Created in partnership with the Helpdesk on Business & Human Rights

Due Diligence Considerations

This section outlines due diligence steps that companies can take to uphold the freedom of association in their operations and supply chains. The described due diligence steps are aligned with the UN Guiding Principles on Business and Human Rights (UNGPs). Further information on UNGPs is provided in the ‘Key Human Rights Due Diligence Frameworks’ section below or in the Introduction.

While the below steps provide guidance on freedom of association in particular, it is generally more resource-efficient for companies to ‘streamline’ their human rights due diligence processes by also identifying and addressing other relevant human rights issues (e.g. child labour, forced labour, discrimination) at the same time.

Key Human Rights Due Diligence Frameworks

Several human rights frameworks describe the due diligence steps that businesses should ideally implement to address human rights issues, including freedom of association. The primary framework is the UN Guiding Principles on Business and Human Rights (UNGPs). Launched in 2011, the UNGPs offer guidance on how to implement the United Nations “Protect, Respect and Remedy” Framework, which establishes the respective responsibilities of Governments and businesses — and where they intersect.

The UNGPs set out how companies, in meeting their responsibility to respect human rights, should put in place due diligence and other related policies and process, which include:

  • A publicly available policy setting out the company’s commitment to respect human rights
  • Assessment of any actual or potential adverse human rights impacts with which the company may be involved across its entire value chain
  • Integration of the findings from their impact assessments into relevant internal functions/processes — and the taking of effective action to manage the same
  • Tracking of the effectiveness of the company’s management actions
  • Reporting on how the company is addressing its actual or potential adverse impacts
  • Remediation of adverse impacts that the company has caused or contributed to

Additionally, the OECD Guidelines on Multinational Enterprises define the elements of responsible business conduct, including human and labour rights.

Another important reference document is the ILO Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy (MNE Declaration), which contains the most detailed guidance on due diligence as it pertains to labour rights.

Paragraph 10(e) of the MNE Declaration, identified the central role of freedom of association in undertaking due diligence on labour issues: “In order to gauge human rights risks, enterprises — including multinational enterprises — should identify and assess any actual or potential adverse human rights impacts with which they may be involved either through their own activities or as a result of their business relationships. This process should involve meaningful consultation with potentially affected groups and other relevant stakeholders including workers’ organizations, as appropriate to the size of the enterprise and the nature and context of the operation. For the purpose of achieving the aim of the MNE Declaration, this process should take account of the central role of freedom of association and collective bargaining as well as industrial relations and social dialogue as an ongoing process.”

Companies can seek specific guidance on this and other issues relating to international labour standards from the ILO Helpdesk for Business. The ILO Helpdesk assists company managers and workers who want to align their policies and practices with principles of international labour standards and build good industrial relations. It has a specific section on freedom of association.

Additionally, the SME Compass offers guidance on the overall human rights due diligence process by taking businesses through five key due diligence phases. The SME Compass has been developed in particular to address the needs of SMEs but is freely available and can be used by other companies as well. The tool, available in English and German, is a joint project by the German Government’s Helpdesk on Business & Human Rights and the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH.

Develop a Policy Commitment on Freedom of Association

UNGP Requirements

As per the UNGPs, a human rights policy should be:

  • “Approved at the most senior level” of the company
  • “Informed by relevant internal and/or external expertise”
  • Specific about company’s “human rights expectations of personnel, business partners and other parties directly linked to its operations, products or services”
  • “Publicly available and communicated internally and externally to all personnel, business partners and other relevant parties”
  • “Reflected in operational policies and procedures necessary to embed it throughout the business”

As part of their policy commitment to respect human rights, companies should commit not to restrict workers’ right to join a trade union/workers’ organization and to associate freely. Such a policy should be compliant with national laws and regulations. However, where the right to freedom of association is restricted under law, companies should find ways to allow workers to collectively express their concerns and have a dialogue with management, which is at the same time consistent with national law, and to provide assistance to business partners to do so.

Businesses may want to consider including the following aspects in their human rights policy to demonstrate their commitment to freedom of association:

The policy commitment on freedom of association should:

  • Be developed involving staff in key internal functions and wider labour rights expertise from inside and outside the company
  • Go through a meaningful consultation process with relevant stakeholders, particularly workers’ representative organizations
  • Be approved at the most senior level of the company
  • Be publicly available and communicated internally and externally to all staff, business partners and other relevant parties
  • Be available in relevant languages and be communicated in a manner that considers the different needs of various audiences
  • Have appropriate internal accountability for its implementation

Although some companies have developed stand-alone policies on freedom of association (for example, Vestas), it is most common for businesses to integrate commitments to freedom of association in other policy documents such as a human rights policy (H&M, Unilever and Coca-Cola) or a code of conduct (Meiji, Olam and General Mills).

Businesses may also consider aligning their policies with relevant industry-wide or cross-industry policy commitments, for example:

Additionally, businesses could enter into a Global Framework Agreement (GFA) with the relevant global union federation that represents workers at the international sectoral level. GFAs put in place standards of trade union rights, health, safety and environmental practices, and quality of work principles across a company’s global operations, regardless of whether those standards exist in an individual country; and may also include provisions for workers’ rights in the supply chain. Examples of companies that have entered into GFAs with IndustriALL include ASOS, Inditex, BMW, Bosch and Volkswagen. The ILO, in cooperation with the European Commission, has developed a searchable database of GFAs signed by companies from around the world.

Helpful Resources
  • ILO, Helpdesk for Business on International Labour Standards: This resource provides answers to the most common questions that businesses may encounter while developing their policy documents that include freedom of association commitments.
  • Ethical Trading Initiative, Freedom of Association in Company Supply Chains: This guide provides a sample policy commitment to freedom of association.
  • Ethical Trading Initiative, FOA & Worker Representation: A 5-step roadmap to implementing freedom of association, with Step 1 focusing on policy commitments.
  • Sedex and Verité, Supplier Workbook: Chapter 1.3 on freedom of association and collective bargaining includes suggestions on what companies should include in their policies on freedom of association.
  • United Nations Global Compact, The Labour Principles of the UN Global Compact: A Guide for Business: The purpose of this guide is to increase the understanding of the four labour principles of the UN Global Compact, as well as to provide an inventory of key resources to help integrate these principles into business operations.
  • United Nations Global Compact-OHCHR, A Guide for Business: How to Develop a Human Rights Policy: This guidance provides recommendations on how to develop a human rights policy and includes extracts from companies’ policies referencing freedom of association.
  • SME Compass: Provides advice on how to develop a human rights strategy and formulate a policy statement.

Assess Actual and Potential Impacts on Freedom of Association

UNGP Requirements

The UNGPs note that impact assessments:

  • Will vary in complexity depending on “the size of the business enterprise, the risk of severe human rights impacts, and the nature and context of its operations”
  • Should cover impacts that the company may “cause or contribute to through its own activities, or which may be directly linked to its operations, products or services by its business relationships”
  • Should involve “meaningful consultation with potentially affected groups and other relevant stakeholders” in addition to other sources of information such as audits
  • Should be ongoing

Freedom of association risk assessments are most often integrated into broader assessment of human rights impacts (for example Nestlé, Unilever and Electrolux). Understanding where in the supply chain the action on promoting freedom of association is most needed and (as a second consideration) where a company can exercise more influence are key steps.

Companies can assess freedom of association risks in countries where they operate and source from by:

  • Identifying highest risk countries and regions for violations of freedom of association
  • Assessing national and local law on freedom of association to identify any gaps (such as those that restrict migrant workers or public servants from unionizing)
  • Regularly engaging with national and local federations of unions and employers, civil society groups and other companies sourcing from the same country to understand industrial relations in the country of interest
  • Engaging with workers during the conduct of site visits or audits, particularly in the absence of formal unions
  • Assessing the risks to freedom of association further down the company supply chain, including the risks related to subcontracting arrangements, which do not favour stable industrial relations or unions
Helpful Resources
  • ILO, Committee of Experts on the Application of Conventions and Recommendations (CEARCR), Application of International Labour Standards 2021: This report allows companies to find out more about the state of the legislation and practice, at a country-level, related to specific labour standards, including freedom of association.
  • Ethical Trading Initiative, Freedom of Association in Company Supply Chains: This guide provides suggestions for risk analysis to identify which countries, suppliers or agencies are most likely to create difficulties for freedom of association. The guide also includes a sample supplier self-assessment questionnaire on freedom of association.
  • Ethical Trading Initiative, FOA & Worker Representation: A 5-step roadmap to implementing freedom of association, with Step 2 focusing on risk assessment.
  • ITUC, Global Rights Index 2021: Companies can use this resource to assess the risks to freedom of association globally, and to identify the highest risk countries and regions. This report looks at specific themes in relation to workers’ rights, such as the right to strike, collective bargaining and access to justice, which enables companies to identify which issues are most pertinent to their country of operation.
  • OECD, Statistics on Trade Union Density: This OECD database enables companies to understand the extent of trade union density in countries, giving insight into the industrial relations environment where operations or suppliers are.
  • United Nations SDGs, Indicator 8.8.2: This dataset provides information on the level of national compliance with regards to freedom of association and collective bargaining based on ILO textual sources and national legislation.
  • CSR Risk Check: A tool allowing companies to check which international CSR risks (including related to freedom of association) businesses are exposed to and what can be done to manage them. The tool provides tailor-made information on the local human rights situation as well as environmental, social and governance issues. It allows users to filter by product/raw material and country of origin. The tool was developed by MVO Netherland; the German version is funded and implemented by the German Government’s Helpdesk on Business & Human Rights and UPJ.
  • SME Compass: The Risk Assessment Tool provides practical guidance when rating and prioritizing risks after they have been identified.

Integrate and Take Action on Freedom of Association

UNGP Requirements

As per the UNGPs, effective integration requires that:

  • “Responsibility for addressing [human rights] impacts is assigned to the appropriate level and function within the business enterprise” (e.g. senior leadership, executive and board level)
  • “Internal decision-making, budget allocations and oversight processes enable effective responses to such impacts”

International instruments identify several actions that companies can implement to respect freedom of association and the right to collective bargaining. Companies can take action at different levels, including in the workplace and in the community of operation.

Actions in the workplace:

  • Recognize that all workers are free to form and/or join a trade union of their choice. Do not interfere with workers’ exercise of this right.
  • Should the workers in your company choose to join or form a union, recognize it and engage in dialogue.
  • Put in place non-discriminatory policies and procedures with respect to trade union organization, union membership and activity in such areas as applications for employment and decisions on advancement, dismissal or transfer
  • Provide internal training/capacity building for the direct workforce to raise awareness of the right to freedom of association and best practice
  • Provide training/capacity building for relevant business relationships (partners, suppliers, clients, etc.) that are involved with the risk/impact about how to respect workers’ right to freedom of association
  • Allow for election of free and independent workers’ representatives and recognize the duly elected representatives
  • Provide worker representatives with appropriate facilities to assist in the development of effective collective bargaining
  • Participate in good faith in collective bargaining with a view to the regulation of terms and conditions of employment by means of collective agreements
  • Consult regularly with the relevant workers’ organizations
  • Where the right to freedom of association and/or collective bargaining is restricted under law, find ways to allow the workers to collectively express their concerns and have a dialogue with management, which is at the same time consistent with national law, and provide assistance to business partners to do so
  • Consider establishing a global framework agreement with the relevant global union federation(s); consider also including provisions concerning freedom of association in the company’s supply chain
  • Screen and select new suppliers against a policy/code that recognizes the right to freedom of association for all workers
  • Assess existing suppliers against a policy/code that recognizes the right to freedom of association for all workers

Actions in the community/country of operation:

  • Engage with peer companies to use collective action/leverage to advance respect for freedom of association
  • Engage through multi-stakeholder action/leverage to advance respect for freedom of association
  • Engage with governmental or regulatory bodies whose action/leverage can help advance respect for freedom of association
  • Engage with other organizations or individuals whose action/leverage can help advance respect for freedom of association
Helpful Resources
  • Ethical Trading Initiative, Freedom of Association in Company Supply Chains: This guide provides suggestions for developing and implementing an action plan on freedom of association in supply chains, including ideas for a corrective action plan in case of breaches.
  • Ethical Trading Initiative, FOA & Worker Representation: A 5-step roadmap to implementing freedom of association, with Step 3 focusing on strategy development and implementation and Step 5 focusing on acting, embedding and consolidating.
  • Sedex and Verité, Supplier Workbook: Chapter 1.3 on freedom of association and collective bargaining includes suggestions on how companies can support freedom of association in their supply chains.
  • SME Compass: Provides advice on how to take action on human rights by embedding them in your company, creating and implementing an action plan, and conducting a supplier review and capacity building.

Track Performance on Freedom of Association

UNGP Requirements

As per the UNGPs, tracking should:

  • “Be based on appropriate qualitative and quantitative indicators”
  • “Draw on feedback from both internal and external sources, including affected stakeholders” (e.g. through grievance mechanisms)

Companies can track performance on the implementation of the freedom of association action plan by conducting audits. It is, however, essential for companies to vet social auditors carefully as freedom of association has been identified as one of the weakest areas of audit practice. Auditors should be selected based on their interpersonal skills as well as specialist knowledge on freedom of association.

In addition to audits, companies could consider adopting the following strategies to track their performance:

  • Reviewing termination records and exit interviews to determine if departing workers referred to discrimination based on union membership or serving as a worker representative
  • Conversations with managers and supervisors to ensure they understand and effectively implement freedom of association policy and procedures
  • Regular engagements with local stakeholders such as grassroots unions and NGOs to have a better sense of the local environment with respect to freedom of association
  • Regular engagements with workers themselves through site visits, surveys or other ways of communication
  • Periodically reviewing recruitment, selection and hiring records to ensure that there is no discrimination against job applicants with union affiliation
  • Routinely reviewing complaints and grievances from workers related to freedom of association

To track performance on freedom of association, businesses could also establish and track specific targets and KPIs, including:

  • Percentage of workers surveyed who understand their rights to freedom of association
  • Percentage of workers who believe the company/supplier respects those rights
Helpful Resources
  • Ethical Trading Initiative, Freedom of Association in Company Supply Chains: This guide provides suggestions for monitoring the effectiveness of an action plan on freedom of association in supply chains, including an effective auditing checklist and useful questions for auditors.
  • Sedex and Verité, Supplier Workbook: Chapter 1.3 on freedom of association and collective bargaining includes suggestions on how companies can monitor if freedom of association policies are being followed.
  • SME Compass: Provides advice on how to measure human rights performance.

Communicate Performance on Freedom of Association

UNGP Requirements

As per the UNGPs, regular communications of performance should:

  • “Be of a form and frequency that reflect an enterprise’s human rights impacts and that are accessible to its intended audiences”
  • “Provide information that is sufficient to evaluate the adequacy of an enterprise’s response to the particular human rights impact involved”
  • “Not pose risks to affected stakeholders, personnel or to legitimate requirements of commercial confidentiality”

Companies are expected to communicate their performance on freedom of association in a formal public report, which can be achieved via companies’ broader sustainability or human rights reporting (such as Unilever’s Human Rights reports or M&S Human Rights reports). An additional way of communication can be made via companies’ annual Communication on Progress (CoP) in implementing the Ten Principles of the UN Global Compact. Other forms of communication may include in-person meetings, online dialogues and consultation with affected stakeholders.

Helpful Resources
  • Ethical Trading Initiative, FOA & Worker Representation: A 5-step roadmap to implementing freedom of association, with Step 4 focusing on communication and remediation.
  • Global Reporting Initiative, GRI 407: Freedom of Association and Collective Bargaining: This GRI standard provides detailed guidance on how organizations can report their management approach to freedom of association and collective bargaining.
  • UNGP Reporting Framework: A short series of smart questions (‘Reporting Framework’), implementation guidance for reporting companies, and assurance guidance for internal auditors and external assurance providers.
  • United Nations Global Compact, Communication on Progress (CoP): The CoP ensures further strengthening of corporate transparency and accountability, allowing companies to better track progress, inspire leadership, foster goal-setting and provide learning opportunities across the Ten Principles and SDGs.
  • The Sustainability Code: A framework for reporting on non-financial performance that includes 20 criteria, including on human rights and employee rights.
  • SME Compass: The Practical Guide on Target Group-Oriented Communication helps to identify stakeholders and find suitable communication formats and channels.

Remedy and Grievance Mechanisms

UNGP Requirements

As per the UNGPs, remedy and grievance mechanisms should include the following considerations:

  • “Where business enterprises identify that they have caused or contributed to adverse impacts, they should provide for or cooperate in their remediation through legitimate processes”.
  • “Operational-level grievance mechanisms for those potentially impacted by the business enterprise’s activities can be one effective means of enabling remediation when they meet certain core criteria.”

To ensure their effectiveness, grievance mechanisms should be:

  • Legitimate: “enabling trust from the stakeholder groups for whose use they are intended, and being accountable for the fair conduct of grievance processes”
  • Accessible: “being known to all stakeholder groups for whose use they are intended, and providing adequate assistance for those who may face particular barriers to access”
  • Predictable: “providing a clear and known procedure with an indicative time frame for each stage, and clarity on the types of process and outcome available and means of monitoring implementation”
  • Equitable: “seeking to ensure that aggrieved parties have reasonable access to sources of information, advice and expertise necessary to engage in a grievance process on fair, informed and respectful terms”
  • Transparent: “keeping parties to a grievance informed about its progress, and providing sufficient information about the mechanism’s performance to build confidence in its effectiveness and meet any public interest at stake”
  • Rights-compatible: “ensuring that outcomes and remedies accord with internationally recognized human rights”
  • A source of continuous learning: “drawing on relevant measures to identify lessons for improving the mechanism and preventing future grievances and harms”
  • Based on engagement and dialogue: “consulting the stakeholder groups for whose use they are intended on their design and performance, and focusing on dialogue as the means to address and resolve grievances”

The ILO MNE Declaration moreover states that “[m]ultinational as well as national enterprises should respect the right of the workers whom they employ to have all their grievances processed in a manner consistent with the following provision: any worker who, acting individually or jointly with other workers, considers that he or she has grounds for a grievance should have the right to submit such grievance without suffering any prejudice whatsoever as a result, and to have such grievance examined pursuant to an appropriate procedure. This is particularly important whenever the multinational enterprises operate in countries which do not abide by the principles of ILO Conventions pertaining to freedom of association, to the right to organize and bargain collectively, to discrimination, to child labour and to forced labour.”

In addition, “Multinational enterprises should use their leverage to encourage their business partners to provide effective means of enabling remediation for abuses of internationally recognized human rights.”

Freedom of association-focused remedial actions can include:

  • Ensuring that workers who have been discriminated against (e.g. in hiring, job assignment, compensation, demotion or transfer) and unfairly dismissed due to anti-union actions have their employment reinstated with back pay
  • Ensuring that declarations of loyalty or other similar commitment not to form or join a union are not imposed as a condition for reinstatement

Grievance mechanisms can play an important role in helping to identify and address freedom of association issues in operations and supply chains — see Tchibo, Inditex and Lego for examples of companies with grievance mechanisms for workers. The ETI guide on freedom of association notes several points to consider with regard to grievance mechanisms, including:

  • Having a grievance mechanism alone is no substitute for a genuine trade union chosen by the workers
  • All stages of the grievance process should be transparent and systematically recorded
  • Worker grievances should not be seen as a threat but as an opportunity to learn and improve a company’s policy and processes
Helpful Resources
  • Ethical Trading Initiative, Freedom of Association in Company Supply Chains: This guide outlines considerations for setting up a grievance mechanism as a complement to a trade union within a company.
  • Ethical Trading Initiative, FOA & Worker Representation: A 5-step roadmap to implementing freedom of association, with Step 4 focusing on communication and remediation.
  • Ethical Trading Initiative, Access to Remedy: Practical Guidance for Companies: This guidance explains key components of the mechanisms that allow workers to submit complaints and enable businesses to provide remedy.
  • SME Compass: The Practical Guide on Grievance Management outlines how to design grievance mechanisms following the UNGP effectiveness criteria and includes examples from companies.
  • Global Compact Network Germany, Worth Listening: Understanding and Implementing Human Rights Grievance Management: A business guide intended to assist companies in designing effective human rights grievance mechanisms, including practical advice and case studies. Also available in German.
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