Ethical Audits – What are they and why you need one

As a produce grower or food processor, the chances are that your company will have undergone several third-party audits, often by BRC auditors or by the major retailers that you supply.  An audit is an inspection or examination of a process or system to ensure compliance with requirements.  It can apply to a specific process or can apply to nationally recognised standards.  An Ethical Audit assesses a company’s systems, its documentation and facilities against the Ethical Trading Initiative (ETI) Base Code, as well as local laws.

There have been numerous news reports about (often migrant) workers being treated unfairly by employers.  These are typically in clothing sweatshops, pick and pack organisations and factories with staff supplied by unscrupulous agencies or gang masters.  For obvious reasons retailers do not want to be associated with such activities.  Therefore, auditing each stage of their supply chain is a way of ensuring their suppliers are complying with ethical trading standards and fair employment practices.

What is covered in an Ethical Audit?

The ETI Base Code is designed to help protect workers from poor and unsafe working conditions, overwork, discrimination, low pay and forced working conditions.  It is founded on the conventions of the International Labour Organisation.  It is an internationally recognised code of labour practice.

So it is these main areas that interest the ethical auditor:

• Wages
• Working hours
• Health & Safety
• Temporary workers
• Right to Work
• Provision of breaks and rest days
• Fair treatment of staff

Workers should be able to choose their employment

Employers need to make sure that their own employees and those of their suppliers are not being forced to work against their will.

Workers should be free to associate with others and bargain collectively

Essentially this means that workers should be able to air their views and opinions to managers without fear of reprisal or discrimination.  They should be allowed to join trade unions or stand for election onto a Works Council.

Workers should have safe and hygienic working conditions

Even a company that thinks it treats its workers well can come unstuck with Health & Safety.  It has the greatest number of non-conformances of all.  Aspects such as not having regular fire drills, blocking emergency exits, and lack of trained first aiders are commonplace.  Other common faults include lack of risk assessments for hazardous equipment and noise, or a lack of suitable Personal Protective Equipment.  If the toilet facilities are unsatisfactory or clean drinking water isn’t readily available employers will also be pulled up.

Child labour should not be used

Cases of child labour in the UK are extremely rare.  Nevertheless always check ID for verification of the age of young workers.  There are restrictions on rest breaks and the number of hours that can be worked by those under 18 in the UK.

Workers should earn a living wage

This is a big one.  Everyone is entitled to earn the National Minimum Wage.  It makes no difference whether you are paid weekly, monthly, by cheque in cash or any other way.  It doesn’t matter whether you work full-time, part time or any other working pattern.  Or whether you work at your employer’s own premises or elsewhere.  Neither does it matter what size your employer is, or where you work in the UK.

The National Minimum Wage is reviewed every year. From April 2018 it will be:

• £7.38 per hour for those aged 21 and over
• £5.90 per hour for 18 to 20-year-olds
• £4.20 per hour for under 18s

Anyone aged 25 and over should not receive less than the National Living Wage rate of £7.83 per hour.

Working hours must not be excessive

Studies show that when staff are required to work long hours for extensive periods of time without sufficient breaks, it is detrimental to their health and wellbeing.  Tired workers are less productive,  They are also liable to make more mistakes.  Consequently it is also in the employer’s interests to ensure that their employees have acceptable working hours.

This means that contracted working hours should not exceed 48 hours per week.

Total hours worked in any 7-day period should not exceed 60 hours unless in exceptional (unexpected) circumstances.

The 60 hours can be made up of normal hours and overtime.  So, if a worker’s contracted hours are 30 per week and they work an extra 30 hours, that extra work must be paid at ‘overtime rate’.  The ETI recommends that overtime premiums are at least 25% higher than the regular wage.

Employers also need to be responsible in asking workers to carry out overtime. This should not be on a regular basis. The employee should also have the right to say ‘no’, and overtime should not be required by contract.

Workers should also have at least one day (24 consecutive hours) off every 7 days, or two days off in 14.

Regular employment should be provided

All staff should have contracts and these should be held on file. It is not acceptable to send agency staff home on arrival at work if they are not required.  It’s recommended that companies using agency workers should have a minimum pay policy in place (e.g. 4 hours).  Thanks to the Agency Workers’ Directive Regulations, after 12 weeks’ continuous work in the same job, agency workers have the same basic working rights as permanent staff in the same role.

There must not be discrimination of any kind

Companies need to provide fair access to jobs.  That means no discrimination based on race, caste, national origin, gender, age, disability, religion, sexual orientation, marital status, political affiliation or union membership.  This extends to all aspects of the job – recruitment, access to training, compensation, promotion, termination or retirement.

Don’t allow  harsh or inhumane treatment

Employers and workers should not tolerate physical and verbal abuse or intimidation.  Neither should anyone put up with physical disciplining of staff, sexual  harassment or such things as refusing staff requests to use the toilet when on a shift.  There need to be systems in place for workers to report any harsh or unacceptable treatment.

Why do you need an ethical audit?

The most likely reason is that it may be a contractual requirement from your customer(s) to undergo regular ethical audits.  Some retailers insist that new suppliers have ethical audit before they can start a supply contract.  In addition, from a moral perspective nobody wants to be seen to be treating others unfairly.  those companies who are not required by their customers to have an ethical audit can still join Sedex and have an audit if they wish, and this demonstrates good practice.

The audit reports from SMETA (Sedex Members Ethical Trading Audit) Ethical Audits are shared on the Sedex platform so this provides a transparent system for sharing ethical audit results with customers.

All in all, it gives you peace of mind and is good for business, whether you happen to be a customer or supplier.

Where can I find out more about Ethical Audits?

To find out more about ethical audits and how to go about arranging one for your company, please visit the Ethical Audits section of our website.