The Red Flag Group®

Employee rights

Employee rights

Why is this a risk?

Like your company, your third parties will also be relying on their employees to provide the products and services that you are purchasing.

You have a third party in Asia that may offer poor working conditions, with hours worked above the local maximum, withholding certain legally required benefits and offering poor housing.These employees are protected by law, and by their local rights and best practices, to receive certain working conditions for a reasonable payment. It is expected that large companies will ensure that their third parties’ workers are protected, receive a fair working environment, work according to local and best practices, and are paid appropriately.

Examples of how this risk could affect you

  • You have a third party in Asia that may offer poor working conditions, with hours worked above the local maximum, withholding certain legally required benefits and offering poor housing.

Which third parties could be engaged in this area?

The types of third parties that engage in poor employee rights are typically:

  • those that are manufacturing electronics, garments or food products in a low-margin environment where labour is predominantly cheap
  • in the construction industry
  • in the fishing and food-production industry.

How are these risks managed?

The risks of employee rights violations are normally managed through:

  • detailed reviews of policies and procedures
  • conducting surveys and data-collection
  • onsite inspections to verify the validity of claims made through the surveys and data-collection efforts.