A duty of care for business to workers?

Business benefits from the labour that workers provide; in return, business should make sure that those workers are treated properly.

Employees have a lot of legal protections - but, in today's gig economy and with global supply chains - many of the workers that make the products and provide the services involved in a business are not direct employees of that business.

Workers (who are not employees) generate the bulk of the economic value created by many businesses.

In our view, business does owe a duty of care to workers in its locations and its supply chains. That duty can be discharged via appropriate procurement practices, effective due diligence and cooperation with suppliers to remedy any issues uncovered.

There are court cases being heard right now in the UK on this very point. Businesses would be wise to assume that they already have a duty of care to workers - rather than waiting for the courts to rule.

This post covers:

• Workers versus employees

• Does business benefit if worker human rights are not respected?

• What are worker human rights?

• What has the government promised to do?

• Where are we now?

• Should we assume there is a duty of care already?

This post looks at the position from a UK and English law perspective. In other countries, the details can be different but the analysis is remarkably similar.

Workers versus employees

Businesses benefit from the labour of workers in their locations and in their supply chains.

Employees: There are a lot of regulations and legal protections for workers that are employed directly in a business.

Workers: But a significant part of the labour provided to businesses does not come from their employees. The proportion varies, but consider how many workers are:

• In the supply chain (ie: working for suppliers to the business)

• In business locations but not employed by the business:

  • Temporary and agency workers

  • Casual labour, eg: in the gig economy

  • Working for sub-contractors, such as companies that provide cleaning, maintenance, security, construction, deliveries etc.

  • Working for out-sourced service companies that manage payroll, call centres, IT etc.

  • Working for franchisees

Does, or should, business get a "free pass" on workers?

This is the question addressed by this post.

Businesses generally do not know who these workers are. They are not direct employees.

And business generally fails to conduct effective due diligence on whether worker human rights are respected for such workers, even though it benefits from the labour that is provided.

What is the contribution of workers vs employees?

This is not something that has been widely measured, as far as we can tell.

But there are measures of carbon footprint that compare "scope 3" (emissions from the supply chain) versus scopes 1 and 2 (direct and indirect emissions from the business itself). An often-quoted estimate is that scope 3 represents 70%+ of the carbon emissions of a business.

This will not translate directly across to an assessment of the economic value contributed by the labour of workers (distinct from direct employees), and the proportion will vary significantly from one business to another.

A report by Anthesis calculated that as many as 2 billion people are working in the informal economy (casual labour, gig economy) worldwide, and are not covered by the legal protections afforded to employees.

It is clear, as a general principle, that much of the value generated by business likely comes from workers who are not directly employed by them.

Does business benefit if "worker human rights" are not respected?

Most of the time, the procurement process for services and products focusses on price and quality.

Often the services and products provided by workers (as opposed to employees) are of lower value and workers are lower skilled.

Markets are competitive - and businesses are incentivised to drive a hard bargain on price. And that drives labour providers to take short cuts when it comes to worker human rights - as this feeds through directly to competitive pricing.

Business benefits directly and economically if worker human rights are not respected because the products and services they receive are cheaper.

Without a duty of care to workers, the system encourages short cuts to be taken to drive prices down - since often the only way prices can be competitive is if worker human rights are not respected.

What are "worker human rights"?

This is a common sense question but one which is often subject to debate.

"Worker human rights" means more than simply the labour rights of workers in respect to their work, as it includes their human rights in respect of freedom of movement and freedom to choose where they work and how long they work.

You will have seen and heard a lot about "Modern Slavery" and "Human Trafficking". The freedom to decide where and how much to work is certainly a worker human right - and probably one of the most important.

But there are many more worker human rights and they are well documented in international agreements that governments have signed up to (for example, the ILO conventions and in the United Nations General Principles on Business and Human Rights).

Rather than a long discussion, here are few further worker freedoms and worker rights to consider:

• freedom in work from discrimination and harassment,

• working in a healthy and safe environment,

• being paid at least a legal, minimum wage,

• being paid what is owed per the contract.

Do we really want to benefit from businesses that are built using labour practices where basic worker human rights are not being respected?

What has the government promised to do?

The UK government was the first to sign up to the UN Guiding Principles on Business and Human Rights that were adopted unanimously by the UN in 2012. Over 30 countries have explicitly signed up to these principles since then.

These principles are all about worker human rights and what it is reasonable to ask governments and businesses to do in relation to workers (as opposed to employees).

General Principle 1 ("GP1") states:

States must protect against human rights abuse within their territory and/or jurisdiction by third parties, including business enterprises. This requires taking appropriate steps to prevent, investigate, punish and redress such abuse through effective policies, legislation, regulations and adjudication.

What does "GP1" mean?

Although it is broadly written, with respect to business and workers, it is quite simple:

• Governments should accept a general duty towards workers where its influence can be brought to bear.

• Governments should create an environment where business is motivated to "do the right thing".

A general duty does not mean that workers can sue governments - there is no liability here. But this is already the first step on the journey that we should all want to take.

Getting business to "do the right thing" is why we need business to be given an explicit duty of care towards workers in its locations and supply chains. This is how government delivers on the promise made in GP1.

Where are we now (in the UK)?

It is not clear whether, here in the UK, business owes a duty of care to workers. The question is being litigated.

We know that business owes a statutory duty of care to its employees. But, as pointed out above, a lot of the value generated by business is likely delivered by workers rather than employees.

Here in the UK, we have court cases that are debating this very topic. Here are two:

1. Tesco PLC: an action brought by 130 migrant garment workers in Thailand working for V K Garments in the Mae Sot Factory; Leigh Day, the law firm representing the workers, commented "The [Tesco] clothing business is worth £1.7 billion and its clients [workers] claim that a ‘significant proportion of its profits are likely to be attributable to the low-operating costs and use of cheap and/or free labour at the Mae Sot factory’.

   
   

2. Dyson PLC: an action brought by 23 workers relating to their treatment in a factory making products for Dyson in Malaysia. In their legal claim, the workers argue that Dyson was unjustly enriched as a result of the allegedly unlawful, exploitative and dangerous conditions at the factory. They argue that Dyson is liable for the alleged breaches of their legal rights due to ... their alleged assumption of responsibility through numerous public statements regarding their policies and procedures for detecting and preventing forced labour and exploitation in their supply chains ... 

A key part of the Dyson case is that business (ie: Dyson) had ineffective due diligence procedures, relying on self-certification by the supplier (which was conducting the abuse) and social audits of the supplier that failed to deliver an effective assessment of worker conditions.

The duty of care does not come into existence from the date of a court ruling - it will always have been there.

If the courts do rule in favour of the workers in relation to the duty of care question, the consequence for business is retroactive.

Most businesses would be wise to assume that they already have a duty of care to workers - rather than waiting either for the courts to rule that they do, or waiting for government to make this clear via amendments to the Modern Slavery Act 2015.

A duty of care for worker human rights is the right answer

At Ask the workers, we recently provided evidence to the House of Commons Select Committee on this point.

English law is a powerful and flexible tool that operates through a number of pillars - including "common law" which is based on principles and precedents, rather than statutes.

One of the principles of common law enables those suffering forseeable harms to claim compensation from those causing those harms and benefiting as a result. It is more complicated than that - but these are common law principles that are present unless the government passes laws to limit or vary them.

At some point soon, the English courts will make a ruling on this point:

• If a business benefits because worker human rights in its locations or supply chains are compromised,

• do the affected workers have a claim for compensation?

In our view, it would be better for government to intervene rather than letting the courts clarify the law.

A common law duty of care, in our view, obviously exists here:

• Business, through its commercial purchasing practices, encourages suppliers to take short cuts on worker human rights;

• Business separately acknowledges its responsibility by asking suppliers to adopt certain standards via the promulgation of its policies and its public statements of compliance;

• But business turns a blind eye to actual supplier practices by knowingly relying on supplier self-certification and on ineffective and infrequent worker rights' due diligence processes like social audits and surveys; and

• Business profits directly from harms that workers may suffer.

With better procurement practices, effective due diligence (like using effective monitoring systems such as Ask the workers), and cooperation with suppliers to remedy any issues uncovered, business could discharge its duty of care to workers.

What should government do?

The train is leaving the station.

Whether courts rule that there is a duty of care to workers or not, the uncertainty means that business has to assume that there is a duty of care in place.

Such a common law duty of care would bring with it potentially unlimited liabilities - and this is actually not desirable. There will also be significant uncertainty as to how that duty of care to workers can be discharged.

Rather than letting the courts clarify the law, it would be much better for government to make this a statutory duty of care. This would enable government to provide guidance on:

• the practices that should be considered in procurement processes to reduce the chance that worker human rights are compromised;

• the effective due diligence steps that business can take to discharge its responsibility to the workers that make its products and support its services;

• and the cooperative steps to be taken by business in respect to workers if issues are uncovered.

What are those effective steps?

• Procurement processes that take into account the harm that can be caused to workers when business exerts its pricing leverage - known as "responsible purchasing practices".

• Effective due diligence processes that use a variety of tools on top of supplier self-certification:

  • Periodic audits and site visits as now, but recognising their limitations, plus

  • Continuous monitoring of worker human rights in locations and supply chains - for example, by asking workers directly how they are being treated via an anonymized worker voice platform, such as the continuous monitoring provided by Ask the workers,

• A duty (as set out in the UN Guiding Principles) to cooperate with suppliers where business has leverage to remedy harms that workers may be experiencing.

This would be recognising "scope 3" for the "S" of ESG - we are already broadly there for the "E" of ESG.

As the UK government stated in its recent guidance to business "Transparency in supply chains", page 1, March 2025:

Businesses must be vigilant to ensure they are not knowingly or unwittingly complicit in this abuse taking place in their operations and global supply chains. Modern slavery is so prevalent that if businesses are not identifying risks and cases, they are probably not looking hard enough.

Get in touch with us here to talk about any of the matters raised in this post.