Internationally renowned wineries have recently had their names involved in a slave labor scandal. Approximately 207 workers were rescued from a situation analogous to slavery in Bento Gonçalves/RS, in a joint action between the Federal Highway Police (PRF), the Federal Police (PF) and the Ministry of Labor and Employment (MTE).
The rescued workers were employed by the company Fênix Serviços Administrativos e Apoio à Gestão de Saúde Ltda, which provided services to the wineries mentioned. Unfortunately, this is not an isolated case. In 2021, Ambev and the Heineken Group, large breweries, were fined after 23 immigrants were found in conditions analogous to slavery in an outsourced transport company, Sider, which provided services for both companies.
In both situations, both wineries and breweries had their image negatively impacted, as well as a high financial loss resulting from the conduct of the outsourced company, since they have civil, criminal and labor liability for the services they contract.
Given this factual context and the growing demand for outsourced services, many companies may wonder how to protect themselves from losses arising from these contracts. To this end,Due Diligence of third parties, the purpose of which is precisely to investigate possible irregularities and deviations that are not apparent in the business activity carried out by the person the company may be considering hiring and/or has hired the services of, is the instrument that can be used in order to avoid reputational, financial and even legal risks in the future.
Due diligence can at first be confused with auditing. However, it is a more complex procedure, comprising a set of investigative acts that must be carried out before a transaction between companies.
Due diligence can be applied in a number of ways. More specifically, with regard to third-party due diligence, it involves a detailed investigation of the legal and economic context in which a particular service provider operates, in order to map out possible risks of fraud, among other illegalities, which could end up causing the contractor administrative and legal liabilities, as well as financial losses and damage to its reputation.
This procedure provides information on the company’s business structure, values, ethical and sustainability practices, commitment to clients and partners, punctuality in fulfilling labor and tax obligations and other information that helps the company make decisions about potential contractors.
With regard to the importance of this procedure in the labor sphere, it is important to point out that with the enshrinement of outsourcing of services by Law 13.467/17, the labor used began to come from different types of contracting, both for the company’s middle and end activities, increasing the risks of these contracts.
Thus, by strictly following the third-party due diligence procedure both in the pre-contracting phase of service providers and during the contractual term, it is possible to mitigate the risks of the activity, preserving the cash and integrity of the contracting company, since this procedure helps to verify the suitability of the provider, as well as keeping contracting companies aware of the management model of contractors and the way in which they interact with society, inspection bodies and the Judiciary.
Carrying out due diligence on third parties is therefore an effective risk management mechanism that can help avoid labor liabilities such as those experienced by the Aurora, Garibaldi and Salton wineries and the Ambev and Heineken breweries, as well as other issues when used in other spheres.
