An International framework agreement (IFA) or a global framework agreement (GFA) is “an instrument negotiated between a multinational enterprise and a Global Union Federation (GUF) in order to establish an ongoing relationship between the parties and ensures that the company respects the same standards in all countries where it operates“ (ILO definition).
The difference between a CSR commitment such as a code of conduct and a Global Framework Agreement is that the latter is a signed agreement with the people employed by the company. According to unions, such an agreement gives the company’s claims in the field of CSR credibility as it provides for joint implementing and monitoring procedures, whereas codes of conduct are the responsibility of companies only.
The vast majority of the existing agreements have been signed since 2000. Most of these IFAs were signed in TNCs whose headquarters are in Europe. 1
What is the scope and content of Global Framework Agreements?
Despite sector and company specificities, the IFAs share some common ground 2 :
- Reference to ILO Core Labour Standards, such as the freedom of association, the right to collective bargaining, the abolition of forced labour, non-discrimination, and the elimination of child labour.
- Reference to ILO Declaration on Fundamental Principles and Rights at Work.
- Recognition of the union and its affiliates in operations worldwide.
Additional features include:
- Reference to the Universal Declaration of Human Rights
- Environmental commitments
- Linkage to CSR policy (i.e. Global Compact Principles)
- Obligations with regard to restructuring including information sharing and consultation
- Decent wages and working hours
- Health and safety standards
- Training and skills development.
The scope of these agreements varies: they can just mention suppliers and subcontractors and merely oblige companies to inform and encourage their suppliers to adhere to the IFA, they can actually contain measures to ensure compliance by suppliers, and they can actually be applied to the whole supply chain, with the transnational company assuming full responsibility. Some IFAs establish that their commitment varies according to the degree of power they have within their different subsidiaries. Some IFAs extend their scope to subcontractors and present commitments to respect the labour rights (in particular regarding health and safety in the workplace) of workers of the subcontractors. One example often cited is the IFA concluded with EADS. 3
In case of non-respect, some IFAs, such as the one negotiated by Rhodia, contain precise sanctions for suppliers and subcontractors, including the termination of the contract in the case of violations of clauses that are considered to be the most important ones, for example the provisions on health and safety or on human rights. 4
Implementation of Global framework Agreements
Implementation and monitoring systems of the commitments taken by the company also vary; the most recent IFAs are more precise on the implementation aspect. According to some, the added value of IFAs is “not only to reaffirm these rights when referring to national labour law standards, but also to organise procedures on implementation and monitoring that aim at making them effective”. 5 Most IFAs institute a Committee of employees and company representatives in charge of the implementation of the agreement.
Other concrete implementing measures may include:
- Annual reporting on the implementation.
- Provision for the creation of a special body in charge of supervising the implementation of the agreement and interpretation of the agreement in case of dispute. 6
- Grievance resolution procedures at the local and international level. Some agreements establish a formal complaint mechanism by which an employee (EADS, Rhodia) or any other stakeholder (Daimler Chrysler) may denounce a breach of the agreement.
- Audit on compliance within the company.
- Few IFAs provide for the possibility to invite NGO representatives to the annual meeting.
An analysis of the Daimler Chrysler dispute resolution procedure 7
This IFA’s dispute resolution record provides compelling evidence that IFAs can produce positive results that can help promote global industrial relations, particularly where there are strong national unions and international networks and a process by which to bring the issue to the attention of the company in a timely manner. A longer term approach that seeks to improve labor relations amongst suppliers, rather than respond to crises, is now necessary. Delays in solving disputes, coupled with the re-emergence of problems considered as solved, will challenge the legitimacy of the dispute resolution process –the most prominent element of the Daimler IFA.
An example of an International framework Agreement
PSA Group Global framework Agreement on social responsibility 8
PSA Group, a worldwide automotive corporation headquartered in France, signed an IFA with the International Metalworkers’ Federation (IMF) and the European Metalworkers’ Federation (EMF) in March 2006. The agreement is interesting as it covers both the company itself and its supply chain, is firm on labour and human rights, and provides for a monitoring procedure. On 8 March, 2017 IndustriALL Global Union together with industriAll Europe renewed its global agreement with the PSA Group.
The Preamble refers to previous commitment of the corporation including the Principles of the Global Compact, the Universal Declaration of Human Rights, The International Labour Organisation’s Declaration on Fundamental Principles and Rights at Work, The Rio Declaration on Environment and Development, The United Nations Convention Against Corruption, The OECD Guidelines for Multinational Enterprises, and the UN Guiding Principles on Business and Human Rights.
Scope of agreement
The Agreement applies directly to the entire consolidated automotive division, to current and future subsidiaries over which the group exercises dominant influence; certain provisions also apply to suppliers, subcontractors, industrial partners and distribution networks.
In Part One, the Agreement includes the Groups commitments to responsible and sustainable development.
Chapter 1: PSA Group commitment to fundamental human rights
PSA Group agrees to promote compliance with human rights in all countries in which the corporation is present, including in geographical areas where human rights are not yet sufficiently protected. PSA Group agrees to work towards preventing situations of complicity or acts of collusion concerning fundamental human rights violations. PSA Group reiterates its commitment to union rights (ILO Convention no. 87, no. 135, 98), condemns forced labour (ILO Conventions nos. 29 and 105), commits to abolishing child labor and sets the minimum age for access to employment in the company at 18 (with an exception at 16 for countries and region whose economies and education systems have not achieved sufficient levels of development), and to eliminate discrimination (ILO Convention no. 111). PSA Group is committed to working against all forms of corruption.
Chapter 2: social requirements shared with suppliers, subcontractors, industrial partners and distribution networks
While PSA Group cannot take legal responsibility for its suppliers, subcontractors, industrial partners and distribution networks, the corporation will transmit this agreement to the companies concerned and request that they adhere to the international agreements of the ILO mentioned previously. PSA Group requires that its suppliers make similar commitments with regard to their respective suppliers and subcontractors. When requesting quotes from suppliers, PSA Group agrees to ensure that compliance with human rights is a determining factor in the selection of suppliers for the panel. PSA Group explains the due diligence process it has in place to manage the human rights impacts in its operations and supply chain. Any failure to comply with human rights requirements will result in a warning from PSA Group and a plan of corrective measures must be drawn up. Non-compliance with these requirements will result in sanctions including withdrawal from the supplier panel.
Chapter 3: Taking into account the impact of the company’s business on the areas in which it operates
PSA Group is committed to promoting the training and employment of the local working population in order to contribute to economic and social development wherever the corporation does business.
Chapter 4: The PSA Group’s policy commitment to environmental protection.
In Part Two: A human resources policy to develop the human capital of the PSA Group
In Chapters 1 and 2 of the second part, PSA Group commits to implementing a global HR policy that develops talents and skills, quality of life and well-being at work, while respecting diversity and equality.
In Chapter 3, the company commits to reinforcing the structures of social dialogue, including the Global Works Council, the Group European Works Council and the Joint Strategic Committee.
Finally, in the last part, the company describes the communication and monitoring of the agreement.
These chapters provide for the establishment of an annual monitoring process of application, in each country, carried out by the company management and the trade unions or employee representatives.
At the corporate level, monitoring of the report will be performed by the Global Works Council in presence of representatives of IndustriALL Global Union and industruALL European Trade Union.
IndustriAll Global Union and H&M global framework agreement
In March 2015, IndustriaALL Global Union together with the Swedish trade union IF Metall signed a global framework agreement with H&M, protecting the interests of 1.6 million garment workers. “The agreement includes setting up national monitoring Committees, initially planned for countries such as Cambodia, Bangladesh, Myanmar and Turkey to safeguard the implementation of the agreement from the factory floor upwards, and to facilitate a dialogue between the parties on the labour market 9 .”
The legal status of IFAs and the ways they can be used in legal proceedings are not clear. The GUFs involved in the negotiation of IFAs see them more as “gentlemen’s agreements,” that is, voluntary agreements that put the onus of application on the signatory parties only. From this point of view, these agreements belong to “soft law”. The most effective sanction in the case of violation by the signatory company of the rights or principles stated in these agreements remains the tarnished corporate image resulting from denunciation campaigns. 10 However, the International Organisation of employers in particular question how a court would regard this type of agreement and how it might affect any other national agreements signed by the company. 11 The recognition by courts of the legality of such an agreement might indeed lead to imposing direct obligations under the international labour standards on companies. It should however be noted that some of these agreements specifically include a “peace clause” which prevents the union from appealing to lodging a complaint before any judicial authority before the exhaustion of all internal mechanisms in place to ensure a friendly settlement of the dispute.
The lack of clear legal status of these agreements may become a problem for companies in the future. “Such a risk is less linked to a potential conflict between the signatory parties insofar as the IFAs themselves may define special dispute settlement mechanisms without involving the courts, than to a potential conflict with a third party, be it an NGO or an individual citizen”. 12
Framework agreements are mainly a means of transnational social dialogue within the company itself and may contribute to the resolution of disputes between workers and employers in particular with regard to respect for labour rights and human rights. Some agreements set forth the possibility for other stakeholders to denounce a breach before the internal grievance mechanism, but this is rare. In any case, NGOs or victims’ representatives aware of human rights violations involving a company that has signed an IFA should contact the global union federation or its local affiliate in order to bring the matter to the attention of the internal Committee in charge of implementing the agreement.