PERFORMANCE STANDARD 2

OVERVIEW

Sofie Michaelsen
Principal Social Development Specialist, IFC

Samuel Omondi
Senior Environmental Specialist, IFC
 Overview of PS2: Structure

Working Conditions and Management of Worker Relationships

Protecting the Workforce

Occupational Health and Safety

Workers Engaged by Third Parties

Supply Chain

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 Overview of PS2: Scope of Application

Direct workers: Workers directly engaged by the client.

Contracted Workers: Workers engaged through third parties to

perform work related to core business processes.

Supply Chain Workers: Workers engaged by the client’s

primary suppliers.

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PS2 Objectives

• Promote the fair treatment, non-discrimination, and equal opportunity of

workers.
• Establish, maintain, and improve the worker-management relationship.
• Promote compliance with national employment and labor laws.
• Protect workers, including vulnerable categories of workers such as children,
migrant workers, workers engaged by third parties, and workers in the
client’s supply chain.
• Promote safe and healthy working conditions, and the health of workers.
• Avoid the use of force labor.
Overview of PS2: Overarching Principles

Local Labor
PS2 Law
Requirements

Collective
Agreements

Protect Fundamental rights of

workers
Overview of PS2: Overarching Principles

Sound worker-management Safe and healthy working Protect the workforce

relationship conditions
● Vulnerable groups
● HR Policies and Procedures ● Address potential hazards
consistent with GIIP and EHS ● Migrant workers
● Working Conditions Guidelines
● Contracted and supply chain
● Terms of Employment ● Address gender-specific risks workers
● Workers’ Organizations
● Harassment and abuse
● Non-Discrimination and Equal
● Avoid Forced Labor
Opportunity
● Avoid child Labor
● Retrenchment
● Not employ children above the
● Access to Grievance Mechanism
minimum age for work in hazardous
work*

* Where national laws have provisions for the employment of minors, the client will follow
those laws applicable to the client
Working Conditions: Human Resources Policies and Procedures

• HR Policies and Procedures consistent with the requirements of PS2 and

national law.
• Provide workers with documented information on workers’ rights under
HR policy consistent with PS2 national law and applicable collective
agreements:
o hours of work
o wages
o overtime
o compensation, and
o benefits
Working Conditions and Terms of Employment

• Respect collective bargaining agreements.

• Where collective bargaining agreements do not exist, provide reasonable
working conditions and terms of employment.
• Identify migrant workers and ensure they are engaged on substantially
equivalent terms and conditions to non-migrant workers.
• Implement policies for the quality and management of accommodation
and provision of basic services and ensure such arrangements will not
restrict workers’ freedom of movement/association.
 Working Conditions: Workers’ Organizations

• If national law recognizes workers’ organizations and

collective bargaining → comply with local law.

• Where national law substantially restricts workers’

organizations → do not restrict alternative mechanisms,
or influence or control those mechanisms.

• Do not discourage workers’ organizations or collective

bargaining, do not discriminate or retaliate.

• Engage with workers' representatives and provide

needed information to allow for meaningful
negotiations.

• Worker's organizations are expected to fairly represent

of the workers.
Working Conditions: Non-Discrimination and Equal
Opportunity

• Basing employment relationship on the principle of equal opportunity and

fair treatment. Apply to all workers inclusive of migrant workers.
• No discrimination on the basis of personal characteristics unrelated to
inherent job requirements.
• Prevent and address harassment, intimidation, and/or exploitation,
especially in regard to women.
• When national law is not aligned with the principles of non-
discrimination, then apply principles to achieve objectives of non-
discrimination and equal opportunity.
Working Conditions: Retrenchment

• Carry out an analysis of alternatives to retrenchment prior to implementing

any collective dismissals.
• In absence of a viable alternative, develop a retrenchment plan to reduce
the adverse impacts on workers taking into consideration:
o principles of non-discrimination,
o consultation with stakeholders (worker’s organizations and relevant authorities),
and
o compliance with local law, contracts, and bargaining agreements.

• Notify workers and make severance payments as per local law, retain
evidence of payments.
Working Conditions: Grievance Mechanism

Mechanism → to raise workplace concerns

• Communicate Grievance Mechanism to workers at the time of recruitment.
• Involve appropriate level of management.
• Address concerns promptly.
• Use a trusted and transparent process.
• No retribution.
• Allow anonymous complaints.
• Do not impede access to other judicial or administrative remedies.
Working Conditions: Issues/Tips

• Not all workers are identified. Relationships between client and indirect
workers are not assessed:
o Obtain detailed information on types of contracts and outsourced/contracted services.
o Request data on migrant workers and contractors.
o Review sample of contracts and bargain agreements.

• Workers are not aware of their rights to organize or are not truly represented:
o Meet workers’ representatives.
o Review local law/requirements–consider local context.

• Grievance Mechanisms are not functional.

 Protecting the Workforce

CHILD LABOR
• Consider:
o National minimum age for work
o Economically exploitative nature of activity
o Hazardousness of the job
o Interference with the child’s education
o Child’s health
• Identify presence of all persons under the age 18, conduct risk assessment, do regular
monitoring of health, working conditions, and hours of work. Follow applicable laws.

FORCED LABOR
• Do not engage in any kind of involuntary or compulsory labor, such as indentured labor,
bonded labor, or similar labor-contracting arrangements.

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Q&A
Occupational Health and Safety

Objective: Provide a safe and healthy work environment

Consider:
• Inherent sector risks
• Physical, chemical, biological, and radiological hazards
• Specific threats to women

Accident Disease
Occupational Health and Safety

The client will address the following areas in line with GIIP and WBG EHS
Guidelines:
• Identification of potential hazards to workers.
• Provisions of preventive and protective measures.
• Training of workers.
• Documentation and reporting of occupational accidents, diseases, and fatalities.
• Emergency prevention, preparedness, and response arrangements (PS1).
Occupational Health and Safety: Issues/Tips

• OHS assessments are not included as part of the ESIA.

• OHS assessments do not cover all activities, particularly those performed by
third parties.
• Focus only on occupational accidents (not occupational disease).
• Under-developed application of the hierarchy of control principles.
• Causal analysis of accidents is not comprehensive.
• Performance indicators focus mainly on accidents and rarely on prevention.
Workers Engaged by Third Parties

Apply to workers engaged (through third parties) to perform work related to core
business processes. Core include production or services processes that are
essential:
• Client will take commercially reasonable efforts to ascertain that the third parties who
engage these workers are reputable and legitimate enterprises.
• Establish policies and procedures for managing and monitoring the performance of third-
party employers.
• Ensure access to a grievance mechanism for third party workers.
Supply Chain

• Risk of Child/Forced Labor

o Identify risks, remedy, and monitor primary supply chain on an ongoing basis.

• Safety Issues
o Introduce procedures and mitigation measures to ensure that primary suppliers are
taking steps to prevent or to correct life-threatening situations.

• The ability of the client to fully address these risks will depend upon the level
of management control or influence over their primary suppliers. If risks are
not possible to be addressed, alternative suppliers should be identified.
Third Party workers and Supply Chain: Issues/Tips

• Poor identification of third-party workers engaged on core activities.

• Responsibilities defined by local law might be different than the objectives of

this PS.

• Poor identification of the scope of applicability for supply chain: including

identification of primary suppliers and safety aspects.

• Use tools to identify if there is high risk on the sector and country/region:
o Global Map of Environmental and Social Risks in Agro-Commodity Production(GMAP)
https://gmaptool.org/tool
o List of Goods Produced by Child Labor or Forced Labor: US Bureau of International
Labor Affairs (ILAB)
PS2 Resources
Guidance Notes Handbook Good Practice Notes

Guidance Notes to Workers' Measure & Improve Your Addressing Gender- Good Practice Note: Good Practice Note: Good Practice Note: Good Practice
IFC’s Performance Accommodation: Labor Standards Based Violence and Managing Risks Managing Contractors' Non-Discrimination Note: Managing
Standards - Effective Processes and Performance: Performance Harassment: Associated with Environmental and and Equal Retrenchment
January 1, 2012 Standards (2009) Standard 2 Handbook for Emerging Good Modern Slavery Social Performance Opportunity (2006) (2005)
Labor and Working Practice for the (2018) (2017)
Conditions (2010) Private Sector (2020)

Case Studies Interim Advice

Case Study: Powered by Women - COVID-19 and Gender- Interim Advice for Interim Advice for Interim Advice for IFC Gender and COVID-19: Key
Exploring Client Business Case for Based Violence: IFC and EBRD Clients IFC Clients on Clients on Preventing Considerations, Resources
Approaches to Gender Diversity and Workplace Risks and on Migrant Workers Supporting Workers and Managing Health and Support for
Gender-Based Equality in Nepal’s Responses (2020) and COVID-19 in the Context of Risks of COVID-19 in Infrastructure and Natural
Violence Prevention Hydropower Sector (2020) COVID-19 (2020) the Workplace (2020) Resource Companies in
and Response - Gas (2020) Emerging Markets (2020)
Natural Açu (GNA),
Energy, Brazil
(2020)
More resources are available at http://www.ifc.org/ps2
ESG Resources

IFC Sustainability Framework ESG Publications:

(2012) For a full list, see:
www.ifc.org/sustainability www.ifc.org/sustainabilitypublications

Good Practice Good Practice

IFC Sustainability IFC Performance IFC Sustainability Private Equity
Guidance Notes to Handbook: Handbook:
Framework - Effective Standards on Resources and Emerging
IFC’s Performance Assessing and Cumulative Impact
January 1, 2012 Environmental and Brochure Markets
Standards - Effective Managing Assessment and
Social Sustainability Agribusiness:
January 1, 2012 Environmental and Management:
- Effective January Building Value
Social Risks in an Guidance for the
1, 2012 Through
Agro-Commodity Private Sector in
Sustainability
Supply Chain Emerging Markets

www.ifc.org/disclosur
e

WBG EHS Guidelines

www.ifc.org/ehsguidelines
World Bank Group (WBG)
Raising the Bar
Also see: www.ifc.org/corporategovernance
Emerging Trends Corporate Corporate
Environmental, Health, and Safety
on Corporate in Environmental, Governance Governance
(EHS) Guidelines
Governance: A Social, and Success Success Stories
IFC has launched a three-year
Study of Eight Governance Data Stories - - Europe and
consultative process to revise the WBG
Stock Exchange and Disclosure: Middle East Central Asia
EHS Guidelines. See
Indices Opportunities and North
www.ifc.org/EHSGuidelinesRevision
and Challenges Africa
ESG Resources

Learning / Tools / Methodology

See: www.ifc.org/sustainability and www.ifc.org/corporategovernance

• E-Learning Course on • FIRST for Sustainability • Corporate Governance

Managing Environmental See: www.firstforsustainability.org Methodology Tools
Available in English, French,
and Social Performance Chinese, Russian and Spanish
• Corporate Governance
Development Framework
Toolkit
• IFC Nominee Directors
• Sustainability Training • Global Map of Training
and E-Learning Program Environmental and
• Environmental and
(STEP) for Financial Social Risks in Agro-
Social Management
Intermediaries Available in Commodity Production
English, French, Russian System (ESMS) Toolkit
(GMAP)
See: www.ifc.org/gmap
and Handbooks
Q&A