BSCI SYSTEM MANUAL. PART III Understanding the BSCI Audit from the auditee perspective

BSCI SYSTEM MANUA PART III Understanding the BSCI Audit from the auditee perspective November 2014

PAGE 174 PART III Understanding the BSCI Audit from the auditee perspective PART III: Understanding the BSCI Audit from the auditee perspective

PART III 1. HOW TO COMPETE THE BUSINESS PARTNER INFORMATION PAGE 175 Part III of the BSCI System Manual provides relevant information for the auditee to understand what is epected from its company in the BSCI Audit. At this point, the BSCI Participant has already identified that the targeted business partner has a production work environment: The auditee is a producer. The preparation for the BSCI Audit is not a goal in itself. It helps the producer to create a constructive dialogue with the auditor about: Its social performance Its challenges Its plans to improve working conditions on a continuous basis Part III has to be read together with Part IV where the producer can find a set of templates to help it in gathering information. Most producers do not have the habit to maintain structured records or enforce internal procedures to harmonise the way workers are treated in the company. The BSCI System Manual helps producers understand the benefits of such an approach to consolidate good management habits. BSCI System Manual Part I and Part II add information about: How the audit is done How long the audit lasts How BSCI Audits are rated

PART III 1. HOW TO COMPETE THE BUSINESS PARTNER INFORMATION PREVIOUS PAGE 176 1. HOW TO COMPIE THE BUSINESS PARTNER INFORMATION BSCI provides a set of templates to gather information on business partners. See BSCI System Manual Part IV- Templates. These documents can be used by: BSCI Participants to collect information on their business partners to decide which ones to audit Producers that want to organise their data in a systematic way or to prepare for a BSCI audit. this case, the producer can: eep using its own internal documents as long as they serve the same purpose Use the BSCI templates for inspiration The collection of information is a process that requires time and the involvement of the relevant staff. ey contact person: The producer should appoint a key contact person that: Provides information to BSCI Participants Maintains the data in the BSCI Platform Participates in BSCI Workshops eads the preparation for the BSCI audit IMPORTANT: The producer shall start setting up a social management system even if not all information is available. The goal is to establish a systematic culture of improvements in the company, not just collect documents for the day of the audit. See BSCI System Manual Part V - Anne 3: How to set up a Social Management System. NOTES:

PART III 1. HOW TO COMPETE THE BUSINESS PARTNER INFORMATION PAGE 177 1.1. COMPANY DATA At this moment, the company may not have been identified as an auditee. The BSCI Participant that has asked for information does not know if the company has a production work environment. The company may use BSCI Template 1: Business Partner formation to collect its own data. The template provides blank spaces to report the following information: Company Data: The company provides information about its location, sector and products that it produces. The company must report if it has a production work environment (production units) so the BSCI Participant can decide about the possibility of an audit. Company Contact Details: The company provides its contact details and lists the main language(s) so its client and the auditor know how to keep in contact. Production Data: The company provides information on its production volume and cost calculation. Production Calendar: The company provides information on months when high, medium or low production activity takes place. Certification Overview: The company provides information on any valid certificate it holds. These certificates can refer to social performance, environmental performance and quality performance. Valid certificates for social or environmental standards show the maturity of the company. Holding certain certificates impacts the BSCI Audit. For eample: A valid SA 8000 Certificate = No BSCI Audit A valid GlobalGAP Certificate indicates that: The length of the BSCI Audit is reduced by 30% The Performance Areas related to occupational health and safety and the environment are not checked by the auditor. The auditor checks the other Performance Areas Working Environment: The company provides information on its working environment and applicable labour regulations. Remuneration Practices in the Company: The company provides information on the applicable legal minimum wage as well as any specific industry based remuneration (if applicable). Situational Descriptions: The company describes any situation relevant to its social performance. (E.g. overtime, accidents, strikes).

PART III 1. HOW TO COMPETE THE BUSINESS PARTNER INFORMATION PAGE 178 1.2. SUPPY CHAIN MAPPING The company may use BSCI Template 2: Supply Chain Mapping to collect information on its supply chain. At this moment, the company may not have been identified as an auditee. Collecting these data helps the company to be aware of the importance of having procedures to select and engage business partners. The company may use the template to map as many business partners as it can identify. If the company sources directly from farms, these farms need to be identified in this template. The company must establish a system to internally monitor these farms. See BSCI System Manual Part V - Anne 3: How to Set Up a Social Management System. Significance for the Auditee: The auditee classifies business partners according to ow, medium or high significance. These 3 criteria are based on the business relations, volume, dependency and/or risks. Recruitment agencies and homeworkers are always considered as highly significant because they represent additional social risks for the auditee. Signed BSCI Code of Conduct: The auditee reports if the business partner has signed the BSCI Code with related Terms of Implementation or not. The auditee keeps this information on record. 1.3. DECENT WORING HOURS The company may use BSCI Template 4: Working Hours Form to collect information on how it working hours, per worker. At this moment, the company has already been identified as an auditee. Collecting this information shows the auditee s awareness on the potential social risks related to ecessive working hours. This template offers the auditee a source of inspiration to oversee how the workforce aligns with decent working hours. The auditee is epected to record weekly working hours for every quarter of the year. This allows the auditee to: Identify periods with high activity Balance ecessive working time over a period of three months IMPORTANT: The auditee may start the working hours calculation per department, but eventually determine the figures per worker to become more aware of how to deal with potential health and safety risks. Such risks must take into consideration the costs related to ecessive working time as well as the calculation of proper payments to each individual worker.

PART III 1. HOW TO COMPETE THE BUSINESS PARTNER INFORMATION PAGE 179 1.4. FAIR REMUNERATION QUIC SCAN The company may use BSCI Template 5: Fair Remuneration Quick Scan to collect information on its region and the workforce s cost of living. At this moment, the company has already been identified as an auditee. Collecting this information shows the auditee s awareness on the potential social risks related to a remuneration which is less than what a person requires to afford daily needs. This template offers the auditee an instrument to understand: The local cost of living and its relation to workers remuneration The calculation formula used by most social schemes Regional contet information: How people commute to work, the size of an average family and household sources of energy all contribute to living epenses. Such information may not be readily available but the auditee can search for it from different sources: Having open discussions with workers and their representatives Government (statistics department) ocal NGOs or community groups may have answers to some of these questions Average monthly family epenses: The auditee estimates the family basket or living epenses for an average family, using the information collected above. iving wages estimate: The auditee can apply the calculation formula using previous sets of data (e.g. by calculating for 1 or 2 wage earners and by considering workers epenses such as transportation costs to go to, and leave, work). Good s: If the auditee provides the auditor with this information and the calculation of fair remuneration, the auditor shall acknowledge this under Good s in the Findings Report. IMPORTANT: Auditors will have their own sources of information, which may differ from those used by the auditee. The auditor shall not judge data accuracy. stead, he/ she shall evaluate how the information was collected (e.g. from workers, government statistics). The auditee shows its awareness and willingness to make when it tries to find and calculate the information mentioned in the template. This effort shall be acknowledged by the auditor.

PART III 1. HOW TO COMPETE THE BUSINESS PARTNER INFORMATION PAGE 180 1.5. STAEHODER MAPPING The company may use BSCI Template 6: Stakeholder Mapping to collect information on its stakeholders. At this moment, the company has already been identified as an auditee. Collecting this information shows the auditee s awareness on the relevance of working with its stakeholders. Stakeholders are individuals, communities or organisations that are affected by and may affect an organisation s products, operations, markets, industries, and outcomes. Stakeholders can be internal (e.g. workers) or eternal (e.g. clients). The auditee identifies and reaches out to cooperate with stakeholders to deal with relevant topics, such as: Training Freedom of association Special protection for vulnerable workers Stop and prevent child labour Grievance mechanism Anti-corruption These topics apply for both internal and eternal stakeholders. For more information about how to do stakeholder engagement, see BSCI System Manual Part I - Chapter 5: How to Engage Stakeholders. 1.6. YOUNG WORERS DATA The company may use BSCI Template 7: Young Workers Data to collect information on the young workers. At this moment, the company has already been identified as an auditee. Collecting this information shows the auditee s awareness on the importance of guaranteeing special protection to the young workers. IMPORTANT: The auditee must have a system in place to gather this information regardless if the company engages young workers or not. For eample, a procedure to verify the ages of workers and people in the recruitment process or engaging with an education programme in the region helps the auditee to collect necessary information to use this template. 1.7. GRIEVANCE MECHANISM The company may use BSCI Template 8: Grievance Mechanism to collect information on lodged grievances. At this moment, the company has already been identified as an auditee. The auditee may use the template each time a grievance is lodged. For information about setting up a grievance mechanism, see BSCI System Manual Part V - Anne 3: How to Set Up a Grievance Mechanism.

PART III 2. UNDERSTANDING THE REQUIREMENTS PER PERFORMANCE AREA PAGE 181 2. UNDERSTANDING THE REQUIREMENTS PER PERFORMANCE AREA BSCI Performance Areas are not static situations. They define a continuous improvement path for the auditee to follow. All Performance Areas challenge the auditee to take a cyclical approach: PAN, DO, CHEC and ADUST. By going through every Performance Area and related questions, the auditee aims to: Understand the possible gaps between its business s and the BSCI Code of Conduct version 1/2014 Self-evaluate its social performance especially to meet a client s (BSCI Participant) request Properly prepare for the BSCI Audit The auditee selects the most accurate answer depending on its self-evaluation: : The auditee has not yet the implementation : The auditee already understands the requirement and has taken initial steps to implement it : The auditee already understands the requirement, implements it and continues to manage it (e.g. as part of its Social Management System) At the bottom of each Performance Area, the auditee finds the relevant documents related to it. The same list of documents is compiled in Anne 6: Most Relevant Documents for the BSCI Audit. IMPORTANT: If the auditee sources directly from farms, the appointed internal auditor will evaluate the farms social performance using this tool. If the farm has less than 5 hired workers, the internal auditor shall use the BSCI Template 3: Smallholders Self- Assessment.

PART III PERFORMANCE AREA 1 Social Management System and Cascade Effect PREVIOUS PAGE 182 2.1. PERFORMANCE AREA 1: SOCIA MANAGEMENT SYSTEM AND CASCADE EFFECT The auditee has set up an effective management system to implement the BSCI Code of Conduct An effective management system is crucial to ensure daily operations work in line with BSCI. The auditee shall carefully read Anne 3: How to Set Up a Social Management System before going further through the BSCI Performance Areas. To set up an effective management system, the auditee understands: The importance that its own good social performance has for its clients The content of the BSCI Code and Terms of Implementation The benefits of having a Social Management System in place Communication with customers and stakeholders helps to make continuous improvement possible NOTES:

PART III PERFORMANCE AREA 1 Social Management System and Cascade Effect PREVIOUS PAGE 183 The auditee appoints a senior manager to ensure that the BSCI values and principles are followed in a satisfactory manner Working in line with the BSCI Code requires the involvement of several staff members. However, there must be a senior position in charge. This function has decision-making power and allocated budget to succeed in the follow-up of BSCI social performance evaluation. The individual assuming this role understands: The BSCI Code of Conduct and System Manual The business and the supply chain The business partners which are significant for the company The epectations of stakeholders addition, the auditee determines who is in charge of: Following up with the grievance mechanism Human resources Ensuring that workers receive and have received training relevant to the BSCI values and principles Occupational health and safety risk assessments NOTES:

PART III PERFORMANCE AREA 1 Social Management System and Cascade Effect PREVIOUS PAGE 184 The auditee knows who its significant business partners are and assesses how they understand and apply the BSCI Code of Conduct For more information, see BSCI System Manual Part I - Chapter 3: How to Develop the BSCI Implementation Strategy. The auditee determines which business partners are significant based on: Price, quality and delivery time Volume Nature of the relationship evel of trust and reliability The auditee keeps records on these significant business partners with regard to the way they manage: Their own social responsibility Potential grievances from their own workers NOTES:

PART III PERFORMANCE AREA 1 Social Management System and Cascade Effect PREVIOUS PAGE 185 The auditee organises its workforce capacity to meet the epectations of the delivery order and/or contracts Controlling and anticipating production processes reduce unnecessary subcontracting and overtime, which may impact quality. The auditee has control over the production process when: It understands the volume and frequency it is able to deliver It plans at least the following aspects: Production, quality checks and delivery time Workforce capacity (in cooperation with workers representatives and the one in charge of human resources) A contingency plan in case something slows down or interrupts production Organisation of overtime according to business needs; with a person responsible for its approval Cost calculation (premium paid overtime is to be added to the cost calculation) Growth epectation and human resources needed NOTES:

PART III PERFORMANCE AREA 1 Social Management System and Cascade Effect PREVIOUS PAGE 186 The auditee monitors how its business partners observe the BSCI Code of Conduct Preliminary steps: The auditee requests its business partners to: Share the BSCI Code of Conduct and relevant Terms of Implementation Sign the Code and relevant Terms of Implementation. This is mandatory if the BSCI Audit scope includes a sample of farms Provide information regarding their social performance (e.g. from internal audits; quarterly reporting; social audits and/or certificates) Clear procedures: The auditee develops and implements clear procedures to: Select business partners by taking their social performance into consideration Follow-up on business partners continuous improvement Set consequences in case business partners breach trust For eample, the auditee shall define under which circumstances a contract or commercial relations shall be terminated due to business partners disregard for workers rights. For more information about stopping business, see BSCI System Manual Part I Chapter 3, subchapter 3.10: Stop Business. NOTES:

PART III PERFORMANCE AREA 1 Social Management System and Cascade Effect PREVIOUS PAGE 187 The auditee develops the necessary policies and procedures to prevent and address any harm done to workers in its supply chain (physically, financially or psychologically) Workers are often harmed when working rules are insufficient or unclear. The harm may be physical but also financial and/or psychological. For addressing these issues, the auditee has at least descriptions of the: Conducted risk assessment(s) Defined steps to prevent and address harm The decision-maker and the available channel(s) of communication Available budget and procedures to draw on for addressing the impact(s) Defined system to follow up on the measures taken NOTES:

PART III PERFORMANCE AREA 1 Social Management System and Cascade Effect PAGE 188 The auditee manages its business relations in a responsible manner The auditee does not need to stop business or contracts with business partners simply because they have difficulties in following the BSCI Code. The auditee has: Communication channels to allow the business partners to eplain their difficulties as well as their to align to the Code Clear procedures to determine when a contract with suppliers or subcontractors needs to be terminated Specific clauses in the contracts about ending a business relationship or rescinding a contract because of social issues Documents Related to this Performance Area ob descriptions in which the implementation of BSCI is included Documentary evidence on production capacity planning Evidence that the BSCI Code of Conduct and Terms of Implementation have been distributed to significant business partners Signed BSCI Code of Conduct and relevant Terms of Implementation if farms are part of the scope of the audit Evidence of business partners social performance (quarterly reports, audit reports, valid certificates) Evidence of qualifications of the person in charge of implementing BSCI Documentary evidence of the social policy and procedures to implement BSCI

PART III PERFORMANCE AREA 2 Workers volvement and Protection PAGE 189 2.2. PERFORMANCE AREA 2: WORERS INVOVEMENT AND PROTECTION The auditee involves and echanges information on workplace issues with workers and their representatives The auditee ensures: Management and workers meet on a regular basis to discuss about how to improve working conditions Minutes of these meetings are taken, kept and remain available for workers to consult A workers representative is elected by workers (including seasonal workers) Records on the election process are kept and made available The concerns of the most vulnerable workers are taken into consideration (e.g. migrant and young workers) Follow-ups on workers requests and/or complaints are recorded The auditee defines long-term goals to protect workers according to the BSCI Code of Conduct The auditee defines long-term goals in cooperation with workers and workers representatives. The auditee has a long-term plan (e.g. 5 years) to work according to the BSCI Code. This long-term plan should: clude the vision, mission and objectives of the company in line with the BSCI Code Reflect a step-wise approach toward making sustainable improvements Genuinely involve workers and workers representatives in defining the goals Be written and approved by the competent person (or governance body)

PART III PERFORMANCE AREA 2 Workers volvement and Protection PAGE 190 The auditee takes specific steps to make workers aware of their rights and responsibilities Workers rights and obligations are defined by: The law The specific work contracts and job descriptions The auditee s rules of the workplace (as long as these rules abide by the law) The auditee raises workers awareness on their rights and responsibilities. These are some specific steps: Organise information sessions: formation sessions are a good starting point but they have no impact if they are done in an isolated manner Develop work contracts, working rules and job descriptions: They must abide by the law and the auditee must clearly communicate them to workers Create proper communication channels with workers (e.g. effective suggestion bo, complaint mechanism) Ensure that workers: Receive a copy of their contracts. some cases (e.g. illiteracy of workers) other means would be used to ensure workers are informed of their rights and obligations (e.g. posters with icons) Are trained by a qualified person at least on: -- The use of personal protective equipment -- Health and safety issues to focus on the work environment -- The use of a grievance mechanism Maintain documentation of the workers trainings, which should at least include a list of names and job titles of the participants, dates, content of the material and qualification of the trainers Put the BSCI Code of Conduct in a visible place in the workplace IMPORTANT: Trainings are mandatory for any new worker (even if he or she has been engaged via a recruitment agency). Migrant workers need to be trained and must receive a version of the work contract in a language they understand.

PART III PERFORMANCE AREA 2 Workers volvement and Protection PAGE 191 The auditee builds sufficient competence to successfully embed responsible s in the business operation. This refers to managers, workers and workers representatives The auditee ensures that management regularly receives: formative sessions on the BSCI Code of Conduct Specific training for the human resources, occupational health and safety and grievance mechanism personnel Feedback on the BSCI Audit results and follow-up The auditee has training materials related to BSCI Code content and these are made available for the management. The auditee establishes or participates in an effective grievance mechanism for individuals and communities A grievance mechanism allows workers and communities to lodge suggestions or complaints related to the workers or communities rights. It can also be used as a communication channel to prevent harmful incidents from taking place. Setting up an internal grievance mechanism and/or joining an eisting eternal one are both possible and both can be effective. To learn more about this topic, see BSCI System Manual Part V - Anne 4: How to Set up a Grievance Mechanism.

PART III PERFORMANCE AREA 2 Workers volvement and Protection PAGE 192 Written Procedure: The auditee ensures that the written procedure for the grievance mechanism defines: A person responsible for its administration Potential conflicts of interest and how to overcome them (e.g. if a grievance is against the person who administers the mechanism) Timelines to address grievances Processes for appeals and escalation, which provide additional guarantees that the auditee will address the grievance Communication processes to ensure that workers and community members have access to the grievance mechanism. This includes workers representatives, seasonal, migrant, temporary, young and female workers Alternative ways for lodging a complaint. For eample, through a workers representative or directly to the management Record system of lodged grievances, including how they were investigated and addressed Regular surveys on user satisfaction with the grievance procedure Documents Related to this Performance Area Documentary evidence of the workers representative election Documentary evidence of regularly scheduled workers meetings Records of agreements with workers representatives Employment contracts including those related to security personnel, cleaning and other services ob descriptions in which the implementation of BSCI is included Documented working rules Evidence of a training calendar for workers and management Documentary evidence of training given to workers, management and human resources (e.g. list of attendees with signature) Documentary evidence of trainer competence Documentary evidence of grievances lodged/investigated (e.g. BSCI Template 8: Grievance Mechanism filled in)

PART III PERFORMANCE AREA 3 The rights of Freedom of Association and Collective Bargaining PAGE 193 2.3. PERFORMANCE AREA 3: THE RIGHTS OF FREEDOM OF ASSOCIATION AND COECTIVE BARGAINING The auditee respects the right of workers to form unions in a free and democratic way Free and open society: The right of workers to form and join organisations of their own choosing is an integral part of a free and open society. Even in countries where trade union activity is unlawful, the auditee allows workers to freely elect their own representatives. The auditee s a clear policy NOT to: Prevent worker participation in the activities of unions or other workers organisations Discourage or interfere in the election process of workers representatives Retaliate against workers who participate (actively or passively) in the workers representative election The auditee respects workers right to bargain collectively Collective bargaining is the process used by workers representatives (e.g. trade unions) and employers to negotiate the provisions that: Reflect the terms and conditions of employment for workers Confer rights, privileges and responsibilities to the parties The auditee encourages collective negotiations on the terms of employment. The auditee ensures that the stipulations contained in the collective bargaining agreement: Apply to workers in the same category Are available to workers Are integrated in the employment contracts

PART III PERFORMANCE AREA 3 The rights of Freedom of Association and Collective Bargaining PAGE 194 The auditee does not discriminate against workers because of their trade union membership The auditee puts into a clear policy NOT to: Discriminate against candidates for a company position because of their affiliation to a trade union Give more nor less benefits to workers because of their affiliation to trade unions Dismiss workers for being unionised The auditee does not prevent workers representatives from accessing or interacting with workers in the workplace The auditee understands that: Workers representatives can arrange meetings with workers during working hours in line with the law The time involved in a meeting with the workers representative cannot be deducted from workers remuneration Documents Related to this Performance Area Documentary evidence of the workers representative election Collective Bargaining Agreement (if applicable) Minutes or documents of meetings that led to the collective bargaining agreement (if applicable) Recruitment and dismissal procedures and records

PART III PERFORMANCE AREA 4 No Discrimination PAGE 195 2.4. PERFORMANCE AREA 4: NO DISCRIMINATION The auditee takes the necessary measures to avoid or eradicate discrimination in the workplace Broad interpretation: some cultures, discrimination may be very subtle, therefore, it is important to broaden the interpretation to include a range of individual characteristics, including race, language, religion and other characteristics as means of discrimination. Most pervasive forms: The most pervasive forms of discrimination can be found with regard to eploitation of migrant workers: Confiscation of passports Failure to provide employment contracts Non-payment or under-payment of wages Illegal deductions from wages ong working hours Substandard living conditions and denial of water and food Use or threats of violence These kinds of behaviour are unacceptable. Directly and indirectly: Potential discrimination shall be avoided both during employment and recruitment processes. The auditee puts into : ternal assessments to identify: Most likely grounds used for discrimination (e.g. race) Most common activities through which discrimination may occur (e.g. hiring process) Root cause analysis of discriminatory behaviours A policy to discourage discrimination particularly when workers are hired, promoted, fired or assigned benefits The auditee needs to be cautious to avoid that: The use of labour brokers or recruitment agencies does not bring additional social risks Medical testing results are not used for discrimination against tested workers IMPORTANT: Virginity tests, use of contraception or equivalent are forbidden as workers requirements or preconditions.

PART III PERFORMANCE AREA 4 No Discrimination PAGE 196 The auditee ensures workers are not disciplined, dismissed or discriminated against because of their complaints against infringements of their rights The auditee makes sure that workers feel free to use the grievance mechanism without fear of reprisal. The auditee puts in : Grievance mechanism records to keep the background of every lodged grievance and the conclusions of the follow-ups Grievance satisfaction surveys and keeps the results on record Regular training to management, including supervisors, to enforce this policy The auditee takes the necessary measures so workers are not harassed or disciplined on grounds of discrimination The auditee puts into : A written procedure that describes reasons for disciplinary measures in the workplace according to the law Consultation with workers and their representatives on disciplinary measures and the way in which they are to be enforced A record-keeping system that maintains overviews on cases of disciplinary measures which may have been imposed Regular training to management, including supervisors, on the content and procedure for disciplinary measures

PART III PERFORMANCE AREA 4 No Discrimination PREVIOUS PAGE 197 Documents Related to this Performance Area Documentary evidence on disciplinary procedures Documentary evidence on disciplinary cases and the measures taken Documentary evidence of workers performance assessments and procedures Worker contracts or agreements, including with recruitment agencies (if relevant) Documentary evidence of grievances lodged/ investigated (BSCI Template 8: Grievance Mechanism filled in) NOTES:

PART III PERFORMANCE AREA 5 Fair Remuneration PREVIOUS PAGE 198 2.5. PERFORMANCE AREA 5: FAIR REMUNERATION The auditee complies with the government s minimum wage legislation or the industry standard approved through collective bargaining (if applicable) The auditee: nows the minimum wage or industry standard that applies to its sector of activity Does not hire any worker for a lower remuneration than this threshold eeps pay slips for at least the 12 month period before the date of the BSCI Audit At least the minimum wage or relevant standard applies to: Part-time workers: On a pro-rata basis Piece-rate workers: The number of pieces produced in 8 hours amounts to no less than the minimum daily wage defined by law Workers in the probationary period are paid according to the law Workers hired through agencies: The auditee is aware of and keeps records on how, when and how much the agency pays these workers a cooperative: If the auditee is a cooperative, the by-laws or internal regulations clearly specify how workers and the cooperative s members are remunerated and when. Specifications on loans and possible advance payments are respected and documented. All these specifications are approved in a General Assembly by the majority as defined by the cooperative s by-laws NOTES:

PART III PERFORMANCE AREA 5 Fair Remuneration PREVIOUS PAGE 199 Wages are paid in a timely manner; regularly and fully in legal tender Agreed and communicated: Payment periods and procedures are agreed and communicated to the workers prior to the engagement. The auditee pays workers: Timely: As agreed and as communicated to workers prior to their engagement Regularly: With a frequency that allows workers to make use of their earnings without incurring debts Fully in legal tender: The work performed by the workers in regular working hours is to be paid in legal tender only Payment in kind can be part of the overall remuneration as long as it is: On top of the amount due in legal tender Never done as alcohol or other drugs For workers hired through agencies: The auditee is aware of and keeps records on how, when and how much the agency pays these workers. The auditee calculates the transportation and housing costs provided to workers and has a written policy on how these services are part of the remuneration. Personal protective equipment and other tools provided to workers to perform their tasks are not part of the remuneration. NOTES:

PART III PERFORMANCE AREA 5 Fair Remuneration PREVIOUS PAGE 200 The level of wages reflects the skills and education of workers The auditee recognises that skills can be achieved by means of both education and eperience. Many skills are not proven by means of official diplomas. Workers skills are taken into consideration: the hiring process When assigning salaries When assigning tasks Having a highly-skilled worker conducting a low-skilled job is not acceptable as it may represent a sign of discrimination or evasion of the law. The auditee ensures that: ob descriptions are available with outlines of the kinds of skills required to perform the jobs The people in charge of recruitment are trained to evaluate the level of competence required from workers Regular trainings are provided to strengthen workers skills People in charge of conducting occupational health and safety risk assessments are consulted to determine the types of skills needed NOTES:

PART III PERFORMANCE AREA 5 Fair Remuneration PAGE 201 The auditee provides sufficient remuneration that allows workers to meet a decent living standard Fair remuneration concerns all workers regardless if they are: Permanent or seasonal Directly or indirectly engaged The auditee may use BSCI Template 5: Fair Remuneration Quick Scan to estimate the living standard in its region and determine a potential gap with its remuneration. This will be acknowledged by the auditor as a good. If there is a gap, the information should be taken into consideration for future wage negotiations. Total remuneration includes: Wages paid for up to 48 regular working hours (or whatever the maimum regular hours are according to local law) Social benefits -kind benefits and bonuses Subsidised or free transportation Subsidised or free living space Subsidised or free canteen services Opportunities for education or training Premium paid overtime Remuneration does not include the cost of: Uniforms Personal protective equipment Training that is mandatory as part of the job requirement. For eample, occupational health and safety training Any tool essential to conduct the job

PART III PERFORMANCE AREA 5 Fair Remuneration PAGE 202 The auditee provides workers with the social benefits that are legally granted National law: National law defines the mandatory social benefits granted to workers in that region. Mandatory social benefits usually are: Old age pension Survivor s benefit Family benefits and parental leave Medical care Unemployment Sick leave Disability Work-related injury compensation Vacations Collective Bargaining Agreement: A collective bargaining agreement must be respected not least if it covers more than the law by including more social benefits. Commercial insurance: some countries, the auditee may sign up for commercial insurance to cover at least some of the social benefits (usually work-related injury and health) and use these commercial insurances to replace (fully or partially) the government programme. If the country s legislation does not allow such a replacement, but workers are insured, the auditee complies partially with this item. Eceptions from social benefits: The auditee may have been granted eemptions from social benefits. Such eceptions shall be: Issued in line with the company procedure Issued by the legal authority (usually government department) Valid for the current period of time Applicable for the auditee The auditee shall have available the original document(s) to prove these eemptions. Good s: If the auditee provides commercial insurance in addition to the minimum social benefits required by law, the auditor shall acknowledge it under Good s in the Findings Report.

PART III PERFORMANCE AREA 5 Fair Remuneration PAGE 203 The auditee ensures that deductions from wages are only taken under the conditions and to the etent prescribed by the law Deductions cannot result in: Workers earning less than the legal minimum wage An economic benefit for the auditee A form of discrimination Training sessions: Workers cannot have deductions in wages or working hours because of the time they are in required meetings, training sessions or other workplace situations beyond their control. stead, the employer assumes responsibility for the situation (e.g. a machine used by a worker is under repair and the lost time negatively impacts her/his productivity). Closed down: If the auditee s production site is going to be closed down for repairs or reconstruction, the auditee has to properly communicate the closing period to the workforce in advance. This communication must be done with the support of the workers representative to ensure all workers rights are respected. Objects or services: Deductions cannot be made for the use of objects, buildings or services which are directly necessary for eecuting the work. That includes entry fees and charges for the use of: Tools and machines Sanitary facilities Drinking water Washing facilities Provisions of protective clothing for workers Market rate: Deductions for services offered by the auditee (e.g. transportation or food) are charged at local market rates or lower. These services must always be voluntary for workers to use. Disciplinary measures: Deductions for disciplinary measures can only occur under the conditions specified by law or the conditions defined in a freely negotiated and established collective bargaining agreement.

PART III PERFORMANCE AREA 5 Fair Remuneration PREVIOUS PAGE 204 Documents Related to this Performance Area Documentary evidence of legal deductions for goods and services Documentation on legal minimum wages relevant for the sector Documented collective bargaining agreement Pay slips for workers and documentary evidence of payments Fair Remuneration Quick Scan completed (BSCI Template 5: Fair Remuneration Quick Scan) Worker contracts or agreements, including with recruitment agencies Personnel data files for all workers (including seasonal workers) Documentary evidence of additional benefits (commercial insurance if applicable) Documentary evidence of updated contributions to social insurance funds Documentary evidence of legal deductions for goods or services ists of wage ranges and calculations including for piece rate workers NOTES:

PART III PERFORMANCE AREA 6 Decent Working Hours PAGE 205 2.6. PERFORMANCE AREA 6: DECENT WORING HOURS The auditee does not require more than 48 regular working hours per week, without prejudice to the eceptions recognised by the IO The auditee ensures working hours do not eceed: 48 regular hours in a week 8 regular hours per day The auditee eceptions apply only to: Management: For supervisory or management positions Custom: When by law, custom or agreement, workers work less than 8 hours in one or more days of the week. The remaining days of the week can then be etended to 9 hours (48 regular working hours remains the maimum) Shifts: For workers employed in shifts, if their average number of working hours takes place over a period of 3 weeks or less Family: For members of the same family employed in the undertaking Special regime: For workers subject to a special regime, defined by the local laws (e.g. security guards are often not subjected to regular legal requirements regarding working hours) These eceptions give fleibility to the limit of daily hours as well as weekly hours. However, average working hours within 3 months or less are limited to 48 hours per week. This fluctuation of hours is not premium paid if it is compensated in time within those three months. IMPORTANT: 48 regular working hours per week as well as the eceptional cases mentioned above are recommended for agricultural undertakings. Additional eceptions related to harvesting time also apply.

PART III PERFORMANCE AREA 6 Decent Working Hours PAGE 206 The auditee request of overtime is in line with the requirements of the BSCI Code of Conduct Overtime: It is any working hour in addition to the regular hour limit. countries where legislation sets the limit below 48 hours per week (e.g. 40 hours), any additional working hour is considered overtime It must be paid in a premium rate Most countries legislations define: Temporary eceptions allow additional working hours (e.g. force majeure, accident risks or actual and urgent work to be done to machinery) Overtime limits (e.g. maimum 3 hours per day) Premium rate that applies to overtime (e.g. 25% more than a regular working hour) Type of working processes, which due to their nature, must be done in continuous shifts and national law allows a permanent eception (e.g. national law allows 2 shifts of 12 hours per day instead of 3 shifts of 8 hours per day) The auditee must be aware of the regulation that applies to its industry. Written procedure: The auditee puts into a procedure to deal with overtime, particularly with regard to temporary eceptions. This procedure: Originates in an agreement between the workers representative and the auditee Sets the daily limits of work over the eceptional period Sets the premium rate paid by the auditee Respects any other criteria defined by law egal eceptions: If the auditee belongs to a type of industry covered by a legal permanent eception, the auditee must keep updated documentary proof of the agreement that describes the legal eception. This agreement must have force of law and define: Type of eceptions Categories of affected workers The maimum additional working hours in each case The premium rate for overtime: at least 25% more than the regular rate

PART III PERFORMANCE AREA 6 Decent Working Hours PREVIOUS PAGE 207 Additional comments about overtime: Voluntary: It needs to be voluntarily agreed, unless in cases of temporary eceptions (e.g. force majeure) which must be described in the employment contract Eceptional: It needs to be eceptional. Overtime cannot be repeatedly added onto regular working hours No adding risks: It needs to be set without increasing the risk to workers health and safety Premium paid: It is paid in a premium rate as defined by the law. Overtime occurring during official holidays and/or Sundays may have a higher premium rate to pay It takes into consideration: The vulnerability of temporary workers, migrant workers and piece rate workers The accumulation of fatigue related to shifts Special protection for young workers, pregnant women and night workers Corrective measures: Certain measures can be implemented to reduce ecessive overtime: New technologies to improve production efficiency New production techniques More skilled and qualified workers Improvement in logistics (e.g. coordination and planning) A proper discussion with clients on delivery time epectations All these aspects of overtime also apply for agricultural undertakings including if the auditee is a cooperative. NOTES:

PART III PERFORMANCE AREA 6 Decent Working Hours PAGE 208 The auditee grants workers the right to resting breaks in every working day The auditee ensures that workers benefit from: Short breaks: Workers are allowed to take short breaks during working hours, especially when the work is dangerous or monotonous, to enable workers to stay alert Meal break: Workers are allowed to take the necessary time for meal breaks according to the law Night rest: Workers working during the day are allowed at least 8 hours of night rest within a 24 hour period Adequate areas: Workers have access to effective resting break areas. For eample: Access to ventilated areas Accessible toilets Possibility for changing the physical working position (either sitting down or standing up) The auditee grants workers the right to at least one day off in every seven days Full calendar day: The auditee respects relevant regulations for days off. The day off shall be a full calendar day and should follow national law or custom. The producer grants workers a full calendar day off in every 7 days, unless the freely negotiated collective bargaining agreement or national law defines otherwise.

PART III PERFORMANCE AREA 6 Decent Working Hours PREVIOUS PAGE 209 Documents Related to this Performance Area Documented working rules Pay slips for workers and documentary evidence of payments Documentary evidence of the legal permanent eception covering the auditee s industry Working time records Documented overtime procedure including agreements with workers Documented records of accidents NOTES:

PART III PERFORMANCE AREA 7 Occupational Health and Safety PAGE 210 2.7. PERFORMANCE AREA 7: OCCUPATIONA HEATH AND SAFETY IMPORTANT: If the main auditee holds a valid GlobalGAP Certificate, the auditor shall not monitor this Performance Area. 2.7.1. Regulations The auditee observes applicable occupational health and safety (OHS) regulations cases where the country does not prescribe OHS regulations, international standards apply. The auditee involves workers and their representatives in drafting and enforcing its internal procedure on occupational health and safety. The auditee seeks workers protection in case of accident, including through compulsory insurance schemes The auditee implements different measures to protect workers in case of accident (e.g. promote compulsory insurance schemes). The auditee involves workers and their representatives to identify better ways to protect workers from accidents The auditee provides regular training for workers and management on how to avoid accidents and minimise impacts from accidents The auditee regularly analyses the accident records to learn lessons and adjust accident protocols accordingly

PART III PERFORMANCE AREA 7 Occupational Health and Safety PAGE 211 2.7.2. Risk assessment The auditee regularly carries out risk assessments for safe, healthy and hygienic working conditions The auditee regularly conducts occupational health and safety risks assessments to: Identify the most common risks for workers Classify the risks based on their severity and likelihood Define the kind of preventive or remedial measures that may be necessary Develop, mantain and implement an action plan Allocate budget A good risk assessment: Is appropriate for the safety and health of all workers cludes consultation with workers Covers all production activities, workplaces, machinery, equipment, chemicals, tools and processes Uses relevant standards as a reference (e.g. national law or international standards) cludes regular monitoring and testing Allocates adequate human and financial resources to ensure that the identified risk(s) can be mitigated Takes into consideration: The special needs of the most vulnerable workers such as pregnant women, young workers or migrant workers The transmittable and non-transmittable diseases in the work environment

PART III PERFORMANCE AREA 7 Occupational Health and Safety PREVIOUS PAGE 212 There is active cooperation between management and workers (and/or their representatives) when developing and implementing systems towards ensuring OHS Workers and their representatives are consulted: During the risk assessment During the development of the action plan During the implementation of the systems If the auditee has set up an occupational health and safety committee with democratically elected workers representatives, this is a positive step. Alternative means are acceptable but adequate evidence must show how this active cooperation takes place. The auditee keeps records on: OHS committee meetings OHS committee recommendations How the decision-maker accepts or rejects those recommendations NOTES:

PART III PERFORMANCE AREA 7 Occupational Health and Safety PAGE 213 2.7.3. Training The auditee regularly provides OHS trainings to ensure workers understand the rules of work, personal protection and measures for preventing and reacting to accidents The auditee makes available to workers the information on: The hazards and risks associated with their work The actions to be taken for their protection This information needs to be displayed in a way that can be easily understood by workers. Workers should be at least trained on the following OHS aspects: Use and maintain the personal protective equipment (cleaning, replacement when damaged and appropriate storage) Handling basic and site specific hazards Safe work s Emergency procedures for natural disasters Evacuation drills and/or fire-fighting drills. The drills are recorded to indicate: The purpose Number of workers who participated Results Photos and dates Time taken for the evaluation: the time for evacuating the building should never last more than 9 minutes The auditee improves its performance by doing additional training on OHS for the following audiences: Management, supervisors and occasional visitors Workers who operate machinery and power generators People working with electrical installations and equipment who also must understand their tasks and safety procedures Workers who handle and/or administer hazardous substances receive specific training. Hazardous substances include, but are not limited to, chemicals, disinfectants, crop protection products or biocides