Malaysia’s MSPO Takes Big Steps on Labour Rights Compliance


The new and revised MSPO standard has been launched by the Malaysian Palm Oil Certification Council in Malaysia.

The new revised standards – the MSPO 2021 series — are the most significant changes to the standard since it was introduced in 2013.  The revision process commenced in 2019 and went through a comprehensive process according to the MPOCC’s procedural rules.

Given how the world has changed since then, there are significant changes to the labour requirements to the standard.

The number of principles has gone from seven to five, with two principles being amalgamated into other principles. Within Principle 4 (Responsibility to social, health, safety and employment conditions), Criterion 3 for Employment Conditions covers many aspects of labour.

The committees for the revision of the standard included labour representatives such as the Malaysian Trades Unions Congress (MTUC), which is Malaysia’s labour representative at the International Labour Organization (ILO). Unsurprisingly, the revised standards are very much in line with international norms on labour rights.

So, what has changed for the MSPO standards on labour – and therefore for the industry?

  1. First, the clearest and most important change is that the new MSPO standards for forced or trafficked labour are directly aligned with the International Labour Organization’s 11 indicators of forced labour. This is an absolutely critical change for the standards, as they form the basis of how many multilateral organizations and governments view forced labour.
  2. Second, the standard has changed the way it accepts evidence of discrimination or of intimidation. Rather than accepting policies or evidence of past compliance to policies, auditors must actively seek a negative finding. In other words, they must undertake interviews and other investigations to ensure that there is no evidence of these things occurring.
  3. Third, there are specific requirements on how contracts are administered between employees and employers, with specific provision for contracts that must be fair, have been agreed by both parties, that have been provided in the language of the employee – and copies of the contract must also be provided.

Even Bigger Changes: Supply Chain Compliance

But there are even bigger, fundamental changes in the standard in terms of responsibilities through the supply chain.

For employers, MSPO places a new, clearer and declared responsibility on the certified company when it comes to contracted workers. The MSPO requirements provide no ambiguity in terms of requirements towards workers. Simply, a sub-contracted worker for a company is treated the same as a direct employee, and the certified company bears all responsibility.

And for all members of the supply chain, all criteria and indicators for labour must be applied to all participants, whether this is at the plantation level or processing. There are exceptions for independent smallholders, but other smallholders that are part of an estate plantation must apply the same requirements. This means there is effectively no distinction between many smallholders and large plantations when it comes to labour requirements.

The MSPO standards have very much attempted to move quickly in response to the greater regulatory pressures that are being placed on supply chains around the world on labour matters.

It is the Malaysian government’s hope that these changes will be accepted as a signal that the palm oil sector takes the issue of forced labour seriously, and the government is putting into place a compliance protocol that can be used for verification of global norms on labour rights.

The changes have taken place alongside the government’s proposed legislative reforms and bilateral efforts, as well as the industry’s renewed commitments on labour. This underlines that the government, regulators and private sector are working towards giving Malaysia’s workers stronger protections.