A Comparative Analysis Between the Bangladesh Labor Law 2006 and 7 General Codes of Conduct

Executive SummaryThe Readymade Garment (RMG) sector in Bangladesh is a highly export oriented sector and therefore extremely volatile to requirements of international buyers. Since the adherence to international social standards has become a mandatory requirement in the international business arena, the local suppliers have to be compliant to these standards in order to remain in business. There have been some significant revisions to the Bangladesh Labor Law in 2006. This newly revised law already covers a lot of the common standards like employment conditions, occupational health and safety issues as well as the ILO core labor standards.

Besides being complaint to the national labor law, the suppliers must also adhere to the international standards. These international standards may be defined through their individual buyers’ codes of conduct or general codes of the conduct. Compliance to the buyers’ codes of conduct is mandatory but compliance to the general codes of conduct is optional unless the buyer accepts a specific general code as a substitute for its own audits or requirements.

These voluntary monitoring or verification initiatives have taken root since the 1990s to add legitimacy and credibility to companies’ social and environmental compliance programs. This study is a comparative analysis of the Bangladesh Labor Law 2006 with seven internationally recognized general codes of conducts. The general codes of conduct are: • • • • • • • SA8000 of Social Accountability International (SAI) Base Code of the Ethical Trading Initiative (ETI) Fair Labor Association (FLA) Fair Wear Foundation (FWF) Business Social Compliance Initiative (BSCI) Worldwide Responsible Apparel Production (WRAP) Joint Initiative on Corporate Accountability and Workers’ Rights (JO-IN).

Besides, the JO-IN code, the other six codes are prevalent in the Bangladeshi RMG sector. The comparative analysis shows that the Bangladesh Labor Law 2006 significantly covers majority of the requirements of the different general codes of conduct. This indicates that if a factory is 100% compliant to the national law, it will cover approximately 85% of the requirements of the other general codes of conduct. Hence RMG factories should be encouraged to improve their compliance with the national law as a first step towards meeting the compliance demands of the brands and retailers who they supply to.

The analysis does reveal that a few requirements are not fully or partially covered by the national labor law. It should be noted that the components which are not fully covered by the Bangladesh Labor Law are either covered by the Bangladesh Constitution or are not directly applicable in the Bangladesh context. This study clearly reveals that the revised Bangladesh Labor Law along with other supporting national legislations such as the Bangladesh Building Code and the Environmental Conservation Rules as well as the overall constitutional framework of Bangladesh, provides a comprehensive guideline for factories in the RMG sector to comply with majority of all international social compliance and environmental standards.

Having good pieces of legislations establishes a solid platform for meeting national laws and internationally defined working standards. However, one of the main challenges is enforcing the laws. In order to do so effectively, awareness creation on the laws and standards is of paramount importance. Campaigns should focus on knowledge dissemination on the content, the implementation procedures and how to monitor and maintain the implemented status. Another critical aspect is training personnel such as thegovernment’s factory inspectors and the associations’ social compliance monitors who are responsible for enforcing the correct implementation of the legislations and standards.

Table of Contents

A comparative analysis between the Bangladesh Labor Law 2006 and seven general codes of conduct

Introduction

The program for “Promotion of Social, Environmental and Production Standards in the Readymade Garments Sector”, in short referred to as PROGRESS, is funded by the German Ministry for Economic Development and Cooperation (BMZ). It is jointly implemented by the Ministry of Commerce (MoC) and the German Agency for Technical Cooperation (GTZ). It concentrates on increasing competitiveness and adherence to social and environmental standards in the ready made garment (RMG). One of the issues related to the RMG sector in Bangladesh is the existences of numerous different codes of conduct which suppliers have to adhere to.

Besides, these codes, the suppliers must also comply with all the requirements of the national legislations. In 2006, the Bangladesh Labor Law went through some major revisions. The revisions combined 25 scattered Acts and Ordinances to formulate one updated code. PROGRESS undertook this in-house study to analyze seven leading codes of conduct which are prevalent to the Bangladeshi RMG sector and compare the codes with the newly revised national labor law by highlighting all deviations.

The general codes of conduct for comparison considered for this study are Social Accountability International (SAI), Fair Wear Foundation (FWF), Fair Labor Association (FLA), Ethical Trading Initiative (ETI), Jo-In Code, Business for Social Compliance Initiative (BSCI) and Worldwide Responsible Apparels Program (WRAP). One of the main objectives of PROGRESS is to do capacity building with the different stakeholders in the RMG sector such as the government and the business associations so that they can provide better services to the sector and ensure that majority of factories in the RMG sector are compliant at least to the national labor law. The findings of this study serve as a basis to reinstate the fact that the revised labor law is a comprehensive piece of legislation which covers majority of the international requirements of most general codes of conduct.

By being 100% compliant with the national labor law, a supplier has significantly met majority of the international requirements. The Bangladesh Labor Law has gone through some majority revisions in 2006 which has made it into a strong piece of legislation. However, it is not still 100% perfect. There are still few gaps and lackings which need to be adjusted and amended in the future. As implementation of the revised law is ongoing, numerous other deficiencies might gradually be identified over time. Since recent revisions just took place, another series of revisions are not anticipated in the near future.

This comparative analysis of the newly revised Bangladesh Labor Law 2006 and seven general codes of conduct clearly illustrates where the commonalities and differences are. Overall, the recent revisions to the Bangladesh Labor Law and other national legislations that are associated with the RMG sector such as the Bangladesh Building Code and the Environmental Conservation Rules jointly provide comprehensive guidelines for RMG suppliers to manufacture and export products under socially and environmentally responsible working conditions which also meet majority of all prevailing international standards.

2 2.1

General Codes of Conduct Definition of Codes

The interest in the social situation of workers in developing countries has increased constantly over the last years in particular under civil societies and consumers in the industrialized countries. Social criteria have become an important part of consumer and investment decisions of individuals andorganizations and therefore also big brands and retailers become more aware of compliance to social standards. Since Bangladesh is part of 1

A comparative analysis between the Bangladesh Labor Law 2006 and seven general codes of conduct

the global market social compliance is extremely relevant for the export-oriented industry of Bangladesh, especially for the RMG sector. For competitiveness in the global markets, the compliance with environmental and social standards is a key point. Through modern information and communication technologies the economic activity of companies becomes increasingly transparent and makes it easier for the civil society to uncover and communicate social and ecological failure of multinational companies.

Companies know about the vulnerability of their brand names and messages concerning bad working conditions can easily damage their image as well as the market position. A social responsible management policy is therefore in the long-term interest of the enterprise. However companies can have a positive influence on the economic development in the target countries through the introduction of social standards and on the same time improve their image and market share through social and ecologically responsible behavior.

To address these issues voluntary monitoring or verification initiatives have taken root since the 1990s to add legitimacy and credibility to companies’ labor compliance programs. They are all voluntary, meaning that companies opt to participate in them. Each requires member companies to adopt its respective workplace code of conduct and verifies that they have complied with organizational requirements. Today, some industries have developed or are developing codes for the entire industry.

That can be best seen for the apparel and footwear sector. General Codes of Conduct as well as buyers’ codes are very common in this industry. These codes of conduct are rules, which companies impose upon themselves in order to embody social and ecological goals in the enterprise. Companies formulate these rules mostly for itself and partly also for the suppliers and orient themselves with the formulation at the international regulations and agreements already mentioned. Codes of conducts may also be recognized as useful instruments to build on the companies’ image.

A lot of companies are participating in this initiatives to show their interests in improving the working conditions of their business partners/suppliers across the global. Fair trade and buying practices are a competitive advantage for many businesses. The codes show their commitment to this process. Codes of conduct may be developed through a multistakeholder approach such as ETI etc. or companies may have their own codes of conduct which are specific for their suppliers or codes could be sector specific such as for garments, food, electronics etc.

2.2

Basis of codes

Social compliance can be measured in relation to a certain standard. Concerning environmental and quality management a multiplicity of standards and certification systems already exist.

The introduction of examinable social standards represents however a new challenge. Internationally recognized social standards exist, e.g. − United Nations Universal Declaration of Human Rights UN Convention on Children’s Rights UN Convention on the Elimination of all Forms of Discrimination against Women − ILO Declaration on Fundamental Principles and Rights at Work − Rio Declaration on Environment and Development However these are guidelines and recommendations which can be converted voluntarily. Standards that can be certified only exist to a small extent. Most of the codes refer to these mentioned international standards, especially the ILO core labor standards.

The ILO formulates international standards in the form of conventions and recommendations setting minimum standards of basic labor rights: Freedom of association The right to organize 2

A comparative analysis between the Bangladesh Labor Law 2006 and seven general codes of conduct

Collective bargaining Abolition of forced labor Equality of opportunity and treatment Besides the above mentioned standards, there are other standards regulating conditions across the entire spectrum of the work related issues.These principles are concretized in eight ILO conventions, in each case two for the four fundamental principles mentioned (see table 1). The ILO conventions are obligatory only if they are ratified by the member states. The entire number of the ratifications increased in the last years noticeably and varies – depending upon convention – in the order of magnitude between 148 and 172. Until July 2007, 128 countries had ratified all eight conventions. Bangladesh has ratified seven out of the eight core conventions.

Table 1: ILO Core-Conventions and ratifications in Bangladesh1 Standard Freedom of association and bargaining Elimination of forced and compulsory labor Elimination of discrimination Abolition of child labor Convention Convention 87 (Freedom of association) Convention 98 (Right to organize& collective bargaining) Convention 29 (Forced labor) Convention 105 (Abolition of forced labor) Convention 100 (equal remuneration) Convention 111 (employment and occupation) Convention 138 (Minimum age) Convention 182 (worst forms of child labor) Ratification Yes Yes Yes Yes Yes Yes No Yes

Codes of practice develop frequently from public pressure or are preventively developed. In addition to the mentioned core labor standards these codes include general working conditions like occupational health and safety, minimum wages, leave days and working hours. Other common aspects include women’s rights or environmental standards. Also the implementation of a management system can be a requirement.

2.3

How codes evolved

The overall aim of social standards is to protect the workers. During the industrialization in Europe they evolved as a reaction to bad working conditions in the newly emerging factories. The depletion of large parts of the workforce moved child labor, forced labor, freedom of association and collective bargaining as well as women’s rights in the centre of public attention. Socially responsible behavior – this means also ecologically responsible behavior – has its starting point predominantly in the developed industrialized countries. The observance of social standards must be furthersupervised also in these countries. The by far larger action needs lie however in developing and emerging countries. Through the increasing world-wide division of labor large parts of the production chain are located in developing countries which have deficits with the observance of social standards. While working abroad companies are supposed to be compliant to the legal regulations. In developing and emerging countries legal regulations do not always correspond to the domestic standards of the companies.

So it can be difficult for companies to combine national legislation and generally recognized basic values. Even if the legislation in developing and emerging countries corresponds to the standards of the industrialized countries there are deficits in monitoring and implementation of the standards.

1

Refer to the ILO website: http://www.ilo.org/ilolex/english/docs/declworld.htm.

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A comparative analysis between the Bangladesh Labor Law 2006 and seven general codes of conduct

However an internationally defined and recognized social standard does not exist. Thus different stakeholder came up with the idea of codes of conduct to verify the compliance to international social standards. Social standards are extremely important in an industrialized world. Nowadays due to financial benefits, most companies outsource their production to developing countries where compliance to social standards is not as important.

The problem is that consumers and respective governments ask for socially responsible behavior and working conditions and often the suppliers and governments of the developing countries cannot enforce or ensure compliance to these international standards. This issue has become a concern for the companies located in Europe and the USA and hence the companies came up with formulating codes of conduct which their suppliers have to adhere to if they want to do business with them.

Companies started off by developing their own codes of conduct. Then gradually as the codes evolved, many companies teamed up with NGOs, trade unions, academia etc. to formulate common codes of conduct. Most general codes of conduct were developed with this multistakeholder approach.

2.4•

Classification of codesdepending upon the standards they contain (all codes have similar requirements but differ in the definitions/design and some have also additional requirements e.g. waste management or anti-bribery policy); depending upon which organization or institution introduced the code and who controls the observance (companies, enterprise federations, trade unions, NGOs, management consultations or testing institutes); depending upon their members and their prevalence (European companies/market, US-American brands/market); depending upon the range of application (e.g. the enterprise-own factories or whole supply chain, etc.); depending upon the covered products (only garment, consumer goods, food, industry-wide); depending upon the methods for their implementation/control (monitoring, certification, and certification).

The codes of conduct can be classified: 2

3 3.1

Comparison of the Bangladesh Labor Law and general codes of conduct Selected indicators

The comparative analysis is categorized according to the ILO core laborstandards, employment conditions, occupational health and safety issues and other aspects. Within these four categories subjects were identified as well as indicators to measure the implementation and coverage of the subjects. The indicators were selected according to the most common aspects of the general codes as well as the Bangladesh Labor Law.

2

Please refer to Annex I for a broad overview on the general codes of conduct.

4

A comparative analysis between the Bangladesh Labor Law 2006 and seven general codes of conduct

Subjects of Codes of Conduct

ILO Core Labor Standards

Employment Conditions

Occupational Health and safety

Other Aspects

Child Labor

Harassment and Abuse

Health

Environment

Forced Labor

Wages

Workplace Conditions

Women’s Rights

Freedom of Association

Working Hours

Welfare

Managment

Discrimination

Leave ad Holidays

Safety

Employment Relationship

OHS Management System and Training

Others

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A comparative analysis between the Bangladesh Labor Law 2006 and seven general codes of conduct

3.2

Analysis

Please note that the grey colored areas indicate coverage Please note that the light grey areas indicate indirect coverage Subject Child Labor Indicators No work below the age of 14 Light work between the age of 12 and 14 Assistance to replaced child workers Identification system/age records No dangerous work Forced labor Bonded labor Prison labor No confiscated original documentation Trade unions Labor representatives Company facilitates parallel means when restricted by law Representatives access to workplace Gender Origin/ethnics Trade union affiliation Religion Political opinion Physical abuse Sexual harassment Verbal abuse Minimum wage Overtime pay Leave pay Regular payment No illegal deductions Maximum 8/day-48/week Overtime 2/day-12/week Overtime voluntary Weekly = 1 day off Annual/casual/sick Festival holidays

BLL 2006

SAI 15

ETI

BSCI

WRAP

FLA

FWF 15

JO-IN 15

ILO Core Labor Standards

Adolescent

Forced Labor

Freedom of Association

Discrimination

Employment Conditions

Harassment and Abuse

* * *

Wages

Working Hours Leave and holiday

* limited to female workers 6

A comparative analysis between the Bangladesh Labor Law 2006 and seven general codes of conduct

Please note that the grey colored areas indicate coverage Please note that the light grey areas indicate indirect coverage Subject

IndicatorsFirst aid appliances Medical facilities Drinking water Sanitary facilities for food storage Clean dormitories where provided Space Temperature Ventilation Noise Light Restroom Child room Canteen Fire extinguisher Gates/stairs Emergency exits Building safety Machinery safety Personal protective equipment (PPE) Management representative for OHS OHS management system (regulations, system to detect…)

Regular health & safety training Waste management Emission or effluents treatment No discrimination Maternity leave and benefit No dangerous work Implementation of management system Anti-bribery and anti-corruption policy Legally binding employment relationship Legal compliance Customs compliance Security procedures for outbound shipments

BLL 2006

SAI

ETI

BSCI

WRAP

FLA

FWF

JO-IN

Health

Occupational Health & Safety

Workplace Conditions

Welfare

Safety

H&S Management Training Environment Women’s Rights

** **

Others

Management Employment Relationship Others

** The SAI code of conduct recommends that companies comply by the ISO 14000 series to meet all environmental requirements.

A comparative analysis between the Bangladesh Labor Law 2006 and seven general codes of conduct

Main Findings

The comparison matrix shows that the revised Bangladesh Labor Law 2006 covers majority of the requirements of the general codes of conduct. From the above matrices, it may be seen that across the board, majority of the general codes and the BLL 2006 state that no work below the age of 14 is allowed. According to SAI, the definition of a “child” is an individual below or equal to the age of 15 but the code states that if the national law sets the minimum age to be 14 (as per ILO Convention 138), the lower age will apply.

The ETI and FLA codes state the same principle. The WRAP codes states that the minimum age should be at least 14. The BSCI code clearly states that the minimum age should be whatever is defined by the national labor law. However, the SAI, FWF and Jo-In codes are more strict and clearly state that the minimum age must be 15 or above. In the case of SAI, since Bangladesh is not included in the list of countries where ILO Convention 138 applies, the minimum age must be 15 or above even though the national labor law states that the minimum age is 14.

Although the minimum age to work is 14, the BLL 2006 has a special clause which states that children between the ages of 12 and 14 may be employed to do “light work” that does not endanger his/her health, development or interfere with his/her education. As per section 44, it is mandatory that the hours of work should be arranged such that it does not interfere with the child’s school attendance. The BLL 2006 defines an adolescent as an individual between the ages of 16 and 18 years of age. The BLL 2006 states that an adolescent may work for a maximum of 5 hours a day, that is, 30 hours a week. However, they cannot work between 7:00pm to 7:00am.

The work must be limited to a maximum of 2 shifts and one shift cannot exceed seven and a half hours of work. In the comparison matrix, it may be clearly seen that the requirements concerning adolescent labor is the same across the board. The issue of “assistance to replaced child workers” is not addresses in the Bangladesh Labor Law and the other 4 codes of conduct which are WRAP, FLA and FWF. The comparison matrix shows that besides BLL 2006, all the general codes of conduct cover the requirements under the forced labor category under the ILO Core Labor Standards.

The rationale behind this is that the issue of forced labor is not that applicable in Bangladesh. Bonded labor and prison labor are non-existent in Bangladesh. The BLL 2006 does not mention the forced labor requirements, however, Article 34 of the Bangladesh Constitution prohibits any form of forced labor. Any law approving forced labor is null and void as per the constitutional framework of the Bangladesh legislation. Also, Bangladesh has ratified both the ILO Conventions 29 and 105 which cover all forced labor requirements.

“Companies facilitate parallel means when restricted by law” requirement under the “freedom of association” category is not covered by the BLL 2006, WRAP, FLA or Jo-In codes. However, section 205 of the BLL 2006 clearly states that when a factory has more than 50 or more permanent workers are employed, a participation committee needs to be formed taking equal number of representatives from the workers and factory management. In factories where there are no trade unions, the workers representatives shall be nominated by the workers.

Section 206 of the BLL 2006 states that the participation committee shall meet at least once every two months to discuss and exchange views and recommend measures for defined functions of the participation committee. The proceeding of each such meeting shall be forwarded to the Directorate of Labor and the conciliator within seven days of meetings. Under the “Discrimination” component of the ILO Core Labor Standards, the Bangladesh Labor Law 2006 does not cover the origin/ethics, religion and political opinion. All the 7 8

A comparative analysis between the Bangladesh Labor Law 2006 and seven general codes of conduct

general codes of conduct cover these aspects. Although these aspects are not covered in the BLL 2006 but Article 28 of the Bangladesh Constitution clearly states that no discrimination against religion, cast, race, sex or place of birth is allowed. Discrimination on any ground is prohibited under the constitutional framework of the Bangladesh legislation.

The BLL 2006 does fully cover the gender and trade union affiliation aspects. The Bangladesh Labor Law 2006 covers the ILO’s “Harassment and Abuse” requirements 100% but the law restricts all the subcomponents to females only. The remaining 7 codes of conduct do not have this restriction. Voluntary overtime is not covered by the Bangladesh Labor Law 2006 however since all forms of forced labor are prohibited according to the Bangladesh Constitution, all overtime is voluntary.

The BLL 2006 states that overtime payments are double of the basic wages. All other codes state that they should be at a premium rate which is usually double of the basic wages. The Jo-In Code states that the overtime payment rate should be one and a half of the regular hourly compensation rate. The WRAP code of conduct allows excessive overtime (beyond the defined maximum allowed time period) in case of urgent business needs but the excessive hours should be more than 12 weeks in a year.

The leave and holidays requirements are fully covered by the BLL 2006 as well as the general codes of conduct. Sanitary conditions of food storage are not covered by the Bangladesh Labor Law, WRAP, FLA and FWF. But according to section 92 of the BLL 2006 states that all factories must have an in-house canteen for every 100 workers. Clean dormitories where provided are mandatory under all the other codes of conduct except the Bangladesh Labor Law 2006. The rationale behind this is that factories with dormitories are very rare in Bangladesh.

The workers usually live in the vicinity of where they work hence dormitories are not that applicable in the Bangladesh context. However, nowadays a lot of new, purpose built factories are having dormitories. In terms of working conditions, issues regarding the noise level are not stated in the Bangladesh Labor Law 2006 or the Jo-In Code but the Bangladesh Environment Acts clearly define the exact level noise that factories must adhere to. Besides the noise issue, all the other working condition requirements of the general codes of conduct are fully covered in the BLL 2006.

The welfare and safety requirements of the general codes of conduct are also fully covered by the BLL 2006. The BLL 2006 states very specific requirements regarding the safety aspects. For example, there must be one fire extinguisher for every 1000 square feet of space. The health and safety management is not covered by the Bangladesh Labor Law 2006. ETI and WRAP also do not cover the OHS management system requirements and the FWF does not state that there must be an OHS management representative.

Management systems are usually additional requirements by some brands and retailers. Regular health and safety training is not mentioned