Living wage

Compensation

Every worker has a right to compensation for a regular work week that is sufficient to meet the worker’s basic needs and provide some discretionary income. Employers shall pay at least the minimum wage or the appropriate prevailing wage, whichever is higher, comply with all legal requirements on wages, and provide any benefits required by law or contract. Where compensation does not meet workers’ basic needs and provide some discretionary income, each employer shall work with the FLA to take appropriate actions that seek to progressively realize a level of compensation that does.

Nondiscrimination

No person shall be subject to any discrimination in employment, including hiring, compensation, advancement, discipline, termination or retirement, on the basis of gender, race, religion, age, disability, sexual orientation, nationality, political opinion, social group or ethnic origin.

Compensation

C.1 General Compliance

C.1.1 Employers shall comply with all national laws, regulations and procedures concerning the payment of compensation to workers.

C.1.2 In any case where differences or conflicts in national law and FLA Workplace Code arise, employers are expected to apply the highest standard.

C.1.3 In any case where national laws, regulations and procedures do not address the payment of compensation to workers, employers shall follow all standards in the FLA Workplace Code that apply to administration and payment of compensation and shall provide an employment contract that includes stipulation of compensation payment to workers.

C.2 Minimum Wage

Employers shall pay workers at least the legal minimum wage or the prevailing industry wage, whichever is higher, for regular working hours (not including overtime). Workers should also be informed about the legal minimum wage.

C.3 Wage & Benefits / Probationary Status

C.3.1Where probationary employment is legally allowed, workers shall:

C.3.1.1 Receive at least the minimum wage for regular workers or the prevailing industry wage for regular workers, whichever is higher;

C.3.1.2 Receive all legally mandated benefits;

C.3.1.3 No workers shall work more than three months in this employment category.

C.4 Wage & Benefits / Apprenticeship or Vocational Training

C.4.1 For the time-period during which they receive training, apprentices and vocational trainees shall:

C.4.1.1 receive at least the minimum wage for regular workers or the prevailing industry wage for regular workers, whichever is higher; and

C.4.1.2 receive all legal mandated benefits.

C.4.1.3 If local law allows for a lower minimum wage for apprentices/trainees, this lower minimum wage may only be applied for the first 30 days, if that time is dedicated primarily to training and not to production or other essential tasks.

C.5 Wage & Benefits / Contract, Contingent or Temporary Workers

C.5.1 Contract/contingent/migrant/temporary workers shall:

C.5.1.1 Receive at least the minimum wage for regular workers or the prevailing industry wage for regular workers, whichever is higher;

C.5.1.2 Receive all legally mandated benefits; and

C.5.1.3 Receive at least the same compensation as regular workers performing the same job functions or tasks with similar levels of experience or seniority.

C.6 Timely and Direct Payment of Wages

All wages, including payment for overtime, shall be paid directly and in full within legally defined time limits. When no time limits are defined by law, compensation shall be paid at least once a month.

C.7 Accurate Calculation, Recording, and Payment of Wage

All payments to all workers, including hourly wages, piecework, benefits and other incentives, shall be calculated, recorded, and paid accurately.

C.8 Accurate Length of Service Calculation

All workers shall be credited with all-time worked for an employer for purposes of calculating length of service and determine the benefits to which workers are entitled.

C.9 Calculation Basis for Overtime Payments

C.9.1Employers shall compensate workers for all hours worked.

C.9.2 The factory shall comply with all applicable laws, regulations and procedures governing the payment of premium rates for work on holidays, rest days, and overtime.

C.9.3 Employees shall be compensated for overtime hours at such premium rate asis legally required in the producing country.

C.9.3.1 In those countries where there is no legally established overtime premium, employees shall be compensated for overtime hours at the prevailing industry premium rate or at the internationally recognized overtime rate, whichever is higher.

C.10 Overtime Wage Awareness

Workers shall be informed, orally and in writing, in language(s) spoken by workers about overtime wage rates prior to undertaking overtime.

C.11 Nonpayment of Incentives

Regardless of any production quotas, incentives shall not be reduced or not paid if the result shall be wages below the legal minimum wage or the prevailing industry wage, whichever is higher.

C.12 Deposit of Legally Mandated Deductions

C.12.1 All legally mandated deductions for taxes, social insurance, or other purposes shall be deposited each pay period in the legally defined account or transmitted to the legally defined agency. This includes any lawful garnishments for back taxes, etc.

C.12.2 Employers shall not hold over any of these funds from one pay period to the other unless the law specifies that deposits are to be made less frequently than pay periods (e.g. monthly deposits, weekly pay).

C.12.3 If the law does not specify, then deposits shall be made before the next pay period in all cases.

C.13 Voluntary Wage Deductions

C.13.1 Voluntary wage deductions, including for savings clubs, loan payments, union membership dues, or any other union fees, can only be made with the express and written consent of individual workers unless (in the case of union dues and fees) specified otherwise in freely negotiated and valid collective bargaining agreements. In all cases, voluntary wage deductions must fall within the limits and conditions specified by law.

C.13.2 Written consent for voluntary wage deductions shall be documented in employee files.

C.13.3 All such voluntary deductions shall be credited to proper accounts and employers shall not hold funds illegally or inappropriately.

C.14 Voluntary Wage Deduction / Workers Access to Information

Workers shall have access to regular and full information concerning the status of relevant accounts and the status and level of their payments thereto.

C.15 Pay Statement

C.15.1 Employers shall provide workers a pay statement in languages understood by workers each pay period and not less frequently than once a month, which shall show:

C.15.1.1 earned wages,
C.15.1.2 wage calculations,
C.15.1.3 total number of hours worked,
C.15.1.4 regular and overtime pay,
C.15.1.5 bonuses,
C.15.1.6 all deductions, and
C.15.1.7 final total wage.

C.16 Compensation Receipt

C.16.1 All compensation records, including wages and benefits whether in cash or in-kind, must be properly documented and their receipt and accuracy must be confirmed by the relevant worker in writing (e.g. signature, thumbprint).

C.16.2 No one can receive wages on behalf of a worker, unless the worker concerned has, in full freedom, authorized in writing for another person to do so.

C.17 Record Maintenance Employers shall ensure that all legally required payroll documents, journals and reports are available, complete, accurate and up-to date.

C.18 False Payroll Records

C.18.1 Employers shall not use hidden or multiple payroll records in order to hide overtime, to falsely demonstrate hourly wages, or for any other fraudulent reason.

C.18.2 Payroll records maintained shall be authentic and accurate.

C.19 Workers Awareness and Understanding of Compensation

C.19.1 Employers shall make every reasonable effort to ensure workers understand their compensation, including:

C.19.1.1 the calculation of wages,
C.19.1.2 incentives systems,
C.19.1.3 benefits, and
C.19.1.4 bonuses they are entitled to at the workplace and under applicable laws.

C.19.1.5 Employers shall communicate orally and in writing to all workers all relevant information in the local language or language spoken by the workers, if different from the local language.

C.20 Employer Provided Benefits

C.20.1 All workers have a right to use or not to use services provided by employers,such as housing or meals.

C.20.2 Deductions for services to workers shall not exceed the cost of the service to employers.

C.20.3 Employers must be able to demonstrate the accuracy or reasonableness ofthese charges.

C.21 Legally Mandated Benefits

C.21.1 Employers shall provide all legally mandated benefits, including holidays, leave, bonuses, severance payments and 13th month payments to all eligible workers within legally defined time periods.

C.21.2 All benefits shall be calculated correctly.

C.22 Compensation Disputes Employers must establish a system through which workers can dispute compensation and receive clarifications in this respect in a timely manner.

C.23 Fair Compensation / Basic Needs Where compensation for a regular workweek is not sufficient to meet workers’ basic needs and provide some discretionary income, each employer shall work with the FLA to take appropriate actions that seek to progressively realize a level of compensation that does.

C.24 Piece Rate/Minimum Wage

C.24.1 Employers shall not set production targets, piece rates or any other incentive or production system at such a level that workers need to work beyond regular working hours as set under the FLA Workplace Code, excluding overtime, in order to make at least the minimum wage or the prevailing industry wage, whichever is higher.

C.24.2 Employers shall not set production targets, piecework, or any other incentive or production system at such a level that the payment for overtime work performed is less than the premium pay required by law or the FLA Workplace Code.

C.25 Wage Advances

C.25.1 Wage advances shall not exceed three months’ pay or legal limits, whichever is less.

C.25.2 Advances shall only be made following clearly established rules which have been communicated to workers.

C.25.2.1 Advances must be properly documented and their receipt and accuracy must be confirmed by the relevant worker in writing (e.g. signature, thumbprint).

C.25.3 No interest may be charged for wage advances.

Employment Relationship

ER.1 Employment Management Systems / Human Resources

ER.1.1 Employers shall have in place written policies and practices and maintain proper and accurate records governing all aspects of employment from recruitment, hiring and probation, including written terms and conditions of employment, job descriptions, administration of compensation, and working hours for all positions, through to retrenchment and termination processes.

ER.3 Employment Management Systems / New Employee Orientation

ER.3.1 Employers shall provide an orientation to new employees at the time of hiring, which includes explanations of the employers’ rules, compensation package and policies for human resources, grievance systems, industrial relations, including respect of the right to freedom of association, workers’ rights and responsibilities, FLA Code of Conduct, health and safety, and environmental protection.

ER.4 Employment Management Systems / Communication

Employers shall inform workers about workplace rules, environmental protection systems, health and safety information, and laws regarding workers’ rights with respect to freedom of association, compensation, working hours, and any other legally required information, and the FLA Code through appropriate means, including posted in local language(s) throughout the workplace’s common areas.

ER.14 Recruitment and Hiring / Employers Agreement with Employment Agencies

ER.14.1 Employers shall use standard contract language with employment agencies or intermediaries that specifically imparts power to employers to directly pay wages to migrant/contract/contingent/temporary workers and ensures equality of compensation and workplace standards as set under the FLA Workplace Code and national laws and regulations.

ER.17 Grievance System / Worker-Management Communication

ER.17.6 Employers shall have a system in place to prevent retaliation against or discrimination towards workers who are filing grievances, including grievances regarding harassment, abuse, violations of factory procedures, compensation, or unsafe working conditions.

Nondiscrimination

ND.1 General Compliance Nondiscrimination

ND.1.2 If not provided by law, employers must provide protection to workers who allege discrimination in any form, including recruitment and employment practices, compensation, marital, or health status.

ND.5 Compensation Discrimination

There shall be no differences in compensation for workers for work of equal value on the basis of gender, race, religion, age, disability, sexual orientation, nationality, political opinion, social group or ethnic origin.

Compensation

C.1 General Compliance Compensation

C.1.1 Employers shall comply with all national laws, Collective Bargaining Agreements in force, regulations and procedures concerning the payment of compensation to workers.

C.1.2 Other than lawfully required deductions, no other deductions may be made from a worker’s compensation without the written consent of the worker. Financial disciplinary measures are prohibited.

C.1.3 In countries where local law does not specify compensation specific to the agriculture sector, the participating company shall consult with local stakeholders representing the employers (farmers), workers, local government and commissions, and civil society to define the appropriate wage level. As a general principle, employers shall follow the minimum wage standards set for other sectors in the same region.

C.1.4 Where national laws, regulations and procedures do not address the payment of compensation to workers, employers shall follow all standards in the FLA Workplace Code that apply to administration and payment of compensation and, where applicable, shall provide an employment contract that includes stipulation of compensation payment to workers.

C.2 Minimum Wage/Fair compensation

C.2.1 Employers shall pay workers at least the legal minimum wage, the prevailing industry sector wage, or the wage pursuant to Collective Bargaining Agreements that are in force, whichever is higher, for regular working hours (not including overtime). Hourly or daily compensation shall be calculated based on the basis of the legal minimal wage, the prevailing industry sector wage, or the wage pursuant to Collective Bargaining Agreements that are in force, whichever is higher. Workers should also be informed by the employer about the legal minimum wage applicable to them.

C.2.2 Employers shall provide all legally required benefits to all workers.

C.2.3 Employers shall not set production targets at such a level that workers need to work beyond regular working hours as set under the FLA Workplace Code, excluding overtime, in order to achieve at least the minimum wage.

C.2.4 Where compensation for a regular workweek is not sufficient to meet workers’ basic needs and provide some discretionary income, each employer shall work with the FLA to take appropriate actions that seek to progressively realize a level of compensation that does.

C.2.5 Employers shall regularly check the wages paid to workers against the applicable legal minimum wage, prevailing wages, and wages established by Collective Bargaining Agreements in force against locally-recognized living wage calculations made by local governmental or non-governmental institutions, where available.

C.2.6 Employers shall regularly revise salaries to prevent loss of purchasing power for workers and to recognize the value of long-term and higher-skill workers.

C.3 Minimum wage/Piece rate payments

Employers shall ensure that the wages for daily, casual, long term, task specific or contract workers are paid in accordance with the national laws applied to regular workers. For work based on production quotas and piecework performed during normal working hours, workers must get paid the proportionate minimum wage or the relevant industry average wage, whichever is higher.

C.4 Farmer/Producer Income

Prices paid to the farmer/producer shall be sufficient to guarantee a fair compensation to the farmer and allow at least for payment of legal minimum or prevailing wages, whichever is higher, to hired workers.

C.5 Training and Probation Wage

Where probationary or training employment is legally allowed, the wage shall not be below the legal minimum and no workers shall work more than three months cumulatively in those employment categories.

C.6 Timely Payment of Wages

All wages, including payment for overtime, shall be paid within legally defined time limits. Where no time limits are defined by law, compensation shall be paid at least once a month or upon completion of a seasonal task which takes less than a month. When workers are hired through contractors, brokers or external agencies, employers shall make sure that workers are paid according to the benchmark requirements.

C.7 Accurate Calculation, Recording and Payment of Wage/Prices

C.7.1 All payments to workers, including hourly wages, piecework, fringe benefits and other incentives shall be calculated, recorded, and paid in a manner that is convenient to workers (e.g., in cash, by bank transfer or check).

C.7.2 FLA affiliates shall ensure that farmers/producers receive payments and certification premiums through a traceable and reliable payment system.

C.7.3 Wage records should be authentic and accurate and should clearly demonstrate how wages, deductions, benefits, overtime and bonuses are calculated.

C.7.4 Employers shall provide workers a pay statement each pay period and not less frequently than once a month, which shall show: earned wages, wage calculations, total number of hours worked, regular and overtime pay, bonuses, all deductions, and final total wage. The payment statement shall be signed and agreed by the worker. For farms with informal labor structures, and where the illiteracy rate is high, proof of payment may be in the form of alternative means (such as using a witness or affixing a thumb print).

C.7.5 No one can receive wages on behalf of a worker, unless the worker concerned has, in full freedom, authorized in writing for another person to do so.

C.8 Calculation Basis for Overtime Payments

C.8.1 Employers shall compensate workers for all hours worked.

C.8.2 Employers shall comply with all applicable laws, regulations and procedures governing the payment of premium rates for work on holidays, rest days, and overtime. There might however be specific working schemes voluntarily agreed by the workers to work on holidays and rest days for short-term seasonal work, which would make this provision not applicable.

C.8.3 Workers shall be informed in writing or orally where necessary, in language(s) spoken by workers, about overtime wage rates prior to undertaking overtime.

C.8.4 Unless workers have voluntarily agreed to other arrangements, in countries where there is no legally established overtime premium, employees shall be compensated for overtime hours at the prevailing sectoral rate or at the internationally recognized overtime rate, of 150% on workdays and 200% on Sundays and holidays.

C.9 Deposit of Legally Mandated Deductions

All legally mandated deductions for taxes, social insurance, or other purposes shall be deposited each pay period in the legally defined account or transmitted to the legally defined agency. Employers shall not hold over any of these funds from one pay period to the other unless the law specifies that deposits are to be made less frequently than pay periods (e.g. monthly deposits, weekly pay). If the law does not specify, then deposits shall be made before the next pay period in all cases.

C.10 Voluntary Wage Deductions

C.10.1 Voluntary wage deductions for union membership, savings clubs, loan payments, etc. can only be made with the expressed and written consent of workers and fall within the limits and conditions specified by law or by collective bargaining agreement.

C.10.1.1 Written consent shall be documented in employee files, or, where applicable, be obtained in front of a trusted witness according to the local context.

C.10.2 All such voluntary deductions shall be credited to proper accounts and funds shall not be held illegally or inappropriately by employers.

C.10.3 Workers shall have access to regular and full information concerning the status of relevant accounts and the status and level of their payments.

C.11 Workers Awareness and Understanding of Compensation

C.11.1 Employers shall make every reasonable effort to ensure workers understand their compensation, including:

C.11.1.1 the calculation of wages,
C.11.1.2 incentives systems,
C.11.1.3 fringe benefits, and
C.11.1.4 bonuses they are entitled to at the workplace and under applicable laws.

C.11.1.5 Employers shall communicate in writing or orally where necessary to all workers all relevant compensation information in the local language or language spoken by the workers, if different from the local language.

C.12 Employer-Provided Fringe Benefits

C.12.1 All workers have a right to use or not to use services provided by employers, such as housing or meals.

C.12.2 Where employers provide workers with housing, meals or other services, there must be a document or instructions that clearly defines how workers can access these services.

C.12.3 Employers must provide goods and services at fair and reasonable prices, comparable to local market prices.

C.12.4 Deductions for services to workers shall not exceed the cost of the service to employers.

C.12.5 Employers must be able to demonstrate the accuracy or reasonableness of these charges.

C.13 Compensation Disputes

Employers must establish a system through which workers can dispute compensation and receive clarifications in this respect in a timely manner. If not provided by law, employers must provide protection to workers who allege violations of compensation laws, regulations, and procedures.

Employment Relationship

ER.1 General/Human Resource Management Systems

ER.1.1 Employer shall have written terms and conditions of employment, job descriptions, rules of compensation, and working hours for all positions. In the case of workplaces with informal labor structures, employers should be able to describe verbally all of the above terms and conditions and clearly communicate them to workers.

ER.12 Terms and Conditions/Communication

ER.12.1 Employers shall regularly inform workers about workplace rules, health and safety information, and laws regarding workers’ rights with respect to freedom of association, compensation, working hours, and any other legally required information, and the FLA Code through appropriate means, including posted in local language(s) throughout the workplace’s common areas or in the surrounding community. In the case of workplaces with informal labor structures, these communication and awareness raising activities could be done with support from supply chain intermediaries such as cooperatives, organizers, tier one suppliers or the participating company.

ER.14 Administration of Compensation/Termination Payouts

ER.14.1 Employers shall handle termination payouts taking into account national legal requirements.

ER.14.2 Employers shall not demand that workers sign any declaration of good health, waivers or releases of other rights as a condition of receiving severance pay or other legal benefits from the company, and shall not threaten to withhold benefits if workers do not sign.

ER.15 Administration of Compensation/Wage Advances

ER.15.1 If consistent with prevailing labor practices, the employer may make advance payments or advances against payment to the workers to book their time. Wage advances shall not exceed three months pay or legal limits, whichever is less. The farmer will not pay advances or loans against assets such as jewels, property documents, land deeds, and other valuables of the worker. These advances shall be interest free and cannot bind the worker as a bonded labor.

ER.15.2 Advances shall only be made following clearly established rules, which have been communicated to workers.

ER.15.2.1 Advances must be properly documented and their receipt and accuracy must be confirmed by the recipient worker, in writing whenever possible (e.g. signature, thumbprint).

ER.16 Administration of Compensation/Free Disposal of Wages

ER.16.1 Employers may not limit in any manner the freedom of workers to dispose of their wages.

ER.16.2 Wages must be paid on regular working days and in principle at or near the workplace. Workers must be free from any coercion to make use of enterprise or works stores.

Nondiscrimination

ND.3 Compensation Discrimination

There shall be no differences in compensation for workers performing equal work or work of equal value on the basis of gender, race, religion, age, disability, sexual orientation, nationality, political opinion, social group, ethnic origin, employment status (e.g. local workers vs. migrant workers), or membership in unions or other workers’ representative bodies.

Freedom of Association

FOA.5 Anti-Union Discrimination/Dismissal, Other Loss of Rights, and Blacklisting

FOA.5.1 Employers shall not engage in any acts of anti-union discrimination or retaliation, i.e. shall not make any employment decisions which negatively affect workers based wholly or in part on a workers’ union membership or participation in union activity, including hiring; termination; job security; job assignment; compensation; promotion; downgrading; transfer; (vocational) training; discipline; and assignment of work and conditions of work including hours of work, rest periods, and occupational safety and health measures, formation of a union, previous employment in a unionized facility, participation in collective bargaining efforts or participation in a legal strike. Such decisions include for instance the use of blacklists or restrictions in training, or rest periods of the worker.