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For any business, the workforce is a valuable asset, and a sound worker-management relationship is a key ingredient to the long-term sustainability of the enterprise. Failure to establish and foster a sound worker-management relationship can undermine worker commitment and retention, result in labor strikes, and can jeopardize a client’s/investee’s operations. Conversely, through a constructive worker-management relationship, and by treating the workers fairly and providing them with safe and healthy working conditions, clients/investees may create tangible benefits, such as enhancement of the efficiency and productivity of their operations.

A client’s/investee’s commitment to establishing a sound worker-management relationship encompasses the following aspects:

  • Human resources policy. A client/investee should adopt a policy appropriate to its size and workforce, which sets out its approach to managing employees. The policy provides information regarding their rights under national labor and employment law, including their rights related to wages and benefits.
  • Working conditions and terms of employment. A client/investee should document and communicate to all employees and workers (including contract workers) their working conditions and terms of employment. These include their entitlement to wages and benefits, hours of work, overtime arrangements and overtime compensation, and leave for illness, maternity, vacation or holiday, that at a minimum comply with national law. This includes respecting a collective bargaining agreement with a workers’ organization if there is such an agreement.
  • Workers’ organizations. Where permitted by law, employees should be granted the right to associate freely and to bargain collectively, by forming and joining workers’ organizations or through alternative means. A client/investee should not discourage workers from forming or joining workers’ organizations and should not discriminate or retaliate against workers who participate in such organizations and bargain collectively.
  • Non-discrimination and equal opportunity. A client/investee should not make employment decisions on the basis of personal characteristics unrelated to inherent job requirements but rather on the principle of equal opportunity and fair treatment.
  • Retrenchment. If a client/investee anticipates the elimination of a significant number of jobs or a layoff of a significant number of employees, it should develop a plan for managing the adverse impacts on employees.
  • Grievance mechanism. A client/investee should provide all employees with a mechanism to raise reasonable workplace concerns, confidentially or anonymously if needed, so that concerns can be addressed promptly at the management-level without any retribution.
  • Child labor and forced labor. A client/investee cannot employ children in a manner that is economically exploitative, or is likely to be harmful to the child or to interfere with the child’s education. A client/investee cannot employ forced labor, which consists of any work or service not voluntarily performed by an individual but executed under threat of force or penalty.
  • Supply chain. A client/investee should pay attention to unfair labor practices of its suppliers, especially in instances where low labor cost is a factor in the competitiveness of supplies, and ensure that this is not due to harmful labor practices.

Respecting international standards with regard to labor and working conditions benefits a client’s/investee’s operations by encouraging positive worker-management relationships that lead to more productive and stable operations, including a reduced likelihood of strikes, and provides a reputational advantage that comes from enhanced public recognition that good international standards are being followed.

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