Following the collapse of the Rana Plaza factory in Bangladesh earlier this year which left 1,127 dead, both the retail industry and international labour organisations have focussed on taking steps to ensure a safe working environment for the employees of companies supplying clothes for many of the world’s biggest brands. Article by Nick Thomas, Partner in the Labour and Employment team at Morgan Lewis.
Whilst there is no doubt that all within the clothing industry are working to achieve the same end-goal, there has been a very clear and highly publicised difference of opinion on how best to get there. In May , two global unions , IndustriALL Global and UNI Global, published the Accord on Fire and Building Safety in Bangladesh. All major global garment retailers with suppliers based in Bangladesh were then invited to sign up to the Accord by 15 May, and many did. However, critics of the Accord were quick to highlight how unusual it was for a document of this kind to be drafted and published by the unions rather than developed through negotiation with the potential signatories . They also noted that the Accord lacked crucial detail, both in relation to the scope of the obligations to which signatories would be subject and, how those obligations would be enforced. In general terms, the Accord provided that any disputes would be adjudicated in the first instance by a “steering committee” comprising representatives from the signatory companies, the unions, and an independent chair. Thereafter, any appeal would go through an arbitration process Crucially, and most contentiously, the outcome of that arbitration would then be enforceable by each signatory’s local court.
The potential for the Accord to become legally enforceable, together with uncertainty as to the classes of complaint to whom the dispute procedure may be available, gave rise to fears that signatories could face claims in their home jurisdictions brought by, for example, employees of their suppliers in respect of a failure by those suppliers to provide a safe working environment. Given the litigation culture in the US,this was of most concern to American retailers , and consequently, whilst many European retailers did sign up to the Accord, many of their US counterparts refused to do so.
IndustriALL Global and UNI Global responded to this refusal by engaging in a vitriolic public campaign, with two major US retailers in particular singled out for criticism. However, in parallel with this, those retailers and others were busy working on their own solution to the health and safety problems in Bangladesh.
After the 15 May deadline passed, the unions engaged in 45 days of discussion with the Accord signatories in an effort to provide more detail and clarity on the operation and policing of the Accord. This resulted in the “Bangladesh Team Implementation Report” being issued on 8 July. Whilst this Report provided some additional information as to how the Accord would be operated, it did not address the contentious issue of enforcement.
Two days later, 18 US apparel retailers announced the formation of the Alliance for Bangladesh Worker Safety , and published their five year action plan. Whilst many aspects of the Alliance agreement and Action Plan are not dissimilar to the Accord there are several fundamental differences: Unlike the Accord, only certain aspects of the Alliance agreement are subject to enforceability provisions (namely the obligation to pay up to $1 million a year for 5 years) and those provisions are to be policed by arbitration with no ability to refer to a member’s local court.
Whilst the Accord seeks to “lock in” its signatories into using Bangladeshi based suppliers for a minimum period going forward, the Alliance agreement contains no such mechanism. The Accord is founded on the premise that responsibility for the safety of Bangladeshi workers should largely rest with the global retailers who contract with Bangladeshis based suppliers. In contrast, whilst the Alliance agreement clearly envisages that retailers have a vital role to play in improving working conditions, it states that the ultimate responsibility forthe safety of Bangladeshi workers rests with the nation of Bangladesh and its factory owners.
Whichever side of the argument you support, one thing is clear: this issue is not going away. The unions have already indicated that they plan to focus next on the rights of association and minimum wage for Bangladeshi garment factory workers. Thereafter, there is no reason why the unions’ activities should be limited to either (1) Bangladesh or (2) the clothing industry. As such, it is only a matter of time before this debate expands into new territories and new sectors. When it does, it will be interesting to see whether the unions stick to their guns, or are willing to finesse their approach in an attempt to address the concerns raised about the Accord, with a view to ensuring the maximum possible number of participants from both sides of the Atlantic.
