor codes of labour practice. Other trade unionists believe that trade unions have roles that may conflict with this work. The first view is based on the perception that codes of labour practice are at least analogous to collective agreements and mean that the traditional trade union role of policing collective agreements cannot be abandoned. The second view is based on the perception that codes of labour practice are more analogous to basic labour law and that the monitoring of codes is more analogous to the role of the national labour inspectorate. Trade unionists holding this second view do not object in principle to the involvement of non-trade union organisations in monitoring codes or to the development of a professional social auditing service.
The guidelines in this section recommend the direct monitoring of codes by trade union organisations and, under specified circumstances, the monitoring of codes by others provided that an international trade union organisation is involved in the accreditation of the monitors and the verification of the monitoring.
There are potential difficulties associated with the role of national trade union organisations in the monitoring process that should be noted however. The kind of codes being considered here are meant to be applied universally, that is, in more than one country. Where there are secure and independent trade unions representing workers covered by a code in more than one country it would seem preferable that they co-ordinate their negotiations with the company adopting the code through the appropriate ITS. In some cases, a national union attempting to monitor the working conditions of non-union employees in another country may be perceived as not representing the interests of the workers in the host country. Here again, it would seem that this potential problem could be avoided through a central role for the ITS in negotiating the monitoring arrangements. In the end trade unions will only be able to assume the responsibility where they are able to reach an agreement with the company and where they find the code feasible to monitor.
This is not to suggest that national unions should not be involved in monitoring. One of the best examples to date of successful monitoring of a code of conduct involved a code negotiated and monitored by a national trade union on behalf of workers in another country. This agreement, known as the 14 point programme was reached by German companies with the German metalworkers union I.G. Metall. The resulting code, concerning the labour practices of these companies in South Africa under apartheid, was monitored by the German union in conjunction with the then illegal trade unions representing black workers in South Africa.
A. Guidelines for implementation
(i) Codes of conduct must be implemented. Responsibility for codes of conduct should not be left with the public relations department (or agency) of the company that adopts a code but should be incorporated into the overall philosophy of the company, and responsibility for implementing the code placed in the appropriate part of the organisation and assigned at each workplace. Observance of the code must be made an enforceable, and enforced, part of any agreement the company enters into when outsourcing. Companies must take the ability of subcontractors and suppliers to observe the terms of their code into account when selecting subcontractors and suppliers.
(ii) Codes of conduct must apply to the company that adopts the code and be applied to all of its principal contractors, subcontractors, suppliers and licensees. codes of conduct are pledges by companies to assume responsibility for the social consequences of their business activities. This responsibility cannot be assumed if companies do not also include the labour practices of the principal suppliers, contractors, subcontractors and licensees of a company that has adopted a code.
(iii) Codes of conduct should apply to all members of an industry association that has adopted a code of conduct. Industry associations that promulgate codes of conduct must make observance of their code a condition of affiliation unless they are legally prevented from doing so. In these cases industry associations should take positive and public steps to encourage member companies to adopt and implement the code of conduct. Appropriate trade union organisations should approach all member companies of an industry association promulgating a code of conduct with a view to getting these companies to adopt and implement the code of conduct.
(iv) The implementation of codes must involve the workers concerned. At a minimum, workers must be informed of the terms of any code of conduct applying to them in a language that they can understand and must be provided with a secure and confidential means of reporting violations of the code. Workers should not be disciplined, dismissed or discriminated against for providing information concerning the observance of a code of conduct.
(v) The implementation of codes of conduct should be governed by an agreement with an appropriate trade union organisation.
(i) Codes of Conduct must be independently monitored. Companies implementing codes should, as part of their normal conduct of business, monitor all workplaces where work is performed on behalf of the company. Companies may choose to supplement this internal monitoring process with an external process involving the use of other organisations including commercial enterprises. However, if the code is to be credible, companies must also arrange for the monitoring of workplaces by inspectors not controlled by the company. Both company-controlled internal and external monitoring must, at a minimum, be subject to the verification of independent monitoring.
(ii) Companies adopting Codes of Conduct should not make claims concerning their code that are not based on an verified and accredited system of independent monitoring. Trade union organisations should not endorse, certify or promote codes or claims regarding the successful application of codes where there is no system of independent monitoring.
(iii) Trade unions must have a central role in the independent monitoring of codes of conduct. The ICFTU believes that the concerned workers themselves through their own secure trade unions are always the most effective means of monitoring labour practices. In cases where there is no secure and independent trade union representing the workers concerned, the ICFTU recommends that independent monitoring be based on negotiated agreements with appropriate trade union organisations.
(iv) Arrangements for independent monitoring of a code of conduct may be negotiated with and, as the case may be, conducted by either national trade unions or by appropriate international trade union organisations. These negotiations and responsibilities could be undertaken by a national trade union representing employees in the home country of a company or otherwise representing a significant portion of its workforce or by the industry or professional international trade union organisation (ITS) covering the sector or company concerned. (A list of all ITS may be found in the appendix).
(v) Trade unions must have a role in the verification and accreditation of independent monitoring. The ICFTU also recognises that trade unions need not assume direct responsibility for conducting independent monitoring of a company’s codes of labour practice. However, appropriate trade union organisations must be involved at the decision making level where systems of independent monitoring are established and accredited. Trade union organisations should, together with business and other organisations, always jointly control any foundations, institutions or agencies established for the purpose of conducting independent monitoring or verification of codes of labour practice.
Codes could be monitored by natural or legal persons contracted by the company concerned provided that the selection and continuing relationship of these persons is subject to the approval of an appropriate trade union organisation. Codes could also be monitored through an institution established and controlled by various companies, appropriate trade union organisations and, as the case may be, other organisations. In these examples, the details of the monitoring arrangements would require the agreement of an appropriate trade union organisation.
(vi) Trade union involvement in the monitoring process does not obligate trade unions to be involved in any certification process. The decision to link independent monitoring with certification of a company or its products must be the subject of a separate agreement and distinguished from the link between a code of labour practice and a programme to independently monitor that code of labour practice.
(vii) Monitoring arrangements must promote and not inhibit the ability of workers to exercise their freedom of association and to create or join trade unions. In cases where monitoring is conducted by non-trade union organisations, guidelines to protect the workers in developing a relationship with their employer through a trade union of their own choosing must be developed and applied.
(viii) Independent monitoring should be based on sound principles drawn from the best practice of trade unions and of the Labour Inspectorate. In the end, the principal means of independent monitoring must be through unannounced visits by trained and authorised inspectors to workplaces where work covered by the code is performed. Criteria based on the provisions of the code must be developed for use by inspectors. Personnel records including records of employees, time worked and pay records must be provided to authorised inspectors and these inspectors must be allowed to interview workers on a confidential basis. Inspections must occur with an adequate amount of frequency and substantiated reports of non compliance with the code must be followed up.
The company or companies involved should therefore provide lists of the names and addresses of their subsidiaries, contractors, sub-contractors, suppliers and franchisees as well as permit access to premises to the trade union organisation, to the approved inspectors or as the case may be to the monitoring agency. Inspection reports should be made available to the participating trade union organisations and, ultimately, the results of the monitoring process must be made public.
(ix) The cost of independent monitoring should be borne by the companies concerned. The adoption and implementation of codes of conduct are an acknowledgement of the social responsibilities of international business that also confers benefits on the company. Companies should not attempt to reap the public relations benefits of a code of conduct which they are unwilling to implement or monitor. Companies should not make monitoring contingent on support from governments or charities. Companies may support monitoring directly or indirectly through a foundation or other institution established for the purpose of assisting companies to implement, monitor or verify and accredit monitoring systems.
(x) The negative consequences to workers must be taken into account. If the implementation of a Code of labour practice has negative effects on individual workers such as displacing child workers or displacing workers in the informal sector with other workers formally employed, programmes must be put in place to compensate or assist the transition of the workers concerned. The means should include compensation by the employer or user enterprise and where appropriate, technical assistance provided through the ILO or on an accredited basis.
(xi) The provisions of the code and the arrangements for its implementation and monitoring should be kept separate. Principles must be distinguished from the application of principles. Where there is a need to interpret the meaning of a provision of a code in any situation, and the code is based on ILO standards, than ILO jurisprudence can be used.
Trade union organisations negotiating codes of conduct with companies or industry associations should negotiate a separate agreement concerning how the code of conduct will be implemented and how it will be monitored. A principle purpose of the agreement should be to establish the relationship between the company and an appropriate trade union organisation. If other organisations such as NGOs are to be involved, then the agreement should establish the relationship between the company, the trade union and these organisations. The agreement should specify the means by which a code will be independently monitored: in particular whether the monitoring will be undertaken by the trade union organisations, by trade union organisations with the assistance of NGOs, by an independent institution established for the purpose or by other accredited and approved professional monitors.
Part 7. A sample implementation and monitoring agreement
The following is a sample agreement between a company and trade union organisation(s) concerning the implementation and monitoring of a code of conduct. This sample is based on a draft document prepared by the ICFTU, ITGLWF and FIET for negotiations. This specific agreement has yet to be adopted. This sample agreement is not meant to be viewed as a policy recommendation but only to show what such an agreement might look like.
The first part of the sample agreement concerns the overall implementation of the code. This part contains three sections. The first section concerns the general obligations of the company to implement the code and to apply it to its own operations. The second section concerns the obligations of the subcontractors, suppliers and licensees of the company. The third section concerns the procedures by which a company would terminate relationships with subcontractors, suppliers and licensees for failure to observe the terms of the code.
The second part of the sample agreement is devoted to independent monitoring. This sample agreement shows how a trade union organisation may elect to permit monitoring by accredited individuals and/or representatives of organisations engaged for this purpose. This agreement also enables the trade union organisation to directly conduct independent monitoring of compliance with the code. This could be the principal means of monitoring or it could be for the purpose of verifying other monitoring. The third part concerns obligations that the agreement places on the parties to the agreement other than the company. These obligations would include respect for commercial confidentiality. The fourth part includes definitions, follow-up arrangements and a means for resolving disputes over the meaning of the code and of the implementation and monitoring agreement. Finally, language for an optional child labour programme is also provided.
This sample agreement may involve one or more trade union organisations and, if appropriate, NGOs. The names of these organisations would replace the phrase "(the other parties to this agreement)". This sample provides for clauses in an agreement involving NGOs for trade union organisations to have an exclusive role. Where the exclusive agreement of the trade union organisations is required, the phrase "(the trade union parties to this agreement)" is used.
This is a sample agreement which should be tailored to fit the company or industry concerned. For instance, terms such as contractor, sub-contractor, supplier, licensee and franchise-holder may be replaced by other terms.
The sample agreement is as follows:
Preamble
The parties to this memorandum agree that to be effective, the (name of this code of conduct of labour practice) must be accompanied by arrangements for its implementation including procedures for independent monitoring to ensure that its provisions are being observed. The purpose of this memorandum is to set out how the (name of this code of labour practice), herewith referred to as "the Code", will be implemented and monitored.
I. Implementation
A. General obligations of (name of company) to implement the Code
(name of company) agrees to take positive actions to implement the Code and to incorporate the Code all of its operations and to make the Code integral part of its overall philosophy and general policy.
(name of company) will fix responsibility for all matters pertaining to the Code within its organisation and inform the (other parties to this agreement) where this responsibility is fixed.
The (Board of Directors or other governing body) of (name of company) shall periodically review the operation of the Code and shall receive reports on the independent monitoring of the observance of the code and a report on its the operation shall be included in the annual report of the company.
(name of company) will make observance of the Code a condition of all agreements that it enters into with contractors, principal suppliers and licensees (or franchise-holders). These agreements will obligate these contractors, suppliers and licensees (or franchise holders) to require observance of the code in all agreements that they make with subcontractors in fulfilling their agreement with (name of company).
(name of company) will, in line with the principles described in this memorandum of understanding, support and co-operate with an independent monitoring programme to ensure that the Code is being observed by all parties obliged to observe the Code.
(name of company) will provide or ensure the provision of translations of the Code in the languages used at the places where products, or their components, are produced and/or distributed by or under agreement with or for (name of company) and provide authorised texts of the Code to contractors and suppliers for their use, and the use by any contractors, subcontractors and suppliers obliged to observe the Code.
(name of company) will maintain full and up-to-date information on all contractors, subcontractors, principal suppliers and licensees (or franchise-holders) obliged to observe the Code and will provide this information to approved inspectors in a timely manner and to (any of the other parties to this agreement) upon request. (name of company) must observe this Code.
(name of company) accepts responsibility for observing the Code with respect to all employees and workers that it supervises and agrees to:-
i) fix responsibility for implementing this Code at each place that it owns or controls;
ii) ensure that all workers are aware of the contents of the Code by clearly displaying an approved text of the Code at all workplaces and by orally informing these employees in a language understood by them of the provisions;
iii) permit approved inspectors or (the other parties to this agreement) to explain the provisions of the code and the monitoring arrangements to any or all workers covered by the code where they deem this necessary.
iv) refrain from disciplining, dismissing or otherwise discriminating against any employee for providing information concerning observance of this code;
v) provide approved inspectors unlimited access without requiring notice to facilities that (name of company) owns or controls; and
vi) maintain records of the names, ages, hours worked and wages paid for each worker, to make these records available for inspection by approved inspectors, and to allow inspectors to conduct confidential interviews with workers.
B. Obligations of contractors, subcontractors ,principal suppliers and licensees
(name of company) will ensure that all contractors, subcontractors, principal suppliers and licensees (or franchise-holders) involved in production and/or distribution of products under agreement with or for (name of company) adhere to the provisions of the Code and include this obligation in agreements that (name of company) enters into with any contractors, subcontractors and principal suppliers. Such agreements will require contractors, subcontractors, principal suppliers and licensees (or franchise-holders):-
iii to fix responsibility within their own organisations for observance of the
Code and to inform (name of company) where this responsibility is fixed;
ii) to fix responsibility for observance of the Code at all workplaces where work related to the agreement with (name of company) is performed;
iii) to display clearly an approved version of the Code in all workplaces where work related to the agreement with (name of company) is performed;
iv) to orally inform all workers engaged in work related to the agreement with (name of company) of the contents of the Code in a language understood by them;
v) to refrain from disciplining, dismissing or otherwise discriminating against any worker for providing information concerning observance of the Code; and
vi) to provide approved inspectors unlimited access, without requiring notice, to their facilities where work related to an agreement with (name of company) is performed; to maintain records of the names, ages, hours worked and wages paid for each worker, to make these records available for inspection by approved inspectors and to (name of company) upon request, and to allow approved inspectors to conduct confidential I interviews with workers.
C. Termination of agreements for failure to observe the Code
It is understood that the purpose of the code is to protect workers from abuses and to eliminate such practices as child labour. It is not meant to injure business organisations and relationships providing regular employment. Observance of the Code by contractors, subcontractors, principal suppliers and licensees (or franchise-holders) must be an enforceable and enforced condition of agreement with (name of company). In order to achieve this:-
(name of company) will ensure that all agreements that it enters into related to the production of products or their components allow for the termination of the agreement for failure to observe the Code by any contractors, subcontractors and principal suppliers;
(name of company) may authorise a procedure with fixed time limits to rectify situations where the Code is not being fully observed by a contractor, subcontractor, supplier or licensees (or franchise-holder). The agreement by the contractor, subcontractor, supplier or licensee (or franchise-holder) to abide by this procedure would enable the continuation of the agreement with (name of company). (name of company) may authorise contractors, suppliers or licensees (or franchise-holder) to institute similar procedures with respect to their contractors, subcontractors, principal suppliers and licensees (or franchise-holder)
Such procedures shall be authorised only where:-
there is a reasonable expectation that the situation will be corrected and that the Code will be observed in the future;
the period specified for correcting the situation is reasonable; and
recognisable and unmistakable violations of the Code are ceased immediately.
Such procedures shall not be authorised more than once for the same contractor, subcontractor, supplier or licensee (or franchise-holder).
With respect to child labour, such procedures shall require that there be no further engagement of children and that child workers be replaced by adults, where possible from the same family. [Optional clause where specific child labour eradication programmes are involved, procedures shall also include measures to assist the children concerned through provision of educational opportunities and transitional economic support.]
Contractors, subcontractors, suppliers and licensees (or franchise-holders) must, as part of their agreement with (name of company) agree to terminate any contract or agreement for the production goods or services by any contractor, subcontractor or supplier that they engage in order to fulfil terms of their agreement with (name of company) not fully observing the Code, or they must seek and receive approval from (name of company) to institute a procedure with fixed time limits to rectify situations where the Code is not being fully observed.
Where there is repeated failure to observe or to ensure observance of the Code by a particular contractor, subcontractor, supplier or licensee (or franchise-holder) the agreement shall be terminated. Repeated failure shall be defined as two occasions for the same or similar violation.
In situations where it is not clear whether a particular practice constitutes a violation of the Code, relevant international labour standards of the International Labour Organisation (ILO) and the expert advice available from the ILO shall be sought for guidance. When such situations are determined to exist, (name of company) agrees to inform and consult the (other parties to this agreement).
The existence of violations of the Code shall be determined by an independent monitoring programme supported by (name of company) and by substantiated complaints from any other source.
II: Monitoring arrangements
(name of company) will fully support a programme for the independent monitoring of the Code by (the trade union parties to this agreement) and/or by individuals or organisations agreed to by both the (name of company) and (the trade union parties to this agreement.). (name of company) will establish appropriate and adequate means to finance the agreed monitoring arrangements. Representatives of (the trade union parties to this agreement) together with any individuals or representatives of organisations that have been so agreed to shall be referred to as "approved inspectors" in this memorandum.
Arrangements for independent monitoring shall be based on the following principles and contain the following elements:-
Selection of approved inspectors
i) Representatives of (the trade union organisations party to this agreement) shall be considered approved inspectors. Other individuals and representatives of other organisations not party to this agreement may be considered approved inspectors provided that they shall be recognisably independent of (name of company) and reason for confidence in their impartiality shall be readily apparent. Such approved inspectors could by agreement between the (name of company) and the (trade union parties to this agreement) be drawn from established human rights, development, religious or charitable organisations or other bodies qualified as capable of providing independent verification of labour conditions;
ii) Such individuals or representatives of organisations shall be identified and agreed through consultation with (the other parties to this agreement) and where appropriate, with the assistance of the International Labour Organisation.
iii) The agreed arrangements must provide for a sufficient number of approved inspectors to conduct adequate monitoring in all countries where work is performed in connection with any agreement undertaken by (name of company).
b) Training and conduct of independent and approved inspectors
i) All individuals involved in this independent monitoring programme shall participate in a training programme to be selected or developed by (the trade union parties to this agreement);
ii) All individuals and/or organisations engaged in this monitoring programme must agree to respect the commercial confidentiality of information obtained in the exercise of the duties, without prejudice to their duty to disclose breaches or alleged breaches of the Code; and
iii) Wherever possible and appropriate approved inspectors shall co-operate with the labour inspectorate of the respective country.
c) Monitoring by spot checks
i) Monitoring must be by the actual observance of working conditions through unannounced inspection visits ("spot checks") to premises where production and/or distribution of goods produced by (name of company) or under agreement with and for (name of company) is performed;
ii) The frequency of inspections should be such that each premise involved in the production and/or distribution of goods by (name of company) or under agreement with and for (name of company) shall be visited as often as necessary but always at least once during the period of each licensing agreement, significant production contract or once during a twelve month period;
iii) Approved inspectors shall be permitted to interview workers on a confidential basis;
Permit-approved inspectors or (the other parties to this agreement) shall be permitted to explain the provisions of the code and the monitoring arrangements to any or all workers covered by the code where they deem this necessary.
In addition to routine inspectiosns, inspections shall be undertaken at specific locations following substantiated complaints, where there is sufficient reason to believe that the Code is not being observed, or upon the request of (the other parties to this agreement);
Inspections shall be conducted in a way which does not cause undue disruption to the performance of work in the premise being inspected;
viii) In consultation with (name of company), the (other parties to this agreement) may nominate representatives to accompany approved inspectors during inspections;
ix) Written reports shall be provided by the approved inspectors to all parties to the Code for each visit; and
x) the findings of this inspection and monitoring process shall form the basis for any public claims as to the operation of the Code.
d) Involvement of the Workers Concerned
(name of company) recognises a role for the workers the code is meant to protect in monitoring observance of the code. The approved version of the Code that contractors, subcontractors and principal suppliers are obliged to display clearly at workplaces should also provide information to assist workers in reporting violations of the Code. (name of company) will, in consultation and co-operation with (any of the other parties to this agreement), develop a practical means for receiving complaints that takes into account the difficulty workers will have in reporting violations and the need for confidentiality in order to protect any workers reporting violations of the Code; and
(name of company) also recognises a role for (the trade union parties to this agreement) in monitoring observance of the Code. (name of company) agrees to make information available to the (the trade union parties to this agreement) upon request and subject only to the condition that the commercial confidentiality of this information be respected, but without prejudice to the right of (the trade union parties to this agreement) to disclose situations where the Code may not be fully observed. Such information will, at a minimum, include the lists of contractors, subcontractors and suppliers, reports from approved inspectors, complaints from employees of contractors, subcontractors and suppliers and other substantiated complaints concerning observance of the Code.
III: Undertakings by (the other parties to this agreement)
The (other parties to this agreement) undertake to publicise their support for the adoption by (name of company) of this Code and their agreement with the provisions contained therein. They further agree to:
Establish and inform (name of company) of contact points within their respective organisations for all matters relating to the Code and this agreement;
Advise (name of company) in the first instance of any alleged breach of the provisions of the Code which comes to their attention;
Respect the commercial confidentiality of information provided by (name of company), without prejudice to their right to disclose situations where the Code is not being fully observed;
Assist (name of company) to the extent possible in the implementation and monitoring of the Code;
Assist (name of company) to identify potential individuals or organisations to monitor the Code and to advise (name of company) on the development of the training programme for inspectors; and
[Optional section: Seek the involvement and support of the International Labour Organisation in the implementation and monitoring of the Code, including in the identification and training of inspectors, in settling questions of interpretation over the Code in situations that are not clear as well as in the development and implementation of a programme for the elimination of child labour.]
IV: Other understandings
A. Definitions
For the purpose of this memorandum the term contractor means any person or organisation who contracts with (name of company) to perform work or provide services. The term subcontractor means any person or organisation who contracts with a contractor to perform work or provide services related to or as part of an agreement with (name of company). The term principal supplier means any person or organisation who provides (name of company) with materials or components used in the final products or the final products sold by (name of company). The terms "licensee" and "franchise-holder" mean any natural or legal person who as part of a contractual arrangement with (name of company), uses for any purpose the name of (name of company) or its recognised brand names or images.
B. Review and follow-up
The parties to this agreement shall meet not more than six months after the adoption of the Code by (name of company) to review progress and to complete arrangements on its implementation and shall meet thereafter at the request of either (name of company) or the (other parties to this agreement) following reasonable notice. The (name of company) shall provide (the other parties to this agreement) prior to this meeting with a report on all steps taken including recommendations with respect to independent monitoring.
C. Interpretation
Questions over the interpretation of the Code or of this memorandum shall be resolved through consultation between the parties to this memorandum. Where such consultation fails to produce agreement the parties to this agreement shall in appropriate instances seek the expert advice of the ILO. Should this advice fail to result in an agreed interpretation then the parties to this agreement shall accept the services of a mediator so designated in this agreement. For the purpose of this agreement the mediator is (name of mediator or organisation to supply mediator).
Optional section:
Child labour programme
(name of company) agrees to promote and make financial commitments to a programme or programmes that:-
i) replace child workers involved in production and/or distribution of goods and services for or by (name of company) with adults (where possible from the same or extended family);
ii) provide the children concerned with educational opportunities, including through the establishment of educational facilities and/or expansion of existing facilities; and
iii) provide transitional economic support for the children concerned and their families to enable withdrawal of the children from the workplaces.
It is understood that these programmes and the financial support provided to them by (name of company) would be determined through agreements reached between (name of company), (the other parties to this agreement) and any appropriate national authorities in countries where child labour has been used to produce products for (name of company). It is understood that such negotiations would include, as far as is practical, the International Labour Organisation and may include any mutually-agreed non-governmental organisations responsible for conducting these programmes.
Codes of conduct are tools which, in certain circumstances, may improve the climate for organising and for collective bargaining. They are among the elements to be considered in developing strategies to facilitate the respect of fundamental worker rights.
The work of the ICFTU, international trade secretariats, and national centres on codes has already contributed to making freedom of association and the right to collective bargaining integral parts of any credible code. Future activities on codes should continue to focus on the objective of creating conditions under which workers are free to join and control their own trade unions and negotiate collective bargaining agreements without employer intimidation and interference.
There are other positive aspects of discussions of codes of conduct and reasons for trade unions to influence the debate. Many codes contain an element of employer responsibility for the behaviour of suppliers and subcontractors. These are important links which are becoming common in the global economy and which give a possibility to reach far beyond the direct employment of a multinational.
Of particular value are agreements on good corporate policy negotiated between international trade secretariats and multinational enterprises. They can form an important and measurable basis for better respect for worker rights and lay the basis for social partnership at the international level. Such agreements can help create islands of decent industrial relations in countries which do not yet require the observance of core labour standards.
The very existence of serious discussions of codes is an acknowledgement that there are negative effects of globalisation. Dialogue between trade union organisations and companies built around codes may contribute to greater understanding in the corporate community of the links between core labour standards and trade and investment. It seems likely that any company which becomes serious about observing a good code of conduct will not wish to be undercut by companies seeking competitive advantage through exploitation and violation of basic worker rights.
Discussions of codes of conduct within the ICFTU family have been very useful in defining the issues, including vital and central trade union principles related to the content of codes, co-operation with other organisations, and effective monitoring and implementation. This document, which includes the basic code as well as considerable background information, reflects the recent history of codes of conduct as well as that long, but healthy and productive debate. It is, however, only part of a process which will include the development of other materials to be used by trade unionists working on codes of conduct and, most importantly, further experience in the use of codes as a tool in the struggle of workers to build strong and free trade unions.