"How does a company respect the right to freedom of association in its operations and supply chain when its operations, business partners or suppliers are based in countries where such rights are heavily restricted in law and/or practice?"

Freedom of association is a separate right from collective bargaining as it can take place even when there are no trade unions present. However, there is a relationship between the two as trade unions and other groups of workers will often participate in collective bargaining.

According to the International Labour Organization (ILO), the "right of workers and employers to form and join organizations of their own choosing is an integral part of a free and open society." If companies restrict workers' rights to join a union or organisation, or to associate freely, then it is unlikely that a company will continue to maintain good labour practices. This could result in the infringement of a number of fundamental rights and labour rights violations including the use of child or forced labour, poor health and safety conditions, and the right to equal treatment.

The challenge for a business is how it can best respect its workers' right to freely associate (including the right to join a trade union and to undertake union activities) when it operates in or sources from countries in which this right is heavily restricted by government. Even if workers (either within the company or its suppliers) formally enjoy the right to freely associate, they can still face a range of practical barriers, including discrimination, informal restrictions, intimidation and even violence. In such circumstances, how – and to what degree – can a responsible company continue operating or sourcing from such countries, whilst at the same time respecting this right?

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Business and freedom of association

Often, strategic and operational goals require companies to work in countries where freedom of association is constrained, either by law or practice. As a result, businesses will often face challenges when trying to uphold policies that allow for freedom of association.

Companies are likely to come across this dilemma when operating in, or sourcing from countries where:

• Laws restrict or prohibit the right to freedom of association: This includes laws forbidding workers to form their own organisations free from interference by the employer or government. Some governments, such as those in China, Myanmar, North Korea and Iran only allow one trade union, which is often under the government's control (either directly or indirectly). Even if unions or other worker groups purport to be independent from the government, government influence can nonetheless be strong.
• There are poor legal frameworks and legal enforcement is weak: Many of the worst abuses in relation to the right to join trade unions or workers associations is characterised by limited enforcement of labour laws. Likewise, in many countries the ability of courts, labour inspectorates and other enforcement bodies to protect this right is undermined by a lack of capacity and resources – as well as corruption. In such contexts, local companies are often able to discriminate against workers linked to unions (and other workers' groups), or subject them to more extreme abuses. In some cases, these can include kidnapping and even murder.
• Governments interfere with the formal registration of unions: In some countries governments may obstruct the bureaucratic process necessary for the legal recognition of trade unions. In others, governments may refuse to legally recognise these unions for spurious reasons.
• Companies refuse to recognise a trade union: Suppliers may refuse to recognise trade unions or worker organisations and therefore refuse to listen to complaints or to partake in collective bargaining. According to the International Trade Union Confederation (ITUC), in approximately 84 out of 141 countries analysed in the 2015 ITUC Global Rights Index, actions by governments or companies rendered collective bargaining rights meaningless.
• Managers or suppliers engage in practices that discourage workers from organising: This includes, for example, not allowing union leaders access to workers for recruiting purposes, as well as the punishment of union organisers or members through intimidation, arbitrary dismissal or forced relocation. In its 2015 Global Rights Index, the ITUC reported that workers in 73 out of 141 countries experienced dismissals, suspension, pay cuts and/or demotions for engaging in peaceful union activities.

Global overview of impediments to freedom of association

The average degree of trade union density - the proportion of paid workers who areunionmembers - in OECD countries in 2013 (latest data available) was 16.9%. This figure hides substantial variations between OECD countries, some of which are highly unionised such as Sweden (67%) and Denmark (66%), and others that have much lower unionisation rates, such as Germany (17.7%) and the UK (25.4%).

According to the ITUC, the worst region in the world to be a trade union member is North Africa and the Middle East, primarily because migrant workers in the Gulf are excluded from labour protections, and labour activists in non-democratic states may experience state repression. The top-10worst countries in the world for freedom of assocation in 2015 are, according to the ITUC: Belarus, China, Colombia, Egypt, Guatemala, Pakistan, Qatar, Saudi Arabia, Swaziland and the United Arab Emirates.

A number of countries continue to ban independent trade unions including China, Laos, North Korea and Viet Nam. In September 2012, Myanmar retracted its ban on independent unions by permitting the Federation of Trade Unions – Burma (FTUB), now the Confederation of Trade Unions – Myanmar (CTUM), and its leaders to return home from exile and to continue their trade union activity. In July 2015, the government official recognised and registered CTUM.

According to the ITUC, there was an increase in the global number of arbitrary arrests and detentions of workers for engaging in peaceful union activities in the 2014/2015 reporting period. The number of countries where such violations were reported rose from 35 in 2013/2014 to 44 in 2014/2015, including cases in both Spain and Brazil.

In some locations, workers' representatives face serious violence at the hands of groups who are either politically motivated and/or who have been directly tasked by employers to discourage union activity. This includes paramilitary groups operating in areas of weak government control – for example in remote rural areas with a limited government presence According to the ITUC, the Americas are one of the most dangerous regions for trade unionists. In Colombia, Guatemala and Honduras, there is systematic and widespread impunity for crimes against trade unionists, including killings, attempted murders and physical attacks.

In some regions, employers may finance organisations that provide non-work related benefits to workers, such as social programmes and possibly access to credit. These organisations (‘solidarista') are often led by company managers. They do not amount to independent trade unions and can in some cases act as impediments to the development of independent trade unions.

Special Economic Zones

Special Economic Zones (SEZs) aim to attract foreign investment through a number of incentives, including tax breaks and exemptions from labour and environmental laws. As a result, in some countries trade unions are forbidden or restricted within these zones.

Because of this, SEZs are often the site of abuses. The ITUC claims that in 2012 employers hindered unionisation of workers in EPZs in Mauritius, Sri Lanka, Morocco, Swaziland, Nigeria, Sudan, Madagascar, Togo, Jamaica and Egypt. This includes EPZ fruit processing company, Blue Skies Products (based in Ghana), which is alleged to have persistently resisted the unionisation of its employees. In 2003, the ILO reported that there were about 3,000 SEZs in 116 countries, in which approximately 43 million workers were employed. China, Bangladesh, Pakistan and Malaysia either outlaw unions within their SEZs, or make it very cumbersome for workers to form trade unions or workers' organisations. Common industries located within SEZs include electronics and textiles.

Cost pressures and globalisation

Companies and their suppliers can be under intense pressure to reduce the costs of production. Since many production costs are fixed, the pressure to reduce variable costs (such as wages) is often increased. When workers form trade unions, companies (or their suppliers) may become concerned that any union activities could incur costs for the company, such as higher wage settlements and reduced working hours.

The global financial and economic crisis has increased pressure on labour markets, reducing available jobs and negatively impacting on working conditions such as wages. In addition, accelerated globalisation has arguably prompted a ‘race to the bottom' for companies seeking cheaper labour costs and lighter labour regulation. Similarly, countries compete with one another to attract investment from such companies, often through the liberalisation of labour regulation. This may mean that an increasing number of workers are denied fundamental human rights.

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Real-world examples

Drummond Company Inc. alleged to be complicit in paramilitary killings of trade union members

In March 2012, the ex-paramilitary Alcides Mattos Tabares, whilst testifying before a US court, claimed that the mining company Drummond Ltda paid paramilitary groups approximately US$1.5 m to kill trade unions members in the department of Cesar, in Colombia. Alcides claimed that whilst part of the paramilitary group Autodefensas Unidas de Colombia (AUC), he took part in the murder of two strike-organising trade union members at Drummond, the president and vice president of the Sintramienergetica trade union. A month later, in a subsequent hearing, Jaime Blanco Maya, who was contracted by Drummond to provide catering services for the mining workers, claimed that the he served as a mediator between the paramilitary group and the multinational, and was in charge of arranging the payment of financial aid. Blanco Maya pled guilty to conspiracy to commit murder, admitting that he knew two trade union members were going to be killed but had not acted to stop it. He claims, however, that James Atkins (the ex-CIA agent in charge of the security of the company) and Jairo Charris (a former worker at Drummond) had masterminded the killings. In February 2013, Blanco Maya was sentenced by a Colombian court to 38 years in prison for organising the killing of the two labour leaders in 2001. Subsequently, in May 2015, Alfredo Araujo, the former Head of Industrial Relations for Drummond, was also charged with murder. The case is now before the Colombian Courts of Justice.

Drummond stated that they only relied on their own private security forces and the Colombian army to protect their assets and denied all connections with paramilitary groups. The hearings were part of a civil lawsuit, in which over 600 victims filed against the company in the State of Alabama. How does a company ensure that at no stage of its operations are anti-union sentiments expressed through, potentially fatal, violent force, especially when security operations are carried out at worksites?

Activist groups accuse UNIQLO suppliers of interfering with worker representation in China

In January 2015, Students & Scholars Against Corporate Misbehaviour (SACOM), Labour Action China (LAC), and a Tokyo-based Human Rights Now (HRN), investigated working conditions at UNIQLO suppliers in China – including Pacific Textile Ltd (Pan Yu) and Dongguan Luen Thai Garment Co., Ltd. In addition to poor working conditions, the subsequent report alleged that the suppliers interfered with the independent representation of workers.

The investigation found that workers did not have the right to elect their own representative to express their opinions and ideas to the management through regular meetings between union committee and factory management. The report noted that Luen Thai managers selected the workers' representative candidate and did not permit any other candidates to run. At Pacific Textiles, it was alleged that workers were not permitted to elect their representatives.

After the launch of the report, Fast Retailing (FR) (UNIQLO's parent company) acknowledged the findings and undertook its own independent investigation. In January 2015, FR issued a corporate social responsibility action plan that included a specific commitment to work with third parties including auditors and NGOs, to help workers exercise their right of collective bargaining, to elect representatives democratically and to engage in discussion with management on a regular basis.

Luxury brand Mulberry accused of inaction over alleged union-busting by its suppliers

In 2015, Mulberry, the luxury leather goods brand, faced a nine-month campaign of protests at stores and franchises across Europe and the US, coordinated by workers in Turkey and activists from the Clean Clothes Campaign and Union League. Workers claimed the brand had failed to protect them from anti-union activities at its Turkish supplier SF Leather, in Izmir. Management allegedly fired 14 workers who joined the Deriteks Sendika union and agreed to re-hire workers only on condition that they surrendered their union membership. SF Leather employs 190 workers and 90% of its production is destined for Mulberry. In response to the campaign, Mulberry stated that their Global Sourcing Code of Conduct requires suppliers to respect the right of employees to join or form an association of their choosing. In addition, in September 2015 Mulberry noted that it would investigate the matter and await the outcome of legal processes in Turkey. A meeting in October 2015 between SF Leather and workers resolved the dispute and resulted in the promise of compensation for the dismissed workers and a commitment by the supplier to respect union activities. The case illustrates how labour rights violations at a single supplier can negatively impact a global brand's reputation.

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Legal risks

When the right to freedom of association is enshrined in national law, a company may face legal risks if it obstructs worker activity in this regard. This is in a great degree dependant, however, on whether and to what degree such law is enforced in practice and whether workers are prepared to defend their rights in court. Although many such cases have taken place in the United States and other similar jurisdictions, for example, they nonetheless demonstrate some of the situations in which litigation can take place in a range of countries - including emerging economies.

Since 2006, for example, Starbucks has faced six anti-union cases all initiated by the barista affiliated Industrial Workers of the World (IWW), which has resulted in considerable legal costs and adverse publicity. Three of these cases were filed in three different states in the US: New York, Michigan and Minneapolis, all with the National Labor Relations Board (NLRB). The NLRB is an independent federal agency created to investigate and make findings in relation to complaints made by workers that are protected by the National Labor Relations Act.

Some of the cases filed by the IWW with the NLRB include:

• New York (2009): In this case the administrative law judge found that work rules were unfairly imposed on employees who supported the IWW. It is claimed that the company reprimanded a barista for participating in a union protest, interrogated other baristas about their union activity and tore down union flyers from company bulletin boards. The company was ordered by the NLRB to give the jobs back to their former workers and to compensate them for lost earnings. The company was also ordered to post notices informing employees of their union rights
• Michigan (2009): In this case, a worker was fired after making a complaint on behalf of the union about an air-conditioner that did not comply with occupational health and safety standards. Starbucks agreed to settle before the hearing for undisclosed costs, but did not admit liability
• Minneapolis (2008): This case involved Starbucks who was found by the NLRB to have prohibited union members from discussing the union whilst at work, as well as prohibiting them from posting any union related materials. The NLRB found for the union early in 2009, stating that workers could discuss union issues while on the job

Production and reputational risks

Additional risks companies may face if the right to freedom of association is undermined within its operations or supply chain include:

• Loss in productivity: A lack of legitimate channels through which workers can articulate grievances and concerns to employers can result in a breakdown in communications and acrimonious industrial disputes. Arguably, this in itself can result in disputes and strikes that could affect company productivity. In addition, it may result in high levels of employee turnover. Together, these can do much to undermine company productivity. In addition, it may result in high levels of employee turnover. Together, these can do much to undermine company productivity.
• High employee turnover: Workers that are not being adequately compensated, are working long hours and are being refused time off may look for work elsewhere. Employees who experience difficulty between balancing out home and work-life balance are three times more likely to consider quitting their jobs.
• Damage to reputation: NGOs and trade union-driven media campaigns alleging that companies are violating workers' rights to associate freely can do significant damage their reputation. This can also result in brand contamination, a loss of sales, poor recruitment and other commercial challenges.

On 16 March 2010, for example, a conglomerate of trade unions (representing 45 million workers) wrote a letter to the Council on Ethics of the Government Pension Fund of Norway, asking it to divest its holdings in Grupo Mexico due to alleged labour and environmental abuses. The unions accused the large mining conglomerate of systematically attacking labour unions, as well as workers' rights to freely associate and collectively bargain. It was also alleged that the National Union of Mine and Metal Workers of the Mexican Republic (SNTMMSRM) in particular, were targeted by the company. The unions cited examples include seizing the SNTMMSRM's assets, attempting to replace the union with one selected by the company and the launch of a protracted campaign of repression against the union's leadership.

Sustained campaigning also can result in disinvestment. According to one study, best labour practices (which are often the outcome of strong worker representation) provide returns to shareholders that are three times greater than those of companies with weak practices.

For example, in 2015 an IndustriALL global union affiliate (the Turkish Union of Textile, Knitting and Clothing Industry Workers or TEKSIF) carried out an activist campaign aimed at fashion label Hugo Boss. The union alleges that union members were intimidated and unfairly dismissed at a factory in Turkey, which is directly owned and managed by the Hugo Boss brand. IndustriALL also alleges that anti-union activities took place in other factories which supply Hugo Boss. In 2015, the Turkish High Court of Appeal ruled in the union's favour, requiring the reinstatement of 20 workers sacked between 2011 and 2014.

Similarly, on 30 June 2009 the Clean Clothes Campaign (CCC) alleged that companies such as Polo, Ralph Lauren and Tommy Hilfiger have been ignoring labour right infringements occurring in supplier factory PT Mulia Knitting Factory located in Indonesia. CCC alleges the factory has denied its employees that right to set up its own workers' union and that these high quality brands are ignoring the rights of these employees.

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The UN ‘Protect, Respect and Remedy' Framework for Business and Human Rights provides guidance on how to protect individuals and communities from corporate related human rights harm.

The framework is comprised of three key principles:

• Protect: The state duty to protect against human rights abuses by third parties, including business;
• Respect: The corporate responsibility to respect human rights; and
• Remedy: Greater access by victims to effective remedy, both judicial and non-judicial.

The framework states that in addition to complying with national laws businesses have a responsibility, in the context of the countries where they operate, to respect human rights through their own business activities and through their relationships with third parties – such as business partners and entities in their supply chains. To meet this responsibility, the framework notes that businesses should engage in human rights due diligence and specifies the main components of the process:

Policies: Including a human rights policy containing broad commitments, supported by more detailed guidance in specific functional areas

Impact assessment: Including assessments that explicitly reference internationally recognised human rights and are used by companies to avoid potential negative human rights impacts on an ongoing basis

Integration: Including the embedding of respect for human rights throughout a company

Tracking performance: Including regular updates of human rights impact and performance

The Guiding Principles for the Implementation of the UN "Protect, Respect and Remedy" Framework aim to provide "concrete and practical recommendations" about how businesses can operationalise their responsibility to respect human rights. According to the Guiding Principles, the responsibility to respect human rights requires responsible companies to:

• Implement a human rights policy
• Apply human rights due diligence
• Provide for remediation

The UNGPs apply to all States and to all business enterprises, both transnational and others, regardless of their size, sector, location, ownership and structure.

The UNGPs have experienced widespread uptake and support from both the public and private sectors, and numerous companies have publicly stated their commitment to the Guiding Principles. The UN Guiding Principles Reporting Framework is also used by companies to report on how they respect human rights.

Companies can seek specific guidance on this and other issues relating to international labour standards from the ILO Helpdesk. This aims to help company managers and workers understand the ILO approach to socially responsible labour practices and to assist in the development of good industrial relations.

For a company to ensure the elimination of restrictions on freedom of association within its own operations, it should first comply with national laws on freedom of association. Where there are no national laws in place, companies that aim to create policies that responsibly respect the right to freedom of association can be guided by international instruments.

Instruments include the ILO Convention No. 87, Freedom of Association and Protection of the Right to Organise (1948) and ILO Convention No.98, Right to Organise and Collective Bargaining (1949) which set down a number of basic principles. Principles include giving employees the right to establish and join trade unions "of their own choosing without previous authorisation" and being given "adequate protection against acts of anti-union discrimination in respect of their employment."

It is important to note however that employers are not required to take on an active role in supporting worker's efforts to associate or organise. That said, employers must ensure that workers can exercise this right in a climate free of violence, pressure, fear and threats.

Other actions that responsible business might take include:

1. Policy and procedure

Adopting a human rights policy that commits to that does not restrict a worker's right to join a trade union/organisation and to associate freely. Such a policy should be compliant with national laws and regulations. However if it is below international standards then a company can make a commitment to aspire to international standards, as long as it does not conflict with the host country's law:

Specific policies, some of which have been used by companies with many tiers in their supply chain, such as Coca Cola, HP and Levis Strauss could include, for example:

• Workers shall not be discriminated against on the basis they belong to a trade union
• Workers shall have the right to develop a parallel means of independent free association to protect their rights, such as forming an internal workers group, if the law restricts the right for a worker associate freely
• Employers are prohibited to use intimidation, unreasonable searches, or police and military force to obstruct workers' right to freedom of association
• Workers' organisations have the right to conduct their activities without employer interference. This includes the right for workers to convene meetings without the presence of management
• Workers are free to meet and discuss workplace issues during breaks at work and before and after work.
• Workers are free to choose with whom they communicate their concerns.
• Workers shall have the right to freely choose representatives to organise workers
• Workers can personally, or through workers' representatives, engage in dialogue with management, inspect working conditions and carry out other organising activities that do not disrupt factory management
• Employers should not prohibit or impede individual unions affiliation with larger regional, national or international unions or federations
• Managers should be trained in freedom of association compliance

If appropriate, the policy can be extended to suppliers through their codes of conduct or contracts by embedding a requirement that the supplier must comply with the company's policies on freedom of association. This may become applicable when a company sources a majority of its products (or components) from multiple tiers of the supply chain. To ensure that suppliers are complying with the code they could, through supplier audits, check that these policies are being complied with.

2. Provision of training to company auditors

Companies can provide training to its auditors so that they are aware of the current national laws and regulations on labour rights, including laws on freedom of association in particular countries and regions

Furthermore, a company can train auditors on the warning signs that they must be on the lookout for in relation to breaches to an employee's right to associate freely.

Warning signs can include (but are not limited to):

• Low trade union membership
• A disproportionate amount of workers who are members of trade unions being laid-off
• Frequent A high amount of strikes or lock-outs
• The refusal of the supplier factory to collectively bargain with trade unions or workers' organisations

3. Provision of training to supplier factories

The company can train suppliers on workers' rights in relation to freedom of association. This training can ensure that suppliers comply with any code of conduct that has been agreed with by the company. A company could do this where freedom of association is restricted by governments, such as China as long as training complies with the laws of the country.

Training can provide information on:

• Current national laws and regulations on labour rights, including laws on freedom of association
• How to ensure that workers' rights are upheld. This could include, for example, allowing workers to form internal groups or vote for representatives. This training can be provided in countries where the right to join an independent trade union is restricted or forbidden

4. Sign international framework agreements with unions

Companies are increasingly signing framework agreements with relevant trade unions, which undertake to protect fundamental workers' rights. This provides for greater transparency and can assist the company in recruiting highly skilled workers. Agreements between companies and trade unions can be at a local, sectoral or international level. If companies deem it appropriate, they can join other parties to the framework agreement, such as major suppliers and joint venture partners.

International framework agreements often commit the company to observing international standards for the recognition of the right to join a trade union as well as other fundamental workers' rights.

5. Develop grievance mechanisms for workers who do not have access to trade unions or workers' representative

Where the right to associate freely is restricted, either by law or practice, a company can (if appropriate) establish grievance mechanisms for both their employees, and, if feasible, for suppliers' employees. These mechanisms should ensure that workers are not reluctant to report any grievances, so if appropriate, a third party facilitator could be useful. The facilitator should also have the power to properly investigate any complaint, including being allowed to inspect suppliers' premises as well as implementing remedies in response to the complaint.

Mechanisms should be:

• Independent (e.g. either through a third party or an employee ombudsman)
• Confidential, so if required, the worker remains anonymous

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International standards

The principle of freedom of association is set out in Article 20 of the Universal Declaration of Human Rights: "Everyone has the right to peaceful assembly and association" and "no-one may be compelled to belong to an association". It is also enshrined in a number of human rights instruments including Article 22 of the International Covenant on Civil and Political Rights (ICCPR) and Article 8 International Covenant on Economic, Social and Cultural Rights (ICESCR).

According to the The Labour Principles of the United Nations Global Compact, Guide for Business, "Freedom of association implies a respect for the right of all employers and all workers to freely and voluntarily establish and join groups for the promotion and defence of their occupational interests. Workers and employers have the right to set up, join and run their own organisations without interference from the State or any another entity. Employers should not interfere in workers' decision to associate or discriminate against either those workers who choose to associate or those who act as their representatives."

Article 2 of the ILO Convention No. 87, Freedom of Association and Protection of the Right to Organise (1948) gives both workers and employers the right to establish (in accordance with rules) or join organisations of their own choosing without previous authorisations. Article 3(2) further says that public authorities should refrain from any interference. It has been ratified by 152 countries. Countries that have not ratified the convention include China, Iran, Iraq, Brazil and India.

ILO Convention No.98, Right to Organise and Collective Bargaining (1949) has been ratified by 163 countries. Article 1 says that "workers shall enjoy adequate protection against acts of anti-union discrimination in respect of their employment." Further, Article 4 states: "Measures appropriate to national conditions shall be taken, where necessary, to encourage and promote the full development and utilisation of machinery for voluntary negotiation between employers or employers' organisations and workers' organisations, with a view to the regulation of terms and conditions of employment by means of collective agreements". China, Iran, Brazil and India are some of the countries that have not ratified this convention.

Relevance with collective bargaining

Collective bargaining is a separate right, which can create separate issues for companies. It can be defined as "a voluntary process through which employers and workers discuss and negotiate their relations, in particular terms and conditions of work. Participants include employers themselves or their organisations, and trade unions or, in their absence, representatives freely designated by the workers." Therefore, although trade unions often participate in collective bargaining this is not a requirement and workers not part of organisations can also participate.

According to the ILO, collective bargaining "allows both sides to negotiate a fair employment relationship and prevents costly labour disputes". The ILO notes that research indicates that "countries with highly coordinated collective bargaining tend to have less inequality in wages, lower and less persistent unemployment, and fewer and shorter strikes than countries where collective bargaining is less established."

Human rights impact

In contexts where the right to freedom of association is restricted, a range of human rights abuses are impacted, including:

Right to equality before the law, equal protection of the law, and rights of non-discrimination (ICCPR, Article 26): Trade union activists can experience discrimination in the form of arbitrary dismissal, demotion, or lack of access to promotions.

Right to work (ICESCR, Article 6): The right to work includes a prohibition of arbitrary dismissal. However, trade union members in many countries are arbitrarily dismissed by employers as a result of trade union membership or collective bargaining activities.

Right to freedom of assembly (ICCPR, Article 21): The right enables workers and trade union members to peacefully undertake group demonstrations. Demonstrations by trade unions can result in interference by police or company security in many countries, in extreme circumstances, end in violence. Restrictions in the right to assemble freely often go hand in hand with frequent dismissals of unionised workers.

Right to enjoy just and favourable conditions of work (ICESCR, Article 7): The right to enjoy just and favourable conditions at work encompasses a wage that enables families to enjoy the right to a decent standard of living and for parents to maintain reasonable working hours (according to the ILO no more than 48 hours). In many countries where trade unions are not independent or present, workers' conditions are not just and favourable.

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