Sedex introduction to labour management

The people that help to create and provide a business’s products or services are known as a business’s workforce or “labour”. All businesses have an obligation to their workforce, to provide decent work with safe, fair and humane working conditions. Labour management helps companies to do this.

What is labour management?

Labour management refers to companies’ practices and standards to comply with international principles, national laws and customer requirements regarding their labour.

This means a company must provide safe and fair working environments and maintain clear standards in areas such as hiring practices, general employment terms, and wages.

Many labour standards are also legal requirements as part of national laws. For example, the Civil Rights Act in the USA forbids employment discrimination “based on race, color, religion, sex and national origin”.[i] These standards apply to all parts of a company’s workforce – its direct employees, temporary or seasonal employees, contractors, agency workers and homeworkers.

We recommend that businesses also consider the people in their supply chains who work for suppliers, service providers and sub-contractors. Many organisations require suppliers to commit to the standards they operate their own business by, through a Supplier Code of Conduct.

What does labour management cover?

Labour management covers a number of work-related areas and the international standards that a company aims to meet.

International labour standards are outlined in codes of practice like the Ethical Trading Initiative’s (ETI) Base Code, which is based on the International Labour Organization’s (ILO) conventions. They aim to improve the standards and conditions that people around the world work under, and align with ethical guidance for businesses such as the UN Guiding Principles on Business and Human Rights.

The ETI Base Code standards are:

Employment is freely chosen. g. no forced labour is used
Freedom of association and the right to collective bargaining are respected. g. all workers can form or join trade unions of their choice
Working conditions are safe and hygienic. g. employers must take steps to prevent accidents or injuries that there are risks of in a workplace or in the course of work
Child labour shall not be used
Living wages are paid. g. the wages for a standard working week should always be enough to meet a worker’s basic needs, with a bit left over
Working hours are not excessive. g. all overtime is voluntary and paid at a higher rate
No discrimination is practised. g. no discrimination based on ethnicity or gender[i] in hiring, access to promotions or in terminating employment
Regular employment is provided. g. employers must not use labour-only contracting, sub-contracting or home-working arrangements to avoid their obligations to workers
No harsh or inhumane treatment. g. there is no physical abuse, verbal abuse, threats or other forms of intimidation.

Why companies should care about labour management

Maintaining high labour standards supports business productivity, with reduced rates of absenteeism, injury or error, and a happy, healthy workforce. Additional business benefits of good labour management include increased worker retention, excellent company reputation (among both customers and investors), and compliance with national laws.

Since many labour standards are legal requirements, breaching these comes with reputational, operational and financial risks. Labour rights abuses also harm workers, reducing their ability to thrive in their jobs and lowering commitment or performance. The International Labour Organization notes that high productivity cannot be achieved and maintained in the long term under poor labour standards[iii].

The costs of responding to labour issues and low worker retention can be significant. In the most severe cases, businesses can lose access to markets – as with the import bans the US Customs and Border Patrol places on products from specific regions or companies if they suspect goods have been made using forced labour.[iv]

Learn about your company’s responsibilities and our recommendations for effective labour management

Contact Sedex to find out how we can help you to understand the labour standards, risks and issues in your company and supply chain.

[i] Title VII of the USA Civil Rights Act 1964, https://www.eeoc.gov/statutes/title-vii-civil-rights-act-1964

[ii] The full list of protected characteristics in the ETI Base Code is: race, caste, national origin, religion, age, disability, gender, marital status, sexual orientation, union membership and political affiliation.

[iii] https://www.ilo.org/wcmsp5/groups/public/—ed_dialogue/—actrav/documents/publication/wcms_425982.pdf – see p.33

[iv] https://www.business-humanrights.org/en/latest-news/zimbabwe-rough-diamonds-from-the-marange-diamond-fields-get-detention-order-by-us-customs-and-border-protection/