Groundbreaking Deal on Due Diligence: EFFAT wins on Franchise

The agreement on the EU Directive on Corporate Sustainability #DueDiligence found by Member States last Friday and confirmed yesterday by the EP JURI Committee is a great victory for the protection of the environment, for local communities, and for millions of workers in Europe and globally.

The Directive can be a game changer in the fight against corporate impunity. Alongside it can be an effective tool to raise labour standards in EFFAT sectors characterised by particularly complex supply and subcontracting chains and franchise networks, where impunity and violations of workers’ rights are commonplace.

Our main achievements

Inclusion of franchise
EU and third-country-based multinationals operating in the EU through franchise systems are also part of the scope of the Directive and will now have to stick to the Due Diligence obligations. This is a major victory for EFFAT, its affiliates, and all workers in the hospitality sector. Union busting practices pursued by fast food and hotel multinationals won’t go unpunished anymore and victims of violence and harassment at work will finally be able to claim justice and hold franchise giants accountable.

Involvement of Trade unions
The Directive ensures that trade unions and workers’ representatives will be preliminary involved in the development and implementation of the due diligence policy.

The due diligence policy shall be developed in prior consultation with the company’s employees and their representatives.
Moreover, consultation of stakeholders (including workers’ representatives and trade unions) will take place in different steps of the due diligence process including mapping adverse impact, developing prevention and corrective action plans, and deciding on business relationship suspension termination.

“This is a Directive that can give a voice to millions food chain workers who grapple with labour abuses and deplorable working conditions while ensuring food on our tables. This Directive is a much needed framework of protections for all workers across EFFAT’s most precarious sectors’ says Kristjan Bragason, EFFAT General Secretary on the Deal.

Our concerns
While welcoming the deal as a major victory for the trade union movement and civil society, EFFAT is concerned over the exclusion of Financial Service from the scope of the Directive

Due to lobby pressure on member states, the text is much weaker in relation to its scope (i.e. an increase in the number of workers and turnover thresholds, leading to less companies covered) and civil liability.

We also regret to see that the high risks sectors that included agriculture and food have been removed.

Finally, we believe the choice to allow a progressive application of the Directive (from 3 to 5 years) leaves too much flexibility jeopardizing the need for a prompt implementation of this Directive.

EFFAT is looking forward to the adoption of the agreement in the EP plenary in April and will prepare the ground with its affiliates for the implementation of the directive in all Member States.