Laurent Arnaudo Auditing compliance with international labor laws – ILO standards

1. Laurent Arnaudo  Auditing compliance with international labor laws – ILO standards

2. Sodexo - FY 2011 financial highlights 2

3. Laurent Arnaudo: Auditing compliance with international labor laws Scope of work and Objectives of our audits: check the compliance with International Labour Standards References for inter’l labor laws evaluation: - Local social, health and safety laws, waste regulations, restriction on the use of hazardous substances in equipment laws/ regulations - United Nations Global Compact, Universal Declaration of Human rights, United Nations convention against corruption, Ethical Trading initiative - International Labor standards (ILO), SA 8000 standard Key focus areas of the evaluation: • Child labour • Forced labour • Health and safety • Freedom of association & right to collective bargaining • Discrimination • Disciplinary practices • Working hours • Remuneration • Management system 3

4. Laurent Arnaudo: Auditing compliance with international labor laws 4

5. Laurent Arnaudo: Auditing compliance with international labor laws ILO The International Labour Organisation (ILO) sets what the fundamental rights of workers are via a number of conventions. What is the ILO? • A UN agency • Mandate to ‘seek the promotion of social justice and internationally recognised human and labour rights’ • A tri-partite org (Govt, unions and employers’ orgs represent member states) What does it do? • Establishes Conventions on labour standards, binding on member states when ratified. 5

6. Laurent Arnaudo: Auditing compliance with international labor laws ILO • Since 1998, states are required to meet the requirements of the core conventions, regardless of whether they have been ratified. • Does not always happen (state refusal, poor law enforcement etc) • The ILO Conventions = key reference point for any good labour standard. • Set international minimum labour standards • Agreed by international consensus, with tri-partite representation The eight core ILO Conventions are: Conventions 29 (forced labour), 87 (freedom of association and protection of the right to organise), 98 (right to organise and collective bargaining), 100 (equal remuneration), 105 (abolition of forced labour), 111 (on discrimination),138 (minimum age of workers) and 182 (worst forms of child labour). 6

7. Laurent Arnaudo: Auditing compliance with international labor laws Why it is important to comply with the standard for your company ? • Company value • Brand reputation • Investors • Customers • Workers • The environmental situation 7

8. Laurent Arnaudo: Auditing compliance with international labor laws Sodexo : • One of the world’s largest employers: • with more than 391,000 employees • representing over 132 nationalities and working in 80 countries. • In the global market place, our business dealings bring us into contact with different social, political, financial, legal and economic systems as well as different cultures, traditions and languages. It is therefore essential for us to have solid ethical foundations to ensure that Human Rights are respected • Sodexo is a signatory of: • the UN Universal Declaration of Human Rights, • the ILO Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy • the UN Global Compact. • Sodexo’s mission is to “Improve the Quality of Daily Life” and we believe we have a responsibility to promote Human Rights in practical ways that relate directly to our business activities and presence. 8

9. Laurent Arnaudo: Auditing compliance with international labor laws A good system means what ? Human Rights Policy • An explicit human rights policy is widely seen as a necessary starting point for demonstrating commitment to the protection and promotion of human rights. Implementation • Roles and responsibilities of employees in managing human rights issues. This requires that responsibilities and authorities are defined throughout the organization (from the board level down) • Training (both to raise awareness of human rights and to build skills and capacities to respect and promote human rights) should be provided to all employees, especially those whose activities may impact on human rights. Development of management tools • including processes for ensuring that human rights are built into core activities • such as purchasing, project management, etc. • But also Internal Audits 9

10. Laurent Arnaudo: Auditing compliance with international labor laws Key focus areas of the audit (see appendix for more details) - • Child labour • Forced labour • Health and safety • Freedom of association & right to collective bargaining • Discrimination • Disciplinary practices • Working hours • Remuneration 10

11. Laurent Arnaudo: Auditing compliance with international labor laws The five phases of an audit • Introductory meeting with relevant managers : Explain nature / purpose of the assessment, highlighting the assessment style and drawing on the ‘Why assessment is necessary’. • Data gathering : four key sources (see next slides) • Complete the Assessment Questionnaire • Feedback meeting with managers, highlighting areas of best practice and the key areas requiring improvements • Report on the key weaknesses and implement actions 11

12. Premises Walk round Management Interviews Document Reviews Worker Interviews Laurent Arnaudo: Auditing compliance with international labor laws The four data sources: • Areas covered: • Internal & external production area • Staff canteen / kitchen / toilets • Accommodation, transport & sick bay facilities. 12

13. Premises Walk round Management Interviews Document Reviews Worker Interviews Laurent Arnaudo: Auditing compliance with international labor laws The four data sources: • Areas covered: • Human resources • Finance • Production / site manager • Health and safety manager • Procurement manager 13

14. Premises Walk round Management Interviews Document Reviews Worker Interviews Laurent Arnaudo: Auditing compliance with international labor laws The four data sources: • Areas covered: • Personnel records • Employment contracts • Pay and hours records / payslips • Health & safety records • Other records where applicable. e.g. • Collective bargaining agreement • Minutes of union meetings (or equivalent) • Policy concerning child / young workers • Disciplinary records / policy • Maternity records 14

15. Premises Walk round Management Interviews Document Reviews Worker Interviews Laurent Arnaudo: Auditing compliance with international labor laws • Worker representatives (where applicable) • ‘Highest risk workers’ e.g. • Young (<18) • Migrant • Agency • Pregnant • Night shift • Hazardous job • Trade Union members • Lowest paid / skilled The four data sources: • Longest working hours • Trainees • Use company provided accommodation 15

16. Laurent Arnaudo: Auditing compliance with international labor laws • Reporting: • Prepare the audit questionnaire / report. Use an automatic reporting tool to calculate the score, create an assessment report and detail areas for improvement. • Agree on an action plan • Monitor progress against the agreed action plan. 16

17. Auditing compliance with international labor laws – Appendix

18. Appendix : Auditing compliance with international labor laws Child Labor The company shall not engage in or support the use of child labor as defined below. • Definition of child: Any person less than 15 years of age, unless local minimum age law stipulates a higher age for work or mandatory schooling, in which case the higher age would apply. If, however, local minimum age law is set at 14 years of age in accordance with developing‑country exceptions under ILO Convention 138, the lower age will apply. • Definition of young worker:Any worker over the age of a child (as defined above) and under the age of 18. • The company shall not expose children or young workers to situations in or outside of the workplace that are hazardous, unsafe, or unhealthy 18

19. Appendix : Auditing compliance with international labor laws Child Labor - Issues • Engage in hazardous work • Hazardous work = more sever health consequences than for adults • Tired more easily, lower concentration, may not be able to assess risks properly. • Work ‘incompatible’ with education - includes full night shifts & long hours. 19

20. Appendix : Auditing compliance with international labor laws Forced Labor • Definitions: all work or service which is exacted from anyperson under the menace of any penalty and for which the said person hasnot offered himself voluntarily • Bonded Labour – forced to work to pay off a debt (yours or another’s). • Interest rates often so high, unable to pay the loan off. • Forced labour is still rife. It could include: • Forced payment of deposits • lodging ID cards • Curfew in accommodation provided by the company • Etc. 20

21. Appendix : Auditing compliance with international labor laws Heath & Safety • Provide a safe and healthy working environment • Take adequate steps to prevent accidents and injury to health, by minimizing, so far as is reasonably practicable, the causes of hazards inherent in the working environment. • Appoint a senior management representative responsible for the health and safety • All personnel receive regular and recorded health and safety training - repeated for new / reassigned personnel. • Establish systems to detect, avoid or respond to potential threats to the health and safety of all personnel. • Clean bathrooms, access to potable water. • Dormitory facilities are clean, safe. 21

22. Appendix : Auditing compliance with international labor laws Heath & Safety • General – Including Ergonomics, noise, temperature • Hygiene • Fire Safety • Machine Safety • General PPE • Use of Chemicals • Storage / Disposal of Chemicals: • First Aid • Canteen / Kitchen • Accommodation 22

23. Appendix : Auditing compliance with international labor laws Freedom of association • Respect the right of all personnel to form and join trade unions of their choice and to bargain collectively. • In those situations in which the right to freedom of association and collective bargaining are restricted under law, facilitate parallel means of independent and free association and bargaining for all personnel. • Ensure that representatives of personnel are not the subject of discrimination and that such representatives have access to their members in the workplace. 23

24. Appendix : Auditing compliance with international labor laws Discrimination • Not engage in or support discrimination in hiring, remuneration, access to training, promotion, termination or retirement based onrace, caste, national origin, religion, disability, gender, sexual orientation, union membership, political affiliation, or age. • Not interfere with the exercise of the rights of personnel to observe tenets or practices, or to meet needs relating to race, caste, national origin, religion, disability, gender, sexual orientation, union membership, or political affiliation. • Not allow behaviour, including gestures, language and physical contact, that is sexually coercive, threatening, abusive or exploitative. 24

25. Appendix : Auditing compliance with international labor laws Remuneration • Wages paid for a standard working week shall always meet at least legal or industry minimum standards and shall be sufficient to meet basic needs of personnel and to provide some discretionary income. • Deductions from wages not made for disciplinary purposes and wage and benefits composition are detailed clearly and regularly for workers • Wages and benefits are in full compliance with all applicable laws and that remuneration is rendered either in cash or check form, in a manner convenient to workers. • Labour‑only contracting arrangements and false apprenticeship schemes are not undertaken in an effort to avoid fulfilling its obligations to personnel under applicable laws pertaining to labour and social security legislation and regulations. 25

26. Appendix : Auditing compliance with international labor laws Working hours • Comply with applicable laws and industry standards on working hours. The normal workweek shall be as defined by law but shall not on a regular basis exceed 48 hours. • At least 1 day off in 7 • Overtime reimbursed at a premium rate and under no circumstances exceed 12 hours per employee per week • Overtime work shall be voluntary, unless: • Where Company is party to a collective bargaining agreement freely negotiated with worker organizations (as defined by the ILO) representing a significant portion of its workforce, it may require overtime work in accordance with such agreement to meet short-term business demand. 26

27. Appendix : Auditing compliance with international labor laws Working hours – Issues • Most national laws will specify • Problem usually lack of national law enforcement or local ‘exemptions’ • ILO requirements re working hours for non-supervisory functions: • C1. Max 48 standard hours pwk • Actual hours worked should not exceed 60 pwk. (12 hours overtime pwk) • Overtime shall be premium paid • C29.Overtime should be voluntary (under forced labour convention) • Calculations of working hours should include legally required breaks 27