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A Toolkit for Responsible Businesses
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Corrective Action Plans

A Corrective Action Plan (CAP) is typically formulated shortly after the audit. Companies handle their development in different ways: some develop CAPs themselves based on audit findings; some require the supplier to draft its own CAP for review/approval by the company; some require the vendor/agency to draft a CAP for its supplier. In some cases, auditors themselves develop the CAP, but this approach raises concerns because it may present a conflict of interest.

It is good practice to provide opportunities for worker and community input into a CAP, particularly those workers who were directly affected by violations.  This can be done through a workers’ organization, a civil society organization or directly with individual workers, according to defined procedures.

Example In Action

The Better Work Remediation Process:  Performance Improvement Consultative Committees (PICC)

Better Work encourages the development of democratic industrial relations structures and processes by including representatives of employers’ organizations and trade unions in designing and implementing its programs.  At the factory level, compliance issues identified through assessments are addressed by a Performance Improvement Consultative Committee (PICC), a body of 8–10 persons comprising an equal number of management and worker representatives.  Where possible, the formation and capacity development of the PICC builds on a factory’s existing effective labor management structures.  Each PICC meets at least on a monthly basis. It formulates and oversees implementation of a remediation plan, ensuring that management and workers share responsibility and accountability throughout the process.  Better Work auditors are available to provide technical assistance and conduct follow-up audits to evaluate progress on the remediation plan.

For more information, see the Better Work website

A CAP should include:

  • All audit findings;
  • The specific action(s) required to remedy each finding, including assistance for individual victims; new written policies or procedures; training for managers, staff, employees; and other actions;
  • Who is responsible for each action;
  • How each action will be verified/confirmed, such as record review, employee interviews, spot-checks or other means;
  • The deadline or milestones for completing each action, which normally should be as expeditious as possible; and
  • Potential consequences if actions are not taken.

For example, if workers are found to be in forced labor in a workplace, the CAP may require one or more of the remediation measures in Tables 1-4 under Preventing Recurrence.  It should clearly specify who is responsible for overseeing and following up on each measure.  It may require the establishment of new procedures and clarify the lines of responsibility for implementing these procedures.  It may establish new “check” mechanisms to detect forced labor in the workplace, and specify who is responsible for conducting these checks. It may also require a training session for all management on the issue of forced labor and the code of conduct’s forced labor requirements.  Finally, the CAP may state the actions that the company will take if this violation is repeated, such as temporary suspension of orders or cancellation of future orders.

The Fair Labor Association (FLA) publishes reports on all factory assessments it conducts for member companies under the FLA Workplace Code of Conduct.  These reports detail the violations found in the factory, the corrective action steps recommended and progress to date.  FLA also has excerpts from several FLA factory assessments that found and remediated child and forced labor violations.

Once a CAP is in place, oversight and follow-up are, of course, critical.  Typically the company tracks implementation of the CAP, checking back with the supplier on progress, particularly at the times when milestones were to be reached.  If the company has personnel in the geographic location, they can check back directly, the original audit team can return to do a follow-up, or another audit team can do so.  The company can also hold its vendors/agents responsible for follow-up.  The important point is not who does it, but that it is done in a timely and effective manner and is founded on clear communication with the supplier.  As part of CAP implementation, many companies provide ongoing training and capacity building to support the supplier in the process of continuous improvement. 

Despite their clear incentive to maintain a positive business relationship with your company, occasionally suppliers will not engage effectively on CAPs either because they do not have adequate support or training or do not perceive an incentive to do so.  Therefore, CAPs should include incentives for suppliers such as a price premium, purchase guarantees, access to financing and/or regular public reporting that rewards compliance.  If remediation and engagement efforts have failed to achieve the desired results, you should consider ending your sourcing relationship with this supplier, taking into account the potential impacts on the workers and attempting to mitigate those impacts in the process.