Vendor Compliance

(Code Of Conduct)
 Global fashion market
160 garment producing countries
3 major markets  US, EU, Japan
Major manufacturers:
oEast Asia : china, H.K, Korea, Macau, Taiwan
oSouth Asia : India, B’desh, POKistan, Sri Lanka
oASEAN : Thailand, Philippines, Malaysia,
Indonesia
 Global fashion market
oCaribbean basin : Nicaragua, Jamaica,
Honduras, Haiti, Guatemala, El Salvador,
Dominican Republic, Costa Rica, Mexico
oAndean region : Peru, Ecuador, Colombia,
Bolivia
oSub-Saharan Africa : Mauritius, Madagascar, S.
Africa, Lesotho, Egypt, Israel, Jordan, Turkey
 SWEAT SHOP
(Workplace in which workers have to work long hours at low
wages under poor conditions)
 Code of Conduct(COC)
COC is a set of standards & guidelines
Spells out desired behaviour & practices
Outlines the ethical business practices
Typically seeks compliance with local laws &
other I’nal norms (I.L.O.)
 COC – Major Initiatives
Fair Labour Association (FLA) [U.S.A.-1999]
Worldwide Responsible Apparel Production
(WRAP) [USA, 1999]
Worker’s Rights Consortium, USA
Clean Clothes Campaign, Netherlands
FIFA, COC
Ethical Trading Initiative (ETI)[U.K.]
 COC – Major Initiatives
SA 8000
Rugmark Foundation [India, 1994]
 Global Supply Chain
a. Complex environment
Buyers have to communicate with factories,
agents, NGOs, consumers, local communities,
unions, trade associations, investors, media,
courts, own employees & shareholders
Not having a COC in an open environment is
akin to suicide!!!
 Global Supply Chain
b. Campaigns by consumer, human rights and
labour rights, groups
Disclosures, transparency, stringent rules for
compliance
 Global Supply Chain
c. Development of consensus codes
Many buyers, many codes, …..problem for
factories
300 codes currently operating in apparel,
footwear, toy & sports goods industries
Consensus codes : many parties agree to
common code of conduct
Irony : many consensus codes
 Global Supply Chain
d. Shareholder activism
Conscious shareholders pass shareholder
resolutions seeking stricter ethical norms
e. Pressure from human right organisations
Earlier focus was on governments
Today, attention is on corporations
 Global Supply Chain
f. Companies are going for best practices
g. Ownership of COC
Serious brands encourage the factory
management to take ownership of COC
From policing to partnership
h. Changing NGO approach
Old approach  boycott the products
New approach  work with factory towards
resolving problems while continuing production
 COC as a biz. tool
1. Expression of commitment
COC provides an evidence of a resolve to
uphold social accountability values by the biz.
 COC as a biz. tool
2. Brand protection
Bad publicity can kill a brand
Consumer ‘withdraw’ support from a ‘great
product’ that’s stained with ‘human blood & sweat’
Negative media coverage is guaranteed &
instant!!!
Non-compliant companies are less likely to attract
& retain talented employees
 COC as a biz. tool
3. Improvement in quality & productivity
Factory performs better on account of improved
management systems & happy workers
4. Minimised biz. risk and liability
Reduced risk of legal actions/law suits
Less harassment by local labour dept. officials
Minimise liabilities of compensations arising out
of illness & accidents
 COC as a biz. tool
5. Better crisis management
Compliant companies can undertake corrective
action more promptly to prevent further damage
How to develop & implement COC
Create company vision & philosophy
Formulate COC policy
Create COC
Communicate COC
Determine process & procedure
Build an effective team
Training staff
Audits & monitoring
Compliance decisions
 Factory audits & monitoring
process
Difference between audit & monitoring
 Audit  approval or rejection
 Monitoring  surveillance (internal/external)
Auditors & monitors
Administrative procedures
 Buyer’s vendor compliance dept. issues a set of
application forms, COC & vendor agreement
Factory audits & monitoring
process
Scheduling of Audit
Payment for Audit
Offering hospitality to auditors
The audit process
The audit report
Letter of approval
 Factory audits & monitoring
process
Ongoing monitoring
Approval is factory-specific
Who should coordinate audit & monitoring?
How much to reveal?
 PRINCIPLES
All products should be
Safe
Produced in a clean & safe environment
In accordance with local legislation
 ETHICAL STANDARDS
Commitment to provide quality products
Identify and work with suppliers :
with compatible ethical standards
who are law abiding
who provide safe & healthy work conditions
 ETHICAL STANDARDS
Suppliers must conform to labour, health and
safety laws
Recognise the dignity of individuals
Not use slave, involuntary prison or forced labour
Rights of lawful free association
Collective bargaining
Workplace free of harassment, abuse, degrading
treatment, corporal punishment
 ETHICAL STANDARDS
Respect privacy and family life of employees
Freedom of thought, conscience, religion
Recognise & respect cultural differences
No discrimination based on gender, race, colour,
nationality, cultural or religious beliefs, age or
marital status
 ETHICAL STANDARDS
Must comply with laws & standards pertaining
to environment
Provide training and education to workers
GENERAL REQUIREMENTS
DEFINITION

Workplace - is defined as place of work

1. factories 6. embroiderers
2. manufacturing units 7. processing houses
3. subcontracting units 8. inspection houses
4. laundries 9. warehouses
5. packaging manufacturers
 1. No forced labour
Employment is freely chosen
Employer shall not use forced, bonded or
involuntary prison labour
The employee shall be free to leave
manufacturing or residential facilities at any time
when they are not working
 1. No forced labour
Employees shall be allowed to consult with
doctors during WORKING HOURS
NO deposit or identity documents shall be
retained for hiring, accommodation, tools or
personal protective equipment or for any other
reason
 1. No forced labour
The Employees don’t have to pay for any tools
they use for manufacturing or which are required
for personal safety
Loans shall be provided subject to written
agreement at affordable rates
2. Freedom of Association
Employees should have the right to join any trade
union and bargain collectively
Employee representatives should not be
discriminated against
3. health/safety standards
Should aim to reduce accidents
Maintain welfare & safety of employees
Worker should be trained to ensure safe and
proper use of equipment & m/c
Raise awareness of potential risks
3. health/safety standards
New workers should be trained
Training should be ongoing
Train again if …..
Equipment or processes have changed
Worker is assigned a new duty or where an
accident has occurred
3. health/safety standards
Senior Manager - health, safety and welfare
requirements
Employer must provide as much information,
instruction, training and supervision as is necessary
3. health/safety standards
Training records must be kept for each individual
employee
 3.1 working condition
3.1.1 workplace
Workplace must be SAFE & CLEAN
sound structure
readily accessible clean drinking WATER
Workplace must be well ventilated and lit
Workplace should be pleasant
 3.1 working condition
3.1.2 toilets
Toilets  clean & odour free
Toilets  flushing + washing water
Every 2 floors 1 male + 1 female room
Toilets must have doors + opaque windows to
protect privacy
 3.1 working condition
3.1.3 canteens

Food storage and preparation areas shall be clean

and hygienic
Cooks shall be trained in food preparation hygiene
 3.1 working condition
3.1.3 canteens
Utensils, if re-used, should be clean & sterilised
Facilities should be provided for eating meals
Adequate rest facilities
3.2 fire safety/evacuation procedures

3.2.1 smoking policy

Employers shall develop a policy on smoking and

communicate it to all employees
Signs shall be posted where smoking is prohibited
 3.2 fire safety/evacuation
procedures

3.2.2 evacuation procedures

Evacuation plan w/ procedure and layout to be

posted @ prominent areas
Emergency drills - every 6 months - workplace as well
as dormitories
 3.2 fire safety/evacuation
procedures
3.2.2 evacuation procedures

Written evacuation procedure for emergencies like

fire, chemical spillage, electricity failure, natural
disaster
 3.2 fire safety/evacuation
procedures
3.2.3 walkways, stairs, exits

Fire exits shall be signed, well maintained, free

from obstruction and easily opened
Walkways should be at least one meter wide &
pathways are free from obstruction and tripping
hazards
 3.2 fire safety/evacuation
procedures
3.2.3 walkways, stairs, exits

Stairs have adequate & secure handrails

Each floor at least 2 emergency exits
Floor and roof openings must be covered or guarded
to prevent falling
3.2 fire safety/evacuation procedures

3.2.4 fire protection equipment

At least one fire extinguisher should be provided
within every 75 ft. in distance or per 1000 sq.ft.
Emergency lighting s.b. in the direction of escape
route in case of power failure
3.2 fire safety/evacuation procedures

3.2.4 fire protection equipment

Fire alarms or other means to be on all floors to warn
staff of evacuation
Fire protection equipment must be immediately
accessible and shall be free from obstruction
3.2 fire safety/evacuation procedures

3.2.4 fire protection equipment

Fire extinguishers, hydrants, hose reels, sprinklers,

smoke/heat detectors and fire alarms
The above shall be inspected monthly for damage &
obstruction
The above shall be inspected and maintained by
qualified personnel annually

Emergency lights should be tested bi-annually

 3.3 medical programmes
provide adequate and appropriate first aid facilities
in case of injury or illness at work
PREVENTIVE MEASURES  display procedures
covering accident reporting and logging, accident
investigation & analysis, & learning from accidents to
prevent them.
 3.3 medical programmes
The workplace should have AT LEAST one
qualified first aider/floor/shift
At least 1 first aider/50 employees in facilities
with < 100 employees
For facilities with > 100 employees, 1 first
aider/100 employees
 3.3 medical programmes
First aid supplies are available and managed by
designated personnel
First aid supplies shall be provided FOC
First aid sign is posted at the first aid box
Annual medical examination on respiratory systems
should be provided for employees using respiratory
protection equipment.??
 3.3 medical programmes
Annual medical hearing examination should be
provided for employees who are Exposed To Excessive
Noise For 8 Hours or equivalent
Accident reporting channel shall be established and
communicated to all employees
Accidents should be reported, investigated,
documented and reviewed
 3.4 chemical safety
Aim  to minimise and eliminate the use of
hazardous substances
All chemicals and hazardous substances must be
identified and labeled with warning signs in accordance
with their chemical properties and legislative
requirements
 3.4 chemical safety
Employees exposed to substance hazardous to their
health must be provided with required information,
instruction and training
They should know health risks associated with the
exposure
They should be familiar with the precautions
necessary for protection
 3.4 chemical safety
Material Data Safety Sheets (MSDS) must be held for
ALL CHEMICALS and the contents communicated to
employees
Personal protection equipment (PPE) shall be
provided for handling chemicals.
Spill kits or absorbents shall be in place in chemical
storage areas
Personal Protection Equipment
Personal Protection Equipment
Spill Kit
 3.4 chemical safety
Processes using hazardous chemicals shall be well
ventilated and personal exposure monitored and
kept below regulatory requirements
Eye washing equipment should be provided in the
laundry process/hand spraying process/ anywhere
there is a risk of splashes in the eye
 3.5 equipment/machinery
Employers must ensure that any equipment
provided for work is
(a) suitable for its intended purpose,
(b) maintained in an efficient state,
(c) in working order and good repair
Dangerous machinery must be securely guarded
 3.5 equipment/machinery
Equipment shall be clean and well maintained.
All moving parts likely to cause injury shall be
effectively guarded.
A maintenance programme shall be in place for all
safety devices and guarding
Where fitted, emergency stop buttons shall be
effective and clearly labelled.
 3.5 equipment/machinery
Portable heating appliances shall be positioned safely
Hoists, pressure vessels, boilers and forklifts shall be
regularly inspected, properly maintained and
documented
Service lines e.g. steam pipes, compressed air pipes
and hot water pipes and tanks shall be regularly
inspected and properly maintained
Hoists
Pressure Vessel
Boiler
Forklift
 3.5 equipment/machinery
Permit-to-work programmes shall be implemented
for electricity work, steam pipe work, pressurised pipe
work, tank entry, fire protection equipment
impairment and welding
Forklifts shall be inspected daily and operated by
authorised personnel only
Gas cylinders shall be securely fixed and separated
from incompatibles
 3.5 equipment/machinery

Welding cylinders shall be equipped with flame

arrestors and check valves
Explosion-proof equipment shall be used in storage
areas with flammable materials
 3.6 electrical safety
Only trained staff to work with electricity
All electrical systems to be maintained to prevent
danger
Work should NOT be carried out on live systems
unless there is no alternative
All portable electrical equipment shall be
tested/checked by a qualified person annually
 3.6 electrical safety
Qualified electricians shall maintain electrical
equipment and supply
All portable electrical equipment shall be grounded
and the power connection securely fixed with a socket
Electricity Main’s supply shall be free from obstacles +
warning signs + properly maintained & prevented from
unauthorised access
 3.6 electrical safety
No live wires shall be exposed
Only waterproof appliances and supply shall be
used outdoors
 3.7 manual handling
NO employee should be required to lift, carry, push or
pull any load, which could harm them
Decision should be based on personal abilities along
with nature of load, task and environment
Preferably, manual handling should be avoided by
providing mechanical handling equipment.
Use job rotation where repetitive strain injuries could
be a risk
 3.8 job hazard assessment
IF risks are not/can’t be adequately controlled,
suitable Personal Protection Equipment must be
provided, FOC. E.g. hearing protection, respiratory
protection, eye protection and gloves
The employer must ensure the equipment is kept
clean, maintained and used
 3.8 job hazard assessment
Chain gloves shall be provided when using electrical
cutters in the cutting process
Job hazard shall be assessed, identified and
communicated to the employees
Warning signs of hazardous areas such as high
voltage, confined space, extreme temperatures and
asbestos shall be posted
 3.8 job hazard assessment
Employees are trained to use & maintain PPE
Signs shall be posted where PPE is required and use
of PPE is mandatory
When noise level is likely to be higher than the
recommended levels, the employer shall appoint a
qualified person to conduct noise assessment
 3.8 job hazard assessment
If Employees are exposed to higher than the
recommended levels for 8 hours or equivalent, the
Employer shall eliminate noise source if possible, else
PPE* shall be provided and hearing examination is
conducted annually
A noise control zone shall be defined where noise
exposure exceeds the recommended levels for 8 hours
or equivalent
 3.9 residential accommodation
3.9.1 dormitories
Where residential accommodation is provided for
employees it must be safe, clean, spacious
Toilet and washing facilities should be provided with
clean running water
Dormitories shall not be crowded and living space
should be > 25 sq.ft./person
 3.9 residential accommodation
3.9.1 dormitories
If there are more than 12 people in a room, 2 fire
exits should be provided
Sleeping arrangements shall be adequate and
provided with reasonable privacy
Each employee must have his/her bed
Lockers shall be provided for personal belongings
 3.9 residential accommodation
3.9.1 dormitories

The building shall be structurally sound and properly

maintained
Employees can leave and enter the dormitory freely
without restriction unless reasonable grounds can be
demonstrated for security & safety
 3.9 residential accommodation
3.9.1 dormitories

Residential facilities must be safe in the areas of

security, fire protection and electrical safety
An evacuation plan must be posted and fire drills is to
be conducted at least every 6 months
 3.9 residential accommodation
3.9.2 bathrooms
The no. of bathroom cubicles for showering shall be
adequate, with a minimum of one shower for 12 people
Hot and cold water shall be provided inside the
bathroom cubicle for showering
Doors or curtains shall be installed in bathroom
cubicles to protect privacy
 3.9 residential accommodation
3.9.3 toilets
The no. of toilets shall be adequate with a minimum
of one toilet for 12 people.
Toilets are clean and free from foul odour.
Toilets are equipped with flushing and washing water
There must be at least one male room and one
female room for every two floors
 3.9 residential accommodation
3.9.3 toilets

Toilets shall have doors to protect privacy, and any

windows shall be opaque.
 3.9 residential accommodation
3.9.4 canteen

Food storage and preparation areas shall be clean and

hygienic. Cooks shall be trained in food preparation
hygiene.
Utensils, if re-used, s.b. clean & sterilised
Facilities should be provided for eating meals
Adequate rest facilities
 3.10 childcare facilities
Childcare facilities shall be clean and safe, particularly
with regard to fire safety and first aid
Childcare facilities should be supervised at all times
by a responsible adult to avoid exposure to any
workplace activities or processes which may present
risks to their health and safety
 3.10 childcare facilities
Records must be kept of illnesses and injuries
All childcare facilities must conform to local
legislation
 3.11 environmental protection
standards
3.11.1 waste disposal

The supplier shall identify waste sources and develop

a procedure for disposal
Hazardous wastes shall be labelled and disposed of
properly
Disposal records shall also be maintained
 3.11 environmental protection
standards
3.11.1 waste disposal
Hazardous wastes shall be stored in designated and
secure areas
The containers of hazardous waste shall be in sound
condition
Training is provided for handling hazardous wastes
annually
 3.11 environmental protection
standards
3.11.2 air emissions
The supplier shall identify air emission sources and
monitor the emission in accordance with regulatory
requirements
Maintenance programmes and operating procedures
should be developed and implemented for in-house air
treatment facilities
 3.11 environmental protection
standards
3.11.3 industrial waste water discharge

The supplier shall identify waste water discharge

sources and monitor the emission in accordance with
regulatory requirements
Maintenance programmes and operating
procedures should be developed & implemented for
in-house waste water treatment facilities
 3.11 environmental protection
standards
3.11.3 industrial waste water discharge

The local authority for waste water discharge shall

grant appropriate license or permit
 3.11 environmental protection
standards
3.11.4 asbestos

ASBESTOS – if present, its condition s.b. monitored

and maintained safely. Anyone working within this
environment e.g. electricians s.b. made aware of the
presence of asbestos
 3.11 environmental protection
standards
3.11.5 storage

Secondary containment equivalent to minimum

110% of volume of the largest container shall be
provided in storage areas for chemical leakage.
No drains are allowed inside the storage area
Drum storage areas shall be covered to prevent
rainwater from coming in contact with drums
 4. Child labour
In India Below 15 years of age = child
Some countries  below 14 yrs = child
Age verified by checking identity + teeth
Between 15 to 18 = young workers
Young workers shouldn’t be given risky job, no
pressing, heavy lifting, dangerous chemicals &
operations
 4. Child labour
Minimum 20 minutes rest time for 4 hours of work
Young workers can’t work beyond 10 PM
Educational facilities shall be provided
 5. Wages & Benefits
Worker should be paid according to the existing local
minimum wages
Should be paid at least monthly
No deduction to be made as a disciplinary measure
Deduction only as per legal requirement
 5. Wages & Benefits
Employer should inform clearly regarding
Working hours
Work days
Rest days
Notice period
Entitlement to leave, other benefits
 5. Wages & Benefits
The Employer shall provide to the employee,
written information on :
Piece rate / Pay rate
Gross pay / net pay / Overtime pay
Itemised deductions
 6. Working Hours
Work schedule should be communicated to the
employees
Employees’ working time should be recorded
accurately
Normal working hours should not be more than
48 hrs/week
 6. Working Hours
O/T shall be voluntary, should not exceed 12
hrs/week
O/T is paid @ 2 times normal wage
Every employee is entitled to paid holiday
 7. No discrimination is
practiced
Equal opportunities
Discrimination on the basis of race, colour, language,
nationality, ethnic or social origin, religious belief,
political opinion, gender, marital status, disability,
property, birth, age, sexual orientation.
 8. Regular employment is
provided
All workers should enjoy Security and Stability of
employment and regularity of income
The employer shall use labour contracts or letter of
employment for each employee
 8. Regular employment is
provided
Employee should know working hours, work days, rest
days, notice period, leave, benefits, etc.
No employee shall pay fees for employment to the
employer
notice period should not be unreasonable
8. Regular employment is provided

Following are NOT ACCEPTABLE

‘At will’ termination
Termination w/o notice
False apprenticeship*
Practice of seasonal or periodic lay-off shall be
reviewed and minimised
8. Regular employment is provided

Supplier shall ensure that all Sub-contractors should be

in compliance with national and local laws
 9. Treatment of employees &
employee communication
Corporal punishment, physical, mental or verbal
abuse, sexual harassment, intimidation, harsh or
inhumane treatment shall not be allowed
Employer shall protect their employees from
bullying, harassment etc. within the company
 9. Treatment of employees &
employee communication

A fair disciplinary procedure should be established

and adhered to, in case of misconduct or
unsatisfactory performance
The employer shall develop written grievance and
disciplinary procedures for workplace and display
 9. Treatment of employees &
employee communication

Workplace grievance and disciplinary ACTIONS

should be documented and MEASURES should be
recorded
An appeal channel shall be developed and
implemented for employees facing disciplinary
action
 10. Management system
10.1 Employer shall comply with all local law
Shall follow the most stringent requirements for
legislation
Shall conduct periodic self-audits to verify compliance
10. Management system
Should be fully aware of the current legislation
It is the responsibility of employer to
demonstrate evidence that they are in
compliance with local law
 10. Management system
10.2 supplier shall develop a system for the
compliance of legislation
Assignment of a Specific Personnel to be
responsible for compliance
Line management accountability for all
compliance issues
Identification of hazards in the workplace
 10. Management system
Identification of training needs and plans for
training
Disciplinary actions for violation of compliance
rules with documentation maintained
Continual improvement of compliance
performance
 10. Management system
10.3 employer shall provide training for all new
employees
Induction training to include work schedule,
minimum wages, wage calculation, work days and
rest days, entitled leave, workplace rules, dormitory
and canteen rules, disciplinary & grievance
procedure
 10. Management system
Environmental health and safety awareness
training including evacuation, fire drills, etc.
Job specific training to include in-depth training
that enables the employees to perform competently
Training records shall include training date,
content, trainers and attendees
 10. Management system
10.4 work place, canteen and dormitory rules should
be posted in prominent areas in local language
 11. implementation
A buyer may continue to work with suppliers who
work towards compliance to the code of practice
and who strive for continuous improvement of
standards in the workplace
 11. implementation
Where violations are found, a corrective action plan
will be agreed between the buyer and supplier and
will then be monitored
 11. implementation
Where corrective actions are not
implemented……….buyer may continue to review
the business placed with that
supplier…….and…….ULTIMATELY STOP giving orders