Resources on Labor Practices and Working Conditions

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LABOR PRACTICES AND WORKING CONDITIONS

Human resources are arguably the most valuable asset for any company, regardless of how important cash, natural resources and technology might be to a specific business model. The minimum obligation of companies to their employees is to abide by applicable legal standards in key areas and activities such as recruiting and hiring (i.e., equal opportunity laws), compensation and benefits (i.e., minimum wage and overtime requirements), job design and placement (i.e., laws pertaining to reasonable accommodation for disabilities), protection from discrimination and harassment, workplace safety, family and medical leaves, union relations, performance evaluation and promotion, and prohibitions on unlawful termination. However, socially responsible human resource management is based on the proposition that employers have an obligation to exceed legal standards when forging relationships with their employees and take steps to ensure that employees are treated with dignity and value and that their contributions and hard work brings both financial and non-financial rewards.

Sustainable human resource management is not only an ethical imperative and a threshold requirement for operating in a socially responsible manner, it can also provide companies with multiple business benefits such as the following listed by the Future-Fit Business Benchmark:

A healthy workforce that is paid a living wage improves employee productivity and fosters a culture of learning that will ultimately make the company more innovative and competitive in its marketplace.
Companies with a good reputation with respect to employee wellness and paying a living wage have found that they are better positioned to attract and retain top talent who are increasing seeking employers with strong values.
Improved decision-making through expanded participation provides opportunities for more diverse perspectives to be included in deliberations.
Providing fair employment terms improves employee productivity, fosters a culture of learning and attracts and retains top talent who are increasingly seeking employers with strong values and a demonstrated commitment to “work-life balance” for their employees.
Fighting discrimination and promoting diversity and inclusion in the workplace improves employee productivity and fosters a culture of learning, becomes a source of innovation, facilitates better risk management, enhances customer and business partner satisfaction and attracts and retains top talent, avoids reputational and financial costs due to lawsuits and regulatory breaches and improves decision-making through more diverse perspectives.
Employee concerns mechanisms improve employee productivity and develop a culture of learning, attract and retain top talent who are increasingly seeking employers with strong values, avoid reputational and financial costs due to lawsuits and regulatory breaches and improve decision-making through more diverse perspectives.

Goals and targets for defining and satisfying legal and social responsibilities to employees can be developed by reference to various international sustainability standards and instruments, many of which have been created under the auspices of the International Labour Organization (“ILO”), which is the only tripartite United Nations agency and brings together governments, employers and workers representatives of 187 Member States to set labor standards, develop policies and devise programs promoting decent work for all women and men. Since 1919, the ILO has maintained and developed a system of international labor standards aimed at promoting opportunities for women and men to obtain decent and productive work, in conditions of freedom, equity, security and dignity. Subjects covered by the standards include freedom of association, collective bargaining, forced and child labor, equality of opportunity and treatment, tripartite consultation, labor administration and inspection, employment policy, employment promotion, vocational guidance and training, employment security, wages, working time, occupational safety and health, social security, maternity protection, social policy, migrants workers, HIV/AIDS, seafarers and fishers, dock workers, indigenous and tribal peoples and other specific categories of workers. International labor standards are addressed to ILO Member States, not to companies, and once a Convention or Declaration is ratified it is up to governments to implement and enforce through national legislation. However, companies may refer to a Convention or Declaration when establishing their own commitments with respect to labor practices and working conditions and include in those commitments an undertaking to “give effect” to or “act in compliance with” the principles of the Convention or Declaration.

As a general matter, relevant standards and instruments in this area call on organizations to consider and address issues relating to compliance with applicable labor and employment laws, working conditions and terms of employment, rights of free association including the right of employees to bargain collectively through the formation of workers’ organizations, non-discrimination and equal opportunity, management of adverse impact on workers due to downsizing of business operations, grievance mechanisms, child and forced labor and monitoring of unfair labor practices in the supply chain. Section 6.3.10 of ISO 26000 Guidance on Social Responsibility developed by the International Organization for Standardization is concerned with organizational commitment to “fundamental principles and rights at work”, which are described by reference to the fundamental rights at work identified by the ILO including:

Freedom of association and effective recognition of the right to collective bargaining (i.e., workers must have the right to establish and, subject only to the rules of the organization concerned, to join organizations of their own choosing without previous authorization and representative organizations formed or joined by workers should be recognized for purposes of collective bargaining)
The elimination of all forms of forced or compulsory labor (i.e., the organization should not engage in or benefit from any use of forced or compulsory labor and should not condone work or service being exacted from any person under the threat of any penalty or when the work is not conducted voluntarily)
The effective abolition of child labor (i.e., organizations should not engage in or benefit from any use of child labor, although organizations may employ a child for light work that does not harm a child or interfere with school attendance or with other activities necessary to a child’s full development (such as recreational activities))
The elimination of discrimination based on race, color, gender, religion, national extraction, social origin, political opinion, age, or disability regarding employment and occupation (i.e., hiring policies and practices, earnings, employment conditions, access to training and promotion and termination of employment should be based solely on the requirements of the job)

Ceres, a non-profit organization advocating for sustainability leadership, has developed and disseminated its Ceres Roadmap as a resource to help companies re-engineer themselves to confront and overcome environmental and social challenges and as a guide toward corporate sustainability leadership. With respect to employees, Ceres stated that the overall vision was that companies would foster a diverse, inclusive and engaged work environment that held sustainability considerations as a core part of recruitment, training and benefits. Obligations toward employees were part of a company’s broader duties to protect the human rights of employees thereby creating fairer, safer and more equitable workplaces across operations and global supply chains. Specific expectations relating to employees were as follows:

Recruitment: Companies will incorporate sustainability criteria into recruitment protocols for all new hires.
Training and Development: Companies will develop and implement formal, and job-specific, training on key sustainability issues for all executives and employees, and facilitate coaching, mentoring and networks for sustainability knowledge sharing.
Diversity: Companies will build a diverse and inclusive board and workforce. Companies will provide formal diversity training, employee resource groups and advancement opportunities, and will identify a senior executive or executive committee with formal responsibility for diversity and inclusion.
Sustainable Lifestyles: Companies will promote sustainable lifestyle choices across their community of employees through education and innovative employee benefit options.
Human Rights: Companies will have a formal human rights policy that covers all direct employees, as well as employees of suppliers and clients. The policy will be aligned with universal standards, including the ILO Core Conventions and the Universal Declaration of Human Rights. Companies will conduct regular human rights due diligence assessments and disclose management systems in place for implementation.

Finally, a number of the Sustainable Development Goals (SDGs) of the 2030 Agenda for Sustainable Development that were adopted by world leaders in September 2015 and which went into effect on January 1, 2016 have a substantial impact on employees and on the employment relationship including no poverty, zero hunger, good health and wellbeing, quality education, gender equality and decent work and economic growth. For example, while companies cannot, acting on their own, totally alleviate poverty, they can provide their own employees with adequate income and other resources and assist them in gaining access to basic services (e.g., education and medical care). Companies can contribute to the achievement of gender equality by ensuring that women have equal opportunity with respect to every employment-related decision and are treated fairly with respect to compensation and promotion. Companies also need to establish and enforce policies against sexual harassment and other forms of discrimination in the workplace. As for decent work and economic growth, companies can strive for higher levels of economic productivity through diversification, technological upgrading and innovation and providing their employees with full and productive employment and decent work.

Job seekers are interested in working for companies that are a good fit with their personal values and companies need to be able to describe their specific organizational values and demonstrate their authenticity during the recruiting process by showing job seekers how corporate responsibility is infused into daily work activities, training programs, reward systems, operational practices and objectives, and hiring practices. Companies should also make an effort to showcase employee-driven corporate responsibility initiatives to illustrate how the company’s concern for corporate responsibility is tied to efforts to create meaningful and rewarding experiences for employees. Messaging regarding corporate responsibility can only add value if they actually reach job seekers, which means that companies need to use multiple channels to inform job seekers about your sustainability, such as company websites and careers pages, employee testimonials, recruitment handouts, conversations with recruiters, position announcements, contests, prizes, “fairs” to expose employees to CR issues, etc. Interestingly, research indicates that corporate responsibility becomes a more important differentiator for employees as their skill levels increase, which means that companies looking to recruit highly-qualified workers should make corporate responsibility an important element of their pitch.

Companies also need to ensure that they in no way prevent their stakeholders, including employees, from have a voice and being treated impartially. Empowering and respecting employees is impossible if a company continues to rely on operational processes that do not adequately address employee concerns (e.g. no formal processes for follow-up, incentives that do not encourage open investigation and corrective action). Good business practices, as well as actions by legislators and regulators, have been moving companies toward implementation of a risk-free concerns mechanism whose existence is communicated effectively to employees, and putting in place policies and processes to effectively identify and transparently address legitimate concerns. Concerns mechanisms, which should also be required of a company’s core suppliers, can result in improved employee productivity and development of a culture of learning, help companies attract and retain top talent who are increasingly seeking employers with strong values, avoid reputational and financial costs due to lawsuits and regulatory breaches and improve decision-making through more diverse perspectives.

A firm’s commitments and processes relating to labor practices and working conditions, both internally and its supply chains, should be formally laid out in a human resources policy that sets out the key principles and objectives of human resources management and describes how the firm. The human resources policy should address compliance with applicable legal and regulatory requirements and then expand outward to include all aspects of the employment relationship including occupational wellbeing and job satisfaction, workplace safety and health, discrimination and harassment in the workplace, performance assessment, compensation and benefits and training and development. Responsibility for administration of the human resources policy will generally be vested in a group of human resources professionals led by a senior official who should be part of the company’s executive team. Human resources professionals at socially responsible companies have been called on to engage in new and sophisticated activities relating to personnel development; dispute resolution; development and maintenance of information and communication systems; designing and implementing strategies for motivating and incentivizing employees; employee safety, welfare, wellness and health; and employee services and counseling.

Responsible businesses are obviously committed to compliance with applicable employment-related laws and regulations; however, they also need to embrace international labor standards as promulgated by the United Nations and the ILO. In addition, responsible businesses understand and willingly accept the obligation to enhance the skills of their workers and look out for their long-term wellbeing. When setting the terms of employment, responsible businesses are mindful of the contribution they can make to universal sustainability issues such as income inequality, vocational training, health and education. Responsibility in this area also includes engaging with workers on issues relating to labor practices and working conditions and include them in strategic decisions regarding the overall direction of the company’s sustainability efforts. Finally, progress toward goals and objectives in this core subject of social responsibility should be carefully tracked using objective measures and the results should be widely disseminated through the company’s sustainability reporting activities.