FWF received a complaint from workers and union leader about the salary system of the factory. In the system, the daily wage and OT fees are remunerated below the legal minimum wage levels, which is then compensated by a higher production bonus. If the workers do not meet the target, the workers get paid the legal minimum wage for their daily work and overtime. The workers, however, got confused between two systems and there was a lot misunderstanding and frustration about the calculation. The union leader complained that the factory salary system is too complicated and workers feel that they do not receive the minimum wage in accordance with the law.
Findings and conclusions
Overview of the complaint investigation
On 28 September 2017 the brand sent an email to the factory to request the factory management to consider simplifying the salary system and to share more details about a training the management planned to clarify the current salary system to the workers. The brand received the training materials from the factory on 1 October 2017, reviewed it and supplied feedback to the factory management.
The factory provided the training about the current salary system to all the workers, and the workers understood better about how the calculation is done.
The brand and FWF visited the factory to understand more about the salary calculation as the complaint that workers are paid below the legal minimum wage was still an issue raised by the union leader. The brand and FWF had a meeting with both the union leader and the management regarding the complaint on 24 and 25 November 2017. During the meeting, the management explained their salary system and how the calculation was made. The union leader and the secretary of the union were present while FWF explained the salary system in the local language. It was concluded that the current salary system does ensure payment of the legal minimum wage for all workers. However, since it is considered very complicated, the management agreed to change it to a more transparent system which ensures payment of the daily minimum wage level, overtime, production bonus, and attendance bonus. The agreement agreed with the union to implement the new system in January 2018.
FWF received a call from the union that the management had a meeting with a few supervisors two days ago and told them that the factory would not pay 3600 MMK + 900 OT in January (based on legal minimum wage level). The union was not consulted and the union secretary came to know about it through other workers. FWF followed it up with the brand.
The brand contacted the factory management and asked it to clarify the delay. The factory replied both to FWF and the brand that the new salary system was delayed in implementation due to the departure of the previous union leader, the lapse in the implementation of the new minimum salary that was supposed to be effective from March and a long period of holidays in China where the management team was traveling. However, they would resume the communication soon.
The management explained the new salary system includes to pay the daily wage + OT + production bonus + discipline bonus. The new system includes a higher daily wage (in line with the legal minimum wage level), which resulted in a reduction in the production bonus. The new system is easier to understand and more transparent than the previous one. However, the union still disagrees about the reduced production bonus. The factory management agreed to increase the daily wage and OT fees, but the production bonus amount is reduced. The new system would be implemented as of March 2018.
FWF decided that the complaint about payment below minimum wage, and implementing a confusing salary system, is resolved as the factory is since March 2018 implementing a more transparant and simplified system and ensures salary payment as per law. FWF concluded that the payment system is in line with the minimum wage law. However, FWF does urge the brand to monitor with the factory management to ensure that the regulations relating to the overtime and bonus is not violating the FWF COLP. The management is also encouraged to communicate with the factory union regularly.