When your business is a procurer (buyer) of goods, services, or works
As a procurer, taking account how workers are treated in your supply chain(s) can be essential to your organisation’s ability to operate. When an organisation is involved in more than one product or service it will have more than one supply chain.
Non-compliance issues in your supply chain can range from breaches of employment standards, like paying less than the minimum wages to more serious forms of exploitation such as forced labour. These issues can affect the quality of your products and services, and have a significant impact on your organisation’s reputation and branding. Making sure that workers in your supply chains are treated fairly is becoming essential to the operation of many businesses and will have a positive effect in the health, safety, productivity and wellbeing of workers.
For example the New Zealand Government’s procurement rule on ‘Improving conditions for New Zealand workers’ is increasing expectations on business. It says that for some contracts, government agencies must require their suppliers (and their domestic supply chains) to ensure and prove that they comply with all relevant employment standards, and health and safety requirements.
On an international level, there is increased focus on compliance throughout supply chains. Assuring continued compliance is now a key part of New Zealand’s brand reputation overseas, for sustainability and integrity.
Undertaking due diligence in your supply chain
Undertaking employment rights due diligence across your supply chains gives you assurance over how workers are treated by prospective suppliers throughout your supply chain before entering into a contract. This should continue via monitoring throughout the life of the contract to maintain that confidence.
You should undertake due diligence activities to make sure that your lead (Tier 1) suppliers are making sure that employment standards as well as employment, labour, and human rights are met by their business, sub-contractors, and within their own supply chains.
Understanding and communicating with your supply chain
There are some key steps you can take to help mitigate labour rights and worker exploitation risks in your supply chains:
- Invest in supply chain mapping and understanding your organisation’ supply chains, identify potential risks, and implement strategies to avoid or mitigate them.
- Develop methods to monitor compliance over the life of your contracts, for example create new channels (eg employee voice tools, employee grievance processes) or tighten settings (eg a stronger employment relations focus later in the duration of the contract).
- Have effective ongoing communications and contact with your lead supplier to strengthen your business relationship.
- Make sure your lead (Tier 1) suppliers have a commitment to focus on labour market risks (depending on the size of the supplier this could include a Human Resources (HR) function, or similar, reporting directly to one or more senior executive members). This commitment should extend throughout the supply chain from the lead suppliers to their own suppliers and sub-contractors.
Reducing risks in your supply chain
The resources below can help you understand how to identify and minimise risks in your supply chain.
- Identify and minimise labour rights issues in your supply chains [PDF 861KB]
- Assuring ethical and sustainable work practices through procurement [PDF 244KB]
- Risk factors for non-compliance [PDF 533KB]
- Risk mitigations for non-compliance [PDF 439KB]
- Employer self-assessment checklist [PDF 581KB]
- Employer self-assessment guide [PDF 879KB]
Tools and Resources
Assuring ethical and sustainable work practices through procurement - PDF 244KB
Considering how your supply chain complies with employment standards.
Risk factors for procurers to manage - PDF 533KB
Ensuring ethical and sustainable work practices in supply chains.
Identify and minimise labour rights issues in your supply chains - PDF 861KB
Guidance for procurers on ethical and sustainable work practices.
Mitigations for procurers to reduce risks - PDF 439KB
Good practice mitigations for non-compliance with employment standards in supply chains.