Retailers with international operations, or reliant on foreign contractors, are increasingly being targeted by pressure groups complaining of poor labour practices abroad.

Retailers with international operations, or reliant on foreign contractors, are increasingly being targeted by pressure groups complaining of poor labour practices abroad. Charities, trade unions, NGOs and others target individual retailers, or their suppliers, alleged to have breached human rights in their global operations. Sportswear, fashion, food, furniture and technology retailers have recently been subject to such negative campaigns. The impact to reputation and sales can be hugely detrimental, as customers and investors are quick to disassociate themselves from tainted brands.

Identifying a retailer’s labour law responsibilities is an important step towards managing the risks associated with global labour relations.

Retailers and their contractors are primarily subject to the national labour laws of the countries where they operate. However, some developing economies have weak labour laws or a poor history of enforcement. As a result, global labour standards have been developed with the aim of creating minimum working standards across the world and protecting human rights. These include the 2011 UN “Ruggie Framework”, a new set of global principles for all businesses. They are more demanding, with an expectation that businesses will proactively audit their global labour practices for compliance, as opposed to a reactive approach to problems when they arise.

While observance of these global standards is generally voluntary, pressure groups ‘name and shame’ individual companies when raising complaints of non-compliance to national governments, the UN and other bodies.

Global trade unions are also actively targeting businesses they believe have weak points in their global labour practices to agree International Framework Agreements (IFAs). Typically, IFAs commit businesses to observing international labour standards for employees and contractors, including the right to join a trade union, to bargain collectively and to decent wage and working conditions. 

It is a mistake to view global labour relations as just a facet of CSR or to assign it low priority due to the largely non-binding nature of international labour standards. Businesses must be proactive if they are to avoid unwelcome pressure on global labour standards. 

Implementing a global labour relations audit to identify high risk operations and contractors puts an employer in a better position to develop a global labour relations strategy. As a minimum, a strategy should include addressing any labour problems identified by the audit, implementing a statement of policy which includes the employer’s commitment to respecting human rights, setting up a communications and business contingency plan to respond to any campaign by pressure groups, training middle and line managers in the policy and ensuring compliance in their areas of responsibility and getting the engagement and support of senior managers and executives. 

  • Thomas Player, partner at international law firm, Eversheds