Can transnational corporations legally apply conditions to companies that supply them with contract and contract and agency labour?


This report has its origins in a discussion at a meeting of ICEM officials and affiliate representatives in April 2007 to discuss progress with ICEM's efforts to bring contract and agency labour (CAL) workers within the protection of labour law and unions. During the meeting, it was stated that one transnational company (TNC) operating in Asia had informed union representatives that it would be unlawful for it to impose conditions on other companies with which it contracted about the terms and conditions on which they employed their workers.

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Although the research has shed light on the complexities of the subject, and on reasons why a TNC might make such a claim as gave rise to the research, the bottom line conclusion remains. Although in some circumstances it might be unlawful for a TNC to include conditions within its contracts with suppliers that provide particular protections to contract and agency workers, there is no obligation on any TNC to continue to do business within the jurisdiction in which those circumstances obtain. In other words, although the assumptions made at the original discussion can be seen to have been rather too simple, the essential conclusion drawn then was correct. Indeed, business-backed codes of conduct tend to suggest that it is good business practice to enforce labour standards through contract compliance.

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After this introduction, the report has three sections. The first looks at the international legal framework, starting with labour law and going on to look at commercial, trade and contract law. The second looks at corporate codes of conduct and the obstacles that might stand in the way of enforcing them through contract conditions. The third looks at national legal frameworks, of both labour and commercial law, and at particular circumstances in which some or all of a jurisdiction's normal regulatory provisions might be waived.