Performance Standard 2

Labor and Working Conditions

Introduction 2. The requirements set out in this

Performance Standard have been in part
1. Performance Standard 2 recognizes that guided by a number of international
the pursuit of economic growth through conventions and instruments, including those
employment creation and income generation of the International Labour Organization
should be accompanied by protection of (ILO) and the United Nations (UN).2
the fundamental1 rights of workers. For any
business, the workforce is a valuable asset,
and a sound worker-management relationship Objectives
is a key ingredient in the sustainability of a
company. Failure to establish and foster a • To promote the fair treatment, non-
sound worker-management relationship can discrimination, and equal opportunity of
undermine worker commitment and retention, workers.
and can jeopardize a project. Conversely, • To establish, maintain, and improve the
through a constructive worker-management worker-management relationship.
relationship, and by treating the workers fairly • To promote compliance with national
and providing them with safe and healthy employment and labor laws.
working conditions, clients may create tangible • To protect workers, including vulnerable
benefits, such as enhancement of the efficiency categories of workers such as children,
and productivity of their operations.
2
These conventions are:
ILO Convention 87 on Freedom of Association and
Protection of the Right to Organize
ILO Convention 98 on the Right to Organize and
Collective Bargaining
ILO Convention 29 on Forced Labor
ILO Convention 105 on the Abolition of Forced
Labor
ILO Convention 138 on Minimum Age (of
Employment)
ILO Convention 182 on the Worst Forms of Child
Labor
ILO Convention 100 on Equal Remuneration
ILO Convention 111 on Discrimination (Employment
and Occupation)
UN Convention on the Rights of the Child, Article
32.1
UN Convention on the Protection of the Rights of
1
As guided by the ILO Conventions listed in footnote 2. all Migrant Workers and Members of their Families

16 IFC PERFORMANCE STANDARDS ON ENVIRONMENTAL AND SOCIAL SUSTAINABILITY

 migrant workers, workers engaged by Contracted Workers
third parties, and workers in the client’s 6. With respect to contracted workers,
supply chain. the client will apply the requirements of
• To promote safe and healthy working paragraphs 23–26 of this Performance
conditions, and the health of workers. Standard.
• To avoid the use of forced labor.
Supply Chain Workers
7. With respect to supply chain workers,
Scope of Application the client will apply the requirements of
paragraphs 27–29 of this Performance
3. The applicability of this Performance Standard.
Standard is established during the
environmental and social risks and
impacts identification process. The Requirements
implementation of the actions necessary to
meet the requirements of this Performance Working Conditions and Management
Standard is managed through the client’s of Worker Relationship
Environmental and Social Management
System (ESMS), the elements of which are Human Resources Policies and Procedures
outlined in Performance Standard 1. 8. The client will adopt and implement
human resources policies and procedures
4. The scope of application of this appropriate to its size and workforce that
Performance Standard depends on the set out its approach to managing workers
type of employment relationship between consistent with the requirements of this
the client and the worker. It applies to Performance Standard and national law.
workers directly engaged by the client
(direct workers), workers engaged through 9. The client will provide workers with
third parties to perform work related to documented information that is clear and
core business processes3 of the project for a understandable, regarding their rights under
substantial duration (contracted workers), national labor and employment law and any
as well as workers engaged by the client’s applicable collective agreements, including
primary suppliers (supply chain workers).4 their rights related to hours of work, wages,
overtime, compensation, and benefits upon
Direct Workers beginning the working relationship and
5. With respect to direct workers, the client when any material changes occur.
will apply the requirements of paragraphs
8–23 of this Performance Standard. Working Conditions and Terms of
Employment
10. Where the client is a party to a
3
Core business processes constitute those production
and/or service processes essential for a specific business collective bargaining agreement with a
activity without which the business activity could not workers’ organization, such agreement
continue.
will be respected. Where such agreements
4
Primary suppliers are those suppliers who, on an
ongoing basis, provide goods or materials essential for do not exist, or do not address working
the core business processes of the project.

PERFORMANCE STANDARD 2 LABOR AND WORKING CONDITIONS 17

 conditions and terms of employment,5 to join workers’ organizations of their
the client will provide reasonable working choosing without interference and to
conditions and terms of employment.6 bargain collectively, the client will comply
with national law. Where national law
11. The client will identify migrant substantially restricts workers’ organizations,
workers and ensure that they are engaged the client will not restrict workers from
on substantially equivalent terms and developing alternative mechanisms to express
conditions to non-migrant workers carrying their grievances and protect their rights
out similar work. regarding working conditions and terms of
employment. The client should not seek to
12. Where accommodation services7 are influence or control these mechanisms.
provided to workers covered by the scope
of this Performance Standard, the client 14. In either case described in paragraph
will put in place and implement policies 13 of this Performance Standard, and
on the quality and management of the where national law is silent, the client
accommodation and provision of basic will not discourage workers from electing
services.8 The accommodation services will worker representatives, forming or joining
be provided in a manner consistent with the workers’ organizations of their choosing, or
principles of non-discrimination and equal from bargaining collectively, and will not
opportunity. Workers’ accommodation discriminate or retaliate against workers who
arrangements should not restrict workers’ participate, or seek to participate, in such
freedom of movement or of association. organizations and collective bargaining.
The client will engage with such workers’
Workers’ Organizations representatives and workers’ organizations,
13. In countries where national law and provide them with information
recognizes workers’ rights to form and needed for meaningful negotiation in a
timely manner. Workers’ organizations are
expected to fairly represent the workers in
5
Working conditions and terms of employment the workforce.
examples are wages and benefits; wage deductions;
hours of work; overtime arrangements and overtime
compensation; breaks; rest days; and leave for illness, Non-Discrimination and Equal
maternity, vacation or holiday. Opportunity
6
Reasonable working conditions and terms of
employment could be assessed by reference to (i) 15. The client will not make employment
conditions established for work of the same character decisions on the basis of personal
in the trade or industry concerned in the area/region
where the work is carried out; (ii) collective agreement characteristics9 unrelated to inherent job
or other recognized negotiation between other requirements. The client will base the
organizations of employers and workers’ representatives
in the trade or industry concerned; (iii) arbitration employment relationship on the principle of
award; or (iv) conditions established by national law.
equal opportunity and fair treatment, and
7
Those services might be provided either directly by
the client or by third parties. will not discriminate with respect to any
8
Basic services requirements refer to minimum aspects of the employment relationship, such
space, supply of water, adequate sewage and garbage
disposal system, appropriate protection against heat,
cold, damp, noise, fire and disease-carrying animals,
adequate sanitary and washing facilities, ventilation, 9
Such as gender, race, nationality, ethnic, social and
cooking and storage facilities and natural and artificial indigenous origin, religion or belief, disability, age, or
lighting, and in some cases basic medical services. sexual orientation.

18 IFC PERFORMANCE STANDARDS ON ENVIRONMENTAL AND SOCIAL SUSTAINABILITY

as recruitment and hiring, compensation plan will be developed and implemented to
(including wages and benefits), working reduce the adverse impacts of retrenchment
conditions and terms of employment, access on workers. The retrenchment plan will be
to training, job assignment, promotion, based on the principle of non-discrimination
termination of employment or retirement, and will reflect the client’s consultation with
and disciplinary practices. The client will take workers, their organizations, and, where
measures to prevent and address harassment, appropriate, the government, and comply
intimidation, and/or exploitation, especially with collective bargaining agreements if
in regard to women. The principles of non- they exist. The client will comply with all
discrimination apply to migrant workers. legal and contractual requirements related
to notification of public authorities, and
16. In countries where national law provision of information to, and consultation
provides for non-discrimination in with workers and their organizations.
employment, the client will comply with
national law. When national laws are silent 19. The client should ensure that all
on non-discrimination in employment, workers receive notice of dismissal and
the client will meet this Performance severance payments mandated by law and
Standard. In circumstances where national collective agreements in a timely manner.
law is inconsistent with this Performance All outstanding back pay and social
Standard, the client is encouraged to carry security benefits and pension contributions
out its operations consistent with the intent and benefits will be paid (i) on or before
of paragraph 15 above without contravening termination of the working relationship
applicable laws. to the workers, (ii) where appropriate, for
the benefit of the workers, or (iii) payment
17. Special measures of protection or will be made in accordance with a timeline
assistance to remedy past discrimination or agreed through a collective agreement.
selection for a particular job based on the Where payments are made for the benefit
inherent requirements of the job will not be of workers, workers will be provided with
deemed as discrimination, provided they are evidence of such payments.
consistent with national law.
Grievance Mechanism
Retrenchment 20. The client will provide a grievance
18. Prior to implementing any collective mechanism for workers (and their
dismissals,10 the client will carry out an organizations, where they exist) to raise
analysis of alternatives to retrenchment.11 workplace concerns. The client will inform
If the analysis does not identify viable the workers of the grievance mechanism at
alternatives to retrenchment, a retrenchment the time of recruitment and make it easily
accessible to them. The mechanism should
10
Collective dismissals cover all multiple dismissals involve an appropriate level of management
that are a result of an economic, technical, or
organizational reason; or other reasons that are not and address concerns promptly, using an
related to performance or other personal reasons. understandable and transparent process that
11
Examples of alternatives may include negotiated provides timely feedback to those concerned,
working-time reduction programs, employee capacity-
building programs; long-term maintenance works without any retribution. The mechanism
during low production periods, etc.

PERFORMANCE STANDARD 2 LABOR AND WORKING CONDITIONS 19

 should also allow for anonymous complaints bonded labor, or similar labor-contracting
to be raised and addressed. The mechanism arrangements. The client will not employ
should not impede access to other judicial trafficked persons.13
or administrative remedies that might be
available under the law or through existing Occupational Health and Safety
arbitration procedures, or substitute for
grievance mechanisms provided through 23. The client will provide a safe and
collective agreements. healthy work environment, taking into
account inherent risks in its particular
Protecting the Work Force sector and specific classes of hazards in
the client’s work areas, including physical,
Child Labor chemical, biological, and radiological
21. The client will not employ children in hazards, and specific threats to women. The
any manner that is economically exploitative, client will take steps to prevent accidents,
or is likely to be hazardous or to interfere with injury, and disease arising from, associated
the child’s education, or to be harmful to the with, or occurring in the course of work by
child’s health or physical, mental, spiritual, minimizing, as far as reasonably practicable,
moral, or social development. The client will the causes of hazards. In a manner consistent
identify the presence of all persons under with good international industry practice,14
the age of 18. Where national laws have as reflected in various internationally
provisions for the employment of minors, recognized sources including the World Bank
the client will follow those laws applicable Group Environmental, Health and Safety
to the client. Children under the age of 18 Guidelines, the client will address areas that
will not be employed in hazardous work.12 include the (i) identification of potential
All work of persons under the age of 18 will hazards to workers, particularly those that
be subject to an appropriate risk assessment may be life-threatening; (ii) provision of
and regular monitoring of health, working preventive and protective measures, including
conditions, and hours of work. modification, substitution, or elimination
of hazardous conditions or substances;
Forced Labor (iii) training of workers; (iv) documentation and
22. The client will not employ forced labor, reporting of occupational accidents, diseases,
which consists of any work or service not and incidents; and (v) emergency prevention,
voluntarily performed that is exacted from an
individual under threat of force or penalty.
This covers any kind of involuntary or
13
Trafficking in persons is defined as the recruitment,
transportation, transfer, harboring, or receipt of
compulsory labor, such as indentured labor, persons, by means of the threat or use of force or other
forms of coercion, abduction, fraud, deception, abuse
of power, or of a position of vulnerability, or of the
12
Examples of hazardous work activities include giving or receiving of payments or benefits to achieve
work (i) with exposure to physical, psychological, or the consent of a person having control over another
sexual abuse; (ii) underground, underwater, working person, for the purpose of exploitation. Women and
at heights, or in confined spaces; (iii) with dangerous children are particularly vulnerable to trafficking
machinery, equipment, or tools, or involving handling practices.
of heavy loads; (iv) in unhealthy environments 14
Defined as the exercise of professional skill, diligence,
exposing the worker to hazardous substances, agents, prudence, and foresight that would reasonably be
processes, temperatures, noise, or vibration damaging expected from skilled and experienced professionals
to health; or (v) under difficult conditions such as long engaged in the same type of undertaking under the
hours, late night, or confinement by employer. same or similar circumstances, globally or regionally.

20 IFC PERFORMANCE STANDARDS ON ENVIRONMENTAL AND SOCIAL SUSTAINABILITY

preparedness, and response arrangements. Supply Chain
For additional information related to
emergency preparedness and response refer 27. Where there is a high risk of child labor
to Performance Standard 1. or forced labor15 in the primary supply chain,
the client will identify those risks consistent
Workers Engaged by Third Parties with paragraphs 21 and 22 above. If child
labor or forced labor cases are identified, the
24. With respect to contracted workers the client will take appropriate steps to remedy
client will take commercially reasonable them. The client will monitor its primary
efforts to ascertain that the third parties supply chain on an ongoing basis in order to
who engage these workers are reputable identify any significant changes in its supply
and legitimate enterprises and have an chain and if new risks or incidents of child
appropriate ESMS that will allow them and/or forced labor are identified, the client
to operate in a manner consistent with the will take appropriate steps to remedy them.
requirements of this Performance Standard,
except for paragraphs 18–19, and 27–29. 28. Additionally, where there is a high risk
of significant safety issues related to supply
25. The client will establish policies and chain workers, the client will introduce
procedures for managing and monitoring procedures and mitigation measures to
the performance of such third party ensure that primary suppliers within the
employers in relation to the requirements supply chain are taking steps to prevent or to
of this Performance Standard. In addition, correct life-threatening situations.
the client will use commercially reasonable
efforts to incorporate these requirements 29. The ability of the client to fully address
in contractual agreements with such third these risks will depend upon the client’s
party employers. level of management control or influence
over its primary suppliers. Where remedy
26. The client will ensure that contracted is not possible, the client will shift the
workers, covered in paragraphs 24–25 of project’s primary supply chain over time to
this Performance Standard, have access to suppliers that can demonstrate that they are
a grievance mechanism. In cases where the complying with this Performance Standard.
third party is not able to provide a grievance
mechanism the client will extend its own
grievance mechanism to serve workers
engaged by the third party.

15
The potential risk of child labor and forced labor
will be determined during the risks and impacts
identification process as required in Performance
Standard 1.

PERFORMANCE STANDARD 2 LABOR AND WORKING CONDITIONS 21