LIMA’s Code of Business Practices
The International Licensing Industry Merchandisers’ Association, Inc. (“LIMA”) is committed on behalf of its member companies to the operation of factories manufacturing licensed products in a lawful, safe, and healthful manner. It upholds the principles that no underage, forced, or prison labor* should be employed; that no one is denied a job because of gender, ethnic origin, religion, affiliation or association, and that factories comply with laws protecting the environment. Supply agreements with firms manufacturing licensed products on behalf of LIMA members should also provide for adherence to these principles.
The role of LIMA is to inform, educate, and survey its members so that individual member companies can adhere to its Code of Business Practices. As an Association, it also acts to encourage local and national governments to enforce wage and hour laws and factory health and safety laws. Specific operating conditions that member companies are encouraged to meet and obtain contractor agreement in advance are as follows:
- That wages and overtime pay practices comply with the standards set by law, including the payment of compensation for overtime hours at such premium rates as is legally required in that country, but not less than at a rate equal to their regularly hourly compensation rate.
- That working hours must exceed prevailing local work hours in the country where the work is to be performed, except with respect to appropriately compensated overtime; must not require in excess of a 60 hour week on a regularly scheduled basis; and must permit at least one day off in every 7 day period.
- That no one under the legal minimum age is employed in any stage of manufacturing; that a minimum age of 14 applies in all circumstances, but notwithstanding the foregoing, that C138 Minimum Age Convention (1973) and C182 Worst Forms of Child Labor Convention (1999) of the International Labor Organization apply.
- That no forced or prison labor is employed*, that workers are free to leave once their shift ends, and that guards are posted only for normal security reasons.
- That all workers are entitled to sick and maternity benefits as provided by law.
- That all workers are entitled to freely exercise their rights of employee representation as provided by local law.
- That factories provide a safe and healthy working environment for their employees and comply with or exceed all applicable local laws concerning sanitation and risk protection.
- That the factory is properly lighted and ventilated and that aisles and exits are accessible at all times.
- That there is adequate medical assistance available in emergencies and that designated employees are trained in first aid procedures.
- That there are adequate and well-identified emergency exits, and that all employees are trained in emergency evacuation.
- That protective safety equipment is available and employees are trained in its use.
- That safeguards on machinery meet or exceed local laws.
- That there are adequate toilet facilities which meet local hygiene requirements and that they are properly maintained.
- That there are facilities or appropriate provisions for meals and other breaks.
- If a factory provides housing for its employees, it will ensure that dormitory rooms and sanitary facilities meet basic needs, are adequately ventilated and meet fire safety and other local laws.
- That all employees are treated with dignity and respect and that no employee shall be subjected to any physical, sexual, psychological or verbal harassment or abuse.
- That no mental or physical disciplinary practices are employed.
- That factories shall recognize and respect the rights of employees to associate, organize and bargain collectively in a lawful and peaceful manner, without penalty or interference.
- That factories shall not discriminate on the basis of race, religion, age, nationality, social or ethnic origin, sexual orientation, gender, political opinion or disability.
- The purpose of this Code is to establish a standard of performance, to educate, and to encourage a commitment to responsible manufacturing, not to punish.
- To determine adherence, LIMA member companies will evaluate their own facilities as well as those of their contractors. They will examine all books and records and conduct on-site inspections of the facilities and request that their contractors follow the same practices with subcontractors.
- An annual statement of compliance with this Code should be signed by an officer of each manufacturing company or contractor.
- Contracts for the manufacture of licensed products should provide that a material failure to comply with the Code or to implement a corrective action plan on a timely basis is a breach of contract for which the contract may be canceled.
- Because of the great diversity in the kinds of licensed products manufactured and the manufacturing methods used, as well as the wide range in factory sizes and numbers of employees, a rule of reason must be used to determine applicability of these provisions.
- This Code should be posted or available for all employees in the local language.
* Many countries recognize that prison labor is essential to the rehabilitation process. This provision prohibits the exportation of prison-made goods to countries that prohibit or restrict the importation of such goods.
Frequently Asked Questions
What is the purpose of the LIMA Code of Business Practices?
LIMA’s Code of Business Practice is intended to provide a code of conduct or best practices under which manufacturers of licensed products would be required to act in a socially responsible and ethical manner in the conduct of their business. These practices include a commitment to the following:
- Occupational health and safety, compensation, hours of work and benefits.
- Minimizing the impact on the environment.
- Management practices that recognize the dignity of the individual, the rights of free association and collective bargaining, and the right to a workplace free of harassment, abuse or corporal punishment.
- The principle that decisions on hiring, salary, benefits, advancement, termination or retirement are based solely on the ability of an individual to do the job.
Why Did LIMA Consider It Necessary to Adopt a Code of Business Practices?
As the licensing industry’s relevant trade association, LIMA is committed to encouraging its members to conduct their business in a socially responsible and ethical manner. Our Board of Directors believed that it was important for LIMA to take a leadership position on this very important issue and that led to the creation and adoption of the LIMA Code of Business Practice. It believed that industry leaders should not be content to do only what is minimally required under the law, but must do what is right and just. Our Board felt that the adoption of this Code for our membership was exactly that-the right thing to do in order to protect the rights of workers around the world.
How Do I, as a Licensor, Implement the LIMA Code of Business Practices?
LIMA recommends that our licensor members include a provision in their standard license agreements requiring that their licensees and their manufacturers adhere to the LIMA Code of Business Practice. A sample provision that you might want to consider incorporating into your license agreement would be:
Manufacturers and Compliance with Labor Compliance Rules:
The manufacture, packaging and storage of the Licensed Products shall be carried out only at premises approved by the Licensor or its nominee in writing from time to time. The Licensor or its nominee shall be entitled at any time on reasonable notice to the Licensee to enter, during regular business hours, any premises used by the Licensee or its Manufacturers for the manufacture, packaging or storage of the Licensed Products, to inspect such premises, all plant, workforce and machinery used for manufacture, packaging or storage of Licensed Products and all other aspects of the manufacture, packaging and storage of Licensed Products. The Licensee shall, and shall insure that its Manufacturers shall make any changes or improvements to its premises, plant, workforce, machinery and other aspects of the manufacture, packaging and storage of Licensed Products as the Licensor or its nominee may reasonably request. Licensee and its Manufacturers shall comply in all material respects with the Code of Business Practices attached hereto as Schedule “B”.
You would then include a copy of the attached LIMA Code of Business Practices as a schedule to your license agreement.
How Do I Go About Insuring Compliance With the LIMA Code of Business Practices?
That is up to the individual licensors. Some may be content to rely strictly on representations or certifications of the individual licensees and their manufacturers while others may elect to be proactive and conduct regular audits of the various manufacturing facilities. These audits or inspections can be conducted using a licensor’s internal personnel or, alternatively, can be outsourced to companies that are in that business. The LIMA office maintains a list of such audit companies and would be happy to provide you with such a list upon request.
What Happens if a Licensee Does Not Follow the LIMA Code of Business Practices?
This would, of course, depend upon what your license agreement provides. If the Licensor should determine that a licensee or its manufacturer has failed to comply with this Code, then upon consultation with the licensee, the licensor may require that the licensee implement a corrective action plan on terms acceptable to the licensor. The remedy will at a minimum include immediately taking all necessary steps to correct such violations including, and without limitation, paying all applicable back wages, or any portion of them, found due to workers who manufactured the licensed products. The licensor would reserve the right to terminate its relationship with any licensee that continues to conduct its business in violation of this Code.
How Does the LIMA Code of Business Practices Compare with Other codes?
The LIMA Code is modeled after the ICTI Code which is used fairly universally in the toy industry. Adherence to the ICTI Code is a condition of membership in the TIA. It also compares favorably with codes used by other trade associations, e.g., the Fair Labor Association, Worldwide Responsible Apparel Production, etc.; major licensors such as Disney, Tommy Hilfiger, NBA, major colleges and universities; and major retailers, e.g., Wal-Mart and Sears. Factories making a good faith effort to comply with widely recognized international labor standards will, in most cases, be in compliance with the LIMA code.
Am I required to Adopt the LIMA Code of Business Practices to be a Member of LIMA?
No, although we strongly encourage our members to adopt this Code.