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Global labour law update: October, 2015

  • United Kingdom
  • Employment law


EU consultation on changing collective consultation law

Over the summer, the EU Commission’s consultation on strengthening existing EU legislation on worker information and consultation closed and the outcome is currently awaited. Three Directives (the TUPE, collective redundancies and information and consultation of workers Directives) are under scrutiny following an earlier review which highlighted some shortcomings and gaps in the definitions of 'information' and 'consultation' across the Directives. Of particular concern to employers is a proposal to introduce stricter obligations to inform and consult by adopting those definitions found in the EWC Directive. Such a move could result in delays to business restructuring and other business change, as well as the potential for more litigation and an increased risk of leaks of market sensitive confidential information. For further information, read our briefing.

Corporate transparency: legal threats where disclosure does not reflect reality

Reports of litigation this summer against Costco, for making misleading statements to consumers, serves as a timely warning to those organisations preparing to report on their human rights performance. It is alleged that Costco products were tainted by slave labour in their supply chains, contradicting its public statements.

Companies are facing increasing pressure to disclose the steps they are taking to combat human rights abuses. For example, the UK’s Modern Slavery Act requires larger commercial organisations doing business in the UK (wherever they are incorporated) to report annually on the steps taken to be slavery-free. The EU Non-financial Reporting Directive requires some larger companies with more than 500 employees to report annually on social and employee-related matters (expected to include the undertaking’s respect for trade union rights), human rights, anti-corruption and bribery matters. The report must include a description of the policies, outcomes and risks related to those matters and information on the due diligence processes implemented by the undertaking (and, where relevant and proportionate, its supply and subcontracting chains) in order to identify, prevent and mitigate existing and potential adverse impacts. Where the company does not have a relevant policy, the statement must provide a clear and reasoned explanation for not having one. The Directive is due to be implemented in member states by December 2016.

These developments are of significance to those working in labour law given the recent trend for trade unions to frame some disputes as human rights issues and to use global human rights concerns as a reputational pressure point against employers, for example, as part of their campaigns to grow union membership and access across the global operations of MNEs.

However, as the Costco litigation shows, companies may be better advised to be realistic, show genuine engagement, take sustainable steps to improve and ensure that public statements match practice on the ground – while a cautious approach may not win immediate accolades, it stands a better chance of protecting the company from damaging hype.

For further information on the Modern Slavery Act, read our guidance.

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