Complaints > Vietnam > Outdoor & Sports Company Ltd., Complaint 348

Vietnam - Outdoor & Sports Company Ltd., Complaint 348

Status
Resolved
Country
Vietnam
Date
02/27/2018
Complaint ID
348
Member involved
Outdoor & Sports Co, Ltd
Filing party
Group of factory workers
Filed against
Factory management
Grounded
Yes

The case

The complainant raised several issues on behalf of her/his and and her/his co-workers (approximately 20 workers sat around her/him when (s)he called the FWF helpline).
1. Factory changed the payment method from hourly salary to piece-rate salary. However no consultation process or collective bargaining process took place with employees in advance. According to the group of workers, several benefits were reduced when they are paid by piece-rate, such as: no pay for paid leave (including holidays), no housing allowance, no petrol allowance, etc. These benefits were included in the previous hourly system.
2. Delay in paying workers' wages: factory is often late in paying workers. The payday is on the 15th of the following month but factory is late or only pays part of the wages. On the date of the complaint, workers were paid only 70% of their wage of January 2018.
3. According to the workers, the probation period is too long. Workers receive a signed labour contract and with that are enrolled in social insurance scheme after 1 to 6 months of employment.
4. Factory management does not accept/receive the resignation/termination letters: on the day of the complaint, the complainants state approximately 180 workers applied for resignation but the factory manager did not accept/receive the resignation letters.
5. Toilet flag: Factory provides 2 toilet flags per line (about 50 workers in a line) to control use of toilet. Workers are permitted to go to toilet a maximum of 5 minutes per time. If anyone in the line breaks that rule, the toilet flag will be revoked. Then, there is only 1 toilet flag for use for the line during that day. This practice has been implemented for the past 6 months.
6. Factory is late in paying social insurance, therefore factory does not return the social insurance books for resigned / terminated workers on time.

The group of complainants wish to inform FWF and its member brand of these issues in their factory and hope FWF and its member brand can help the factory to improve working conditions for workers. They do not want their complaint to create any trouble or difficulties for factory management. They also want to thank factory owner for their job. However, they feel unhappy as their benefits decrease and they are managed more strictly.

Findings and conclusions

On 27 February 2018, FWF's complaints handler in Vietnam received a complaint from a group of factory workers, who had six issues they wished to raised. The claimed that:
1. Factory changed the payment method from hourly salary to piece-rate salary. However no consultation process or collective bargaining process took place with employees in advance. According to the group of workers, several benefits were reduced when they are paid by piece-rate;
2. Delay in paying workers' wages: factory is often late in paying workers;
3. The probation period is too long. Workers receive a signed labour contract and with that are enrolled in social insurance scheme after 1 to 6 months of employment.
4. Factory management does not accept/receive the resignation/termination letters;
5. Toilet flag: Factory provides 2 toilet flags per line (about 50 workers in a line) to control use of toilet. Workers are permitted to go to toilet a maximum of 5 minutes per time. If anyone in the line breaks that rule, the toilet flag will be revoked;
6. Factory is late in paying social insurance, therefore factory does not return the social insurance books for resigned / terminated workers on time.
FWF declared this complaint admissible and informed Outdoor and Sports Company (OSC) the FWF member brand sourcing at this factory. OSC reached out to factory management, who replied within one week. As a verification audit was planned at this factory on 15 and 16 June 2018, the investigation was carried out during the audit, with extra time made available for investigating the claims of the complaint.

The investigation showed that:
1. Changing of salaries calculation:
- Workers do not understand factory's wage policy and most workers do not know how to calculate their wages
- All allowances and bonus, as required per law, are paid as of payroll of October 2017
- Factory pays workers at piece rate, but it does not top up when workers' piece salary falls below the contract salary.
2. Delayed payments of salaries:
- Most workers said that they received full salary on time. However, workers said that the factory paid them late in some months.
- From review of the payment records from January to May 2018, it is noted that factory paid workers late in 2 out of 5 months
3. Probation period:
- The probation period is officially 2 months but in practice sometimes 3 months.
- Factory does not sign labour contracts and pay insurance benefits for all workers after the training period. Based on the review of labour contracts, payroll records, insurance reports, receipt of bank transfer, it is noted that there are 81 workers who were employed from 6 May 2015 to 26 April 2018 have not signed labour contract and are not enrolled in social insurance scheme.
4. Refusing resignations
- Workers can resign if they hand in their notice according to the law
- Around half the workers who resigned in March 2018 had bonuses deducted. These deductions were not agreed in advance in either the labour contract or CBA.
5. Toilet flag:
- Workers must use a flag when going to the toilet
- The official policy states that workers cannot use the toilet for more than 10 minutes but in practice no disciplinary action is taken against those who do;
6. Social insurance payments:
- Based on review records of resigned workers, it is noted that the social insurance books for resigned/terminated workers were returned on time. All other social insurance payments were up to date.

A Corrective Action Plan was created following the audit, the brand should work with the factory on making sure that the workers are paid at least the amount stated in their working contracts, if the piece rate salary falls under the contract salary. Besides, the factory should have a policy to make sure of this. Although workers seemed to say the flag system wasn't an issue, FWF recommends that no restriction on toilet usage should take place whatsoever. FWF recommends that all other CAP activities related to this complaint are closely monitored by OSC.

The remediation of the complaint was verified through a document inspection and reaching out to the complainant. The complainant said that she and her co-workers are pleased with the factory's improvements. The brand and the factory have made good progress in addressing the issues raised by the complainants. Both partners should continue working together to implement the CAP. The complaint has been resolved.
See details

Overview of the complaint investigation

03/16/2018 Investigation

The FWF member checked with factory management and received a reply within one week.

03/20/2018 Investigation

FWF concluded additional investigation is needed based on the reply received from factory management.
3 issues were found during the previous audit 2016 and do not need further investigation, but should be part of the improvement plan following the audit.
The 3 new issues raised by the complainants are: 1) the payment method 2) the toilet flags and breaks, 3) the termination, including workers interview and document review.

Since a verification audit at this factory was planned on 15&16 June 2018, investigation will be done in more details during the audit, with an additional 0,5 day for workers interviews and 0.5 day for documents check.

06/20/2018 Investigation

The verification audit investigation showed that:

1. Changing of salaries calculation:
Workers do not understand factory's wage policy and most workers do not know how to calculate their monthly pay as well as overtime compensation. Workers are aware that they can go to line leader or HR department to get help for wage calculating.
Since November 2017 factory changed from time salary to piece salary. From review of payroll records of September to November 2017 and April to May 2018, it is noted that:
- All allowances and bonus including attendance bonus, petrol allowance, housing allowance, seniority allowance and hazardous allowance are paid as of payroll of October 2017. Workers are entitled to holidays, paid leave days as required per law.
- Factory pays workers at piece rate, but it does not top up when workers' piece salary falls below the contract salary.

Based on the review of the payroll of May 2018 of sewing line A1 (37 workers), line A2 (36 workers) and Cutting (14 workers), it is noted that:
- There are 46 out of 87 cases of workers received the monthly salary lower than their contract wage from 56,672 VND ~ 471,163 VND in May 2018.
- There are 22 out of 87 reviewed cases received the piece salary (excluding allowances such as attendance bonus, seniority bonus, housing bonus, transportation bonus, hazardous allownace) lower than the legal miminum wage (3,530,000VND) from 46,815 ~ 267,917 VND in May 2018.

2. Delayed payments of salaries
Interviews with workers: Most workers said that they received full salary on time and payday is on the 15th of every month through bank transfer. However, workers said that the factory paid them late in some months. From review of the payment records from January to May 2018, it is noted that factory paid workers late in 2 out of 5 months (paid on 28 February for the salary of January (50% of remaining salary) and on 16 May for the salary of April).

3. Probation period
- Interview with Management: Training and probationary period is 2 months.
- Worker Interview: workers said probation period from 2 to 3 months for most of workers. After that they sign labour contract with 1 year for the 1st time, 3 years for the 2nd time and then from the 3rd year it's becomes the long-term contract.
- Most workers said one written copy of the labour contract is provided to them. However, some workers said that they have been working at this factory for over 3 months but had not signed a contract yet.
- Document review: Factory does not sign labour contracts and pay insurance benefits for all workers after the training period. Based on the review of labour contracts, payroll records, insurance reports, receipt of bank transfer, it is noted that there are 81 workers who were employed from 6 May 2015 to 26 April 2018 have not signed labour contract and are not enrolled in social insurance scheme.

4. Refusing resignations
-Worker Interviews: Workers said that they have rights to choose to work in this factory and they are free to leave the job if they wish to, but they have to follow the procedures required by law. (i.e. to send the stop working application form to HR department 30 days or 45 days in advance depending on type of labour contract).
-Document review: 154 workers resigned in March 2018. However, 86 workers who resigned in March 2018 had the year end bonus, which was paid on 9 February 2018, deducted. This deduction is not agreed in advance in either the labour contract or CBA.

5.Toilet breaks
1) During the visual inspection, it was observed that workers must use a flag when they go to toilet.
2) From workers' interview: Workers said they are allowed to use the flag to use the toilet for a maximum of 10 minutes. If workers take longer than 10 minutes, the flag will be withheld by the security guard, then their line leader must find the HR department to take the flag back. Workers do not see or hear of any workers disciplined for going to the toilet too long.

6. Social insurance payments:
According to records provided, the last social insurance payment was made on 14 June 2018 for May 2018 (for 280 employees).
Based on review records of resigned workers, it is noted that the social insurance books for resigned / terminated workers were returned on time.

08/27/2018 Remediation

Referring to the Corrective Action Plan of the audit, the brand should work with the factory on making sure that the workers are paid at least the amount stated in their working contracts, if the piece rate salary falls under the contract salary.
Besides, the factory should have a policy to make sure of this.

Although workers seemed to say the flag system wasn't an issue, FWF recommends that no restriction on toilet usage should take place whatsoever.

FWF recommends that all other CAP activities related to this complaint are closely monitored by OSC.

10/10/2018 Verification

Workers confirmed that the toilet flag system was stopped 2-3 month ago. They are now free to access to the toilet.

Factory should still check if all salaries are reaching at least the legal minimum wage: three interviewed workers said that they do not know if their salaries meet their contracted salary or not. Their salary depends on productivity and unit price, therefore their wage are sometimes low or high.One worker said that her salary is higher than her contracted salary because her line always meet the target.

11/20/2018 Verification

On 20 November, FWF complaints handler studied the documents shared by the factory regarding wages. She also called the factory to ask for more information and clarification. Results of this investigation showed that the written notice (No.01/TBL-2018 MKV) dated 15 July 2018 states that the company will pay a support equal to the minimum wage if the piece salary is lower than the minimum wage.

From the review of the payroll records, it is noted that:
i) Payroll of July 2018 of Sewing Line 2: Piece salary of all workers in the line are higher than the minimum wage.
ii) Payroll of August 2018 of sewing line 7 (31 workers): The top up was paid (from 120,310 VND to 523,523 VND) to 25 workers who had piece salary fall below the minimum wage;
iii) Payroll of September 2018 of Sewing line 1 (48 workers): The top up was paid (from 932,252 VND to 1,583,877 VND) to 48 workers who had piece salary fall below the minimum wage;

11/27/2018 Evaluation of the complaint

The complainant said that she and her co-workers are pleased with the factory's improvements. She expects these improvements to be maintained, and thanks FWF for helping workers.

11/27/2018 Resolved

FWF considered the progress made by the factory and communication between brand and factory as good. However, both partners should continue working together to implement the audit CAP. Special attention should be paid to making sure all workers have a working contract.

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