Any of our business? Human Rights and the UK private sector

Any of our business? Human Rights and the UK private sector - Human Rights Joint Committee Contents

Memorandum submitted by TUC

ABOUT THE TUC

With member unions representing some 6.5 million working people, the TUC campaigns for a fair deal at work and for social justice at home in the UK and abroad. The TUC, together with its member trade unions are affiliated to a range of European, and international trade union bodies. Together this global trade union family places respect for human and trade union rights at the centre of its work, and in particular rights to freedom of association and collective bargaining.

Guaranteeing fundamental rights for trade unions and for trade union members benefit workers, the economy and wider civic society. Through collective bargaining and effective worker representation trade unions play a central role in reducing inequality as well as enabling organisations to adapt to increased global competitive pressures. As the ILO recently concluded in major study inequality in developed and developing countries: "high trade union density, a more coordinated collective bargaining structure, and greater coverage of collective bargaining agreements tends to be associated with lower inequality".[548]

THE GAPS IN RESPECTING FUNDAMENTAL LABOUR RIGHTS ABROAD AND AT HOME

UK business can play a positive role in providing decent work in other countries by investing in or sourcing from them. Yet without a strong set of rules and institutions to balance the profound inequalities that often exist between UK business and the host country it operates in, UK business can have a significantly negative impact on labour rights.

The International Trade Union Confederation's (ITUC) annual survey on trade union rights extensively documents workers seeking to defend their rights suffer harassment, discrimination, intimidation, assault, illegal dismissal, imprisonment and murder.[549]

Examples of the positive and negative impact of UK business on human rights include respectively:

— Under the ILO's "Better Factories" programme in Cambodia, garment firms were rewarded with better market access if they could demonstrate improvements in labour standards. Firms, working with local trade unions, government and ILO technical experts and supported by major UK brands were able to record significant improvements in labour standards. The result has been better wages and better working conditions for Cambodia's 350,000 mostly female garment workers—wages they have sent home to their families to help them overcome food shortages. Importantly, it has resulted in a more productive and competitive industry.

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UK international obligations

The latter actions should be at odds with the UK's obligations under international law. The UK has ratified all eight of the fundamental conventions of the ILO on forced labour, child labour, discrimination and freedom of association and the right to collective bargaining.[551]4 Further, it is a signatory to the International Covenant on Economic, Social and Cultural Rights additionally covering in Article 7, the right to a living wage, safe and healthy working conditions and reasonable hours of work. The UK is also a signatory to the European Social Charter of 1961 which affords protection inter alia for the right for a fair remuneration sufficient for a decent standard of living (article 4): the right to organise (article 5); the right to bargain collectively (article 6(2)); and the right to strike (article 6(4)). The UK has also ratified the European Convention on Human Rights, the provisions of which also cover the right to freedom of association (article 11).

Under international law, the UK has a duty to comply with human right standards to which it is a signatory and to protect against human rights abuses by non-state actors, including UK business. The TUC has expressed repeated concerns that UK law currently fails to comply with international labour standards in a number of important respects. As the Committee will be aware, since 1989 the ILO Committee of Experts has consistently found that UK trade union laws fail to comply with ILO Convention 87 (on freedom of association and protection of the right to organise) and ILO Convention 98 (on the right to organise and bargain collectively).[552] The view that UK law fails to comply with international human rights on freedom of association and the right to be bargain collectively have also been reiterated by the Social Rights Committee of the Council of Europe (in relation to Article 5 and 6 of the European Social Charter 1961) and the UN Committee on Economic Social and Cultural Rights (in relation to Article 8 of the International Covenant on Economic, Social and Cultural Rights).

In addition, the TUC has serious concerns about the implications of the recent decisions by the European Court of Justice in the Viking[553] and Laval line of cases. It appears that these cases have placed new restrictions on fundamental rights to freedom of association and the right to bargain collectively, as well as limiting the ability of national government to use national legislation and procurement arrangements to promote social objectives and worker protection.

Impact of state obligations on employers

There are also strong ethical, economic and political arguments for the UK government (and host country governments) to hold UK business to account while operating outside the UK. There is however a limited legal framework for doing so.[554]

States are often unable to apply and enforce human rights standards. For example, core ILO conventions on Freedom of Association and Collective Bargaining have been ratified by 148 and 158 member states respectively (out of 181 ILO member states), yet, as the ITUC's annual survey on trade union rights documents, these rights are, "subject to massive and often vicious violations. Evidently, ratification is one thing and application quite another".[555] In terms of state capacity, key problems here include chronically under resourced labour inspectorates and judiciaries, corruption, state abrogation of responsibility or intimidation.

Secondly, many countries deliberately restrict the application of such rights, particularly in an effort to attract investment. Trade unions are effectively banned in export processing zones in countries such as Honduras, Pakistan, Bangladesh and Guatemala. Last year, labour legislation was amended to reduce the application of fundamental rights in Malaysia, El Salvador, Morocco, and Vietnam.[556] Bilateral Investment Treaties also restrict the application of human rights law to companies investing in host states.

Thirdly, the increasingly complex structures of businesses operating across borders makes it easier for parent companies to avoid liability for the actions of their subsidiaries or suppliers. Where legal action does exist eg UK tort law, it is poorly suited to covering a UK business's complex sphere of influence and activities presenting potential plaintiffs with significant practical and legal barriers to commencing proceedings.

International trade agreements that do cover labour rights have a mixed record. They typically only apply to states, not firms, and have a limited record in reducing human rights abuses. For example the EU's GSP+ system awards trade preferences to states demonstrating adherence to fundamental human rights. Yet only in the most extreme cases of human rights abuses has GSP+ status been revoked (Belarus, Burma) while states notorious for failing to prevent, or being complicit in, the murder of hundreds of trade unionists (Colombia, Guatemala) were not even investigated under the recent renewal of preferences. The system could be greatly strengthened.

The ability to hold company directors to account for conduct both inside and outside the UK is limited. The legal duties of company directors have recently been codified for the first time. Section 172 of the Companies Act 2006 requires directors to "promote the success of the company for the benefit of its members as a whole" and in so doing "have regard" to the long-term impact of decisions, the interests of the company's employees, supplier and customer relationships, community and environmental impacts and the company's reputation. These new duties are mirrored in the reporting requirements in section 417 of the Act, which include, for quoted companies, a requirement to report on environmental matters, employees, social and community issues and supplier relationships.

These new legal requirements are helpful in setting a general framework for the way in which companies should carry out their business operations. However, directors' duties are very difficult to enforce,[557] so while they provide ammunition for those arguing for higher corporate standards and should encourage directors to take account of the impact of their decisions on their stakeholders, they do not provide a mechanism for holding companies to account for their actions. The wider reporting requirements are also positive, but the requirements are not backed up by statutory guidance as to which elements of information companies should report, so there is a danger that reports will be inconsistent both with each other and over time, detracting from comparability. Both the new duties and the business review reporting requirements would benefit from being backed up by detailed statutory guidance for companies and mechanisms for enforcement.

Finally, and most significantly, workers suffering human rights abuses face—particularly in low income countries—almost impossible barriers to accessing justice.

STRENGTHENING THE RESPONSIBILITY OF BUSINESSES TO RESPECT HUMAN RIGHTS

The responsibility of business to respect core labour standards should be universal, irrespective of where the business is operating or how big it is. The standards were drafted and agreed upon by ILO representatives of employers, government and employees to be applied universally, irrespective of the country and its level of development. Special initiatives, guidance or technical assistance can assist companies understand their human rights obligations and the impact of its activities eg guidance for small or medium enterprises, or companies operating in difficult environments is widely available.

The current climate should strengthen the obligations of business to protect and promote human rights for several reasons:

Firstly, the drastic contraction of flows of investment, remittances and trade is having a severe effect on jobs, incomes and livelihoods globally, particularly for women, youth, migrants and older persons in low income countries. Recent ILO projections of working poverty across the world indicate between 2007 and 2009, up to 200 million workers will be added to those living on less than USD 2 per day. This extreme poverty both represents sever breaches on labour rights and places severe pressure on others. This is therefore a powerful moral argument for business to respect them.

Secondly, respect for fundamental labour rights can be an important driver of economic recovery. Collective bargaining and provision of a living wage has a vital role to play in preventing systemic deflationary spirals by re-inflating the economy and ensuring a more balanced distribution of the gains from growth and reducing excessive inequalities—a key factor behind the crisis.[558] Further, the ILO has recently estimated that the "opportunity cost" of forced labour to the workers affected in terms of lost earnings is some USD 20 billion.[559]

Finally, there is an emerging international consensus, voiced by G8 Social Summit in March and endorsed by the recent London Summit that "the current downturn should not be taken as a pretext to weaken workers' rights…".[560] Stemming out of these meetings is the proposal to include a labour chapter in the proposed "Merkel Charter" on global business standards for sustainable development—a clear global endorsement of the need for business to strengthen respect for labour rights in response to the crisis.

ADDRESSING THE CHALLENGE

To address the foregoing, the TUC firmly supports realising the three principles of the Ruggie Framework namely:

— The duty of states to protect;

— That business should respect fundamental and human rights

— That victims of corporate harm should have effective access to remedies

Given the extent of the gaps in respecting fundamental labour rights, as identified above, realising this framework will require pursuing a number of complementary approaches at least in the medium term. The TUC believes that institutional reform should have the following aims:

(a) Promoting high standards of conduct for business organisations in their operations.

(b) Ensuring understanding and buy-in from business organisations and other relevant actors on the standards that they are expected to uphold in their operations;

(c) Enforceability of such standards, so that infringements followed by a refusal to take voluntary corrective actions lead to sanctions that are appropriate to the infringement and the size of the company;

(d) Mechanisms for redress for victims of infringements.

The TUC believes that creation, promotion or strengthening of the following are essential steps towards these aims:

— A review of UK labour law and EU law with a view to ensuring compliance with international labour standards.

— The establishment of a UK Commission on Business, Human Rights and the Environment as proposed by the Corporate Responsibility (CORE) coalition;

— Strengthening the UK National Contact Point to the OECD Guidelines for Multinational Enterprises and advocating for the strengthening of the OECD treaty itself during the mooted 2010 review;

— The promotion of effective multi-stakeholder initiatives such as the Ethical Trading Initiative; and

— The promotion of Global Framework Agreements between Multinational Enterprises and Global Union Federations;

Review of UK labour law and EU laws

In its Report on the International Covenant on Economic, Social and Cultural Rights,[561] the Joint Select Committee concluded "The CESCR [Concluding Observations of the UN Committee on Economic Social and Cultural Rights] concludes that current law places undue restrictions on the right to strike, as protected in Article 8 ICESCR. We consider that the Government should take seriously the successive findings of the authoritative international bodies overseeing treaties to which the UK has become party, and should review the existing law in the light of them." The TUC supports this conclusions and notes that limited progress has been made in this area since the Committee reached its conclusions in 2004. We take the view that the Government should review UK labour law and in particular the provisions of the Trade Union Labour Relations (Consolidation) Act 1992 to ensure the proper implementation of and compliance with international labour law standards.

The recent investigation by the Information Commissioner's Office in the construction sector has highlighted the need for introduction of new laws outlawing blacklisting activities designed to discriminate against trade union members and activists. The TUC welcomes the recent announcements by the Government that it will seek to use the powers contained in section 3 of the Employment Relations Act 1999 to introduce regulations in this area. We call on the Government to introduce effective and robust blacklisting regulations which protect fundamental rights of UK workers to freedom of association.

We also call on the UK to review and address the implications of recent ECJ judgments on fundamental freedoms, and in particular rights to freedom of association and the right to bargain collectively. The TUC supports proposals from the ETUC for revisions to be made to the EU Posting of Workers Directive and for the adoption of a Social Progress Clause which would provide that EU law, including free movement principles contained within the EU Treaty are interpreted in a manner which respects fundamental social rights, in particular the right for unions to bargain collectively and to take industrial action. Where a conflict arises, precedence should be given to fundamental social rights.

A UK Commission for Business, Human Rights and the Environment

The TUC supports the proposal put forward by the Corporate Responsibility (CORE) Coalition for the government to create a Commission for Business, Human Rights and the Environment.[562] It is a compelling and sensible realisation of the framework that Ruggie proposes. The TUC would welcome being a part of the process to establish such a Commission.

Rather than repeat the details of the proposal the TUC makes the following supplementary comments in support of it:

Firstly, the Commission will not be an unfair cost on UK business: Abusing human rights should never be a competitive advantage, and there are significant commercial and reputational advantages in respecting human rights. Aside from failing to address human rights abuse, the absence of a level playing field created by such a mechanism could see ethical businesses undermined by those less ethical.

Secondly, the Commission could play an important role in strengthening local systems of justice, not undermining them. Penalties awarded against companies could be used to run capacity building activities to strengthen local judicial systems. Such an approach under the labour side agreement of NAFTA was effective in convincing the Mexican government to outlaw discriminatory pregnancy testing in workplaces.[563]

The OECD Guidelines on Multinationals

For trade unions, the OECD Guidelines for Multinational Enterprises are an important soft law instrument in holding companies to account, especially as most complaints under the guidelines concern alleged breaches of chapter IV—Employment and Industrial Relations of the guidelines.[564] Recent reforms to the UK's National Contact Point (NCP) to the Guidelines such as increased staffing, an oversight body with external representative, and the use of independent professional mediators have increased its effectiveness and are welcomed by trade unions. The reformed NCP played an important role in encouraging global security firm G4S to sign a global framework agreement with the Global Union Federation UNI to respect core labour standards in the 112 countries where it operates.

However significant shortfalls remain. The capacity of the NCP to investigate complaints is still weak. The NCP is unable to compensate victims or penalise companies breaching the Guidelines, enabling companies such as Unilever, currently facing four complaints, to unreasonably delay the process, or in the case of Afrimex, to completely ignore the NCP finding that it breached the Guidelines. The Guidelines also have a very low profile. These weaknesses explain the very low usage of the Guidelines globally: since their revision in 2000, each of the 40 NCPs has received on average only one complaint every 16 months.[565]

The TUC recommends that the UK government:

— Increase the level of resources for the NCP to allow it to better investigate complaints.

— Develop a system to penalise companies failing to remedy breaches of the Guidelines; perhaps through withdrawal of subsidies or export credits; placing companies under supervision, requiring them to report this fact to shareholders or referral to the Companies Investigation Branch of BERR.

— At the mooted 2010 review of the OECD guidelines advocate for amendment of the Guidelines to adopt the Ruggie Framework.

— Better promote the guidelines to UK business.

The Ethical Trading Initiative and other voluntary initiatives

The Ethical Trading Initiative is an important multi-stakeholder body enabling UK companies working with trade unions and NGOs, to better understand how decisions they make can negatively impact on workers' rights in their global supply chains, and then set about improving respect for workers rights. Even seemingly benign decisions of a UK business can profoundly undermine respect for core labour standards in ways not immediately obvious. For example, a UK company placing a high volume order with a tight turnaround time with a supplier in a low income country often forces the supplier to implement excessive overtime or lock-ins, pay wages well below the absolute poverty line, suppress workers' attempts to organising, or even to use forced or child labour.

An impact study on the effectiveness of ETI found that progress on improving health and safety, working hours and wages was made but that discrimination, harassment, and restrictions on freedom of association remained serious problems.[566] A core conclusion of the study is that a strong legal framework for respecting freedom of association is essential to making any progress on improving respect for labour standards, especially in allowing workers to monitor and work with management to remedy any breaches. Therefore, the ETI model remains an important complement to a bigger framework on rights but it is certainly no substitute for it.

This conclusion is shared by a comprehensive survey of the effectiveness of mechanisms in trade agreements to improve labour standards, where the author concludes that it is the "combination of negative and positive incentives that are more likely to change firm behaviour than purely informative or voluntary activities".[567]

UK government guidance to business on respecting human rights is limited and piecemeal, consisting largely of different government departments supporting a range of voluntary initiatives. For example, BERR's recent report on corporate responsibility lists a range of such initiatives but there is no evidence of their reach or effectiveness.[568] Many such initiatives lack credibility, a conclusion shared by the overwhelming majority of UK "elites" in a recent poll.[569]

The TUC recommends to the UK government to:

— Conduct research into the reach of such initiatives and their effectiveness in driving respect for human rights; with a view to providing positive incentives to UK business to become members of multi-stakeholder initiatives that can demonstrate improvements in respect for human and labour rights;

— Task a specific government body with developing and coordinating a cross-Whitehall approach on business and human rights;

— Run awareness-raising activities for UK business eg mandatory in-country inductions for UK business when establishing operations there.

Global Framework Agreements

Underpinning the operation of health and safe workplaces, free from harassment or discrimination, with a skillful and productive workforce working reasonably hours for fair wages is the ability of workers themselves to advocate for them. Freedom of association is therefore the foundation upon which respect for all other labour rights rests.

The UK government could play a stronger role in promoting freedom of association globally, particularly in the areas that Prof. John Ruggie describes as facing "governance gaps". It can do so by promoting Global Framework Agreements. These are instruments negotiated between a multinational enterprise and a Global Union Federation (GUF) to establish an ongoing relationship between the parties and ensure that the company respects the same core labour standards in all the countries where it operates. There are at least 60 agreements currently.[570]

The TUC recommends that the UK government:

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June 2009

548 ILO (2008) World of Work Report: Income Inequality in the age of financial gloablisation Back

549 ITUC Annual Survey of Violations of Trade Union Rights (2008) Back

550 See the report by FNV Mondiaal (2009) Adding Insecurity to Life available at
http://www.fnv.nl/binary/Unilever%20erratum%202009_tcm7-23546.pdf Back

551 The Core ILO conventions include: Forced Labour (no.29); Freedom of Association and Protection of the Right to Organize (no. 87); Right to Organize and Collective Bargaining 1949 (No.98); Equal remuneration (No.100); Abolition of Forced Labour (No. 105): Discrimination (Employment and Occupation) (No.111); Minimum Age Convention (No.138); and Elimination of the Worst Forms of Child Labour (No. 182) Back

552 For the ILO Committee of Expert's most recent observations see http://www.ilo.org/ilolex/qbe/ceacr2009.htm. Back

553 C 438/05 IFF and FSU v Viking Line [2008] IRLR 143 Back

554 This is despite all ILO member states committing to respect, promote and realise core labour standards under the ILO Declaration on Fundamental Principles and Rights at Work 1998. Back

555 ITUC (2008) Annual Survey of Violations of Trade Union Rights, p.5 Back

556 ITUC Ibid. Back