ALBIRO AG, Complaint 525

CONCERNING LABOUR STANDARDS
There is no discrimination in employment Payment of a living wage Reasonable hours of work
STATUS
Verification
DATE
2018-10-17

Ms. Hristina Ampeva is the leader of the local organisation for the protection of labour rights in the garment sector in Macedonia ("Glasen Tekstilec"). On Friday 16 October and Wednesday 17 October 2018, she received three calls via her organisations' helpline regarding the decreased salaries of workers in an Fair Wear member factory. On Wednesday 17 October, she called the Fair Wear Macedonian complaints handler and asked to file an official complaint to Fair Wear as she had information from the workers (complainants) that the factory is producing for Fair Wear member.

The three complainants claimed that their received salaries had drastically decreased for the month of September 2018. The complainants working in the factory reported that the wages decreased, and some of the workers received wages that are below the legal minimum wages. After the workers requested an explanation from the owner and General Manager, it was publicly explained to the complainants that the reason for their decreased wages is that they are being punished because they did not vote on the last national referendum for the changes of the name of the country. A national referendum was organised in the country where citizens were invited to vote on whether they agree to change the name of the country from the Republic of Macedonia to the Republic of North Macedonia. This is a personal matter, voting in a referendum is a human right of every citizen guaranteed by the Macedonian constitution and should not be related to the working conditions of specific workers. The factory manager is politically oriented to the political party currently governing the country.

Workers pointed out they recently underwent the Fair Wear Workplace Education Programme on 15 October 2018, which could have helped to encourage them to file the complaint. Ms. Hristina is concerned about the situation in the factory and especially for the affected workers. The situation at the factory is tense due to the political situation and Ms. Hristina Ampeva is afraid that further punishments will follow.

Overview of the complaint investigation

2018-10-29 Investigation

The field investigation took place on 29 October at the factory premises and included the following processes:
a) Interview with factory management regarding the actual complaint;
b) Document inspection/ wage lists and supporting documents related to the wages;
c) On-site Interviews with the workers.
Off-site worker interviews were organised and conducted via phone on 27th October, prior to factory visit and are considered as a relevant source of this investigation.

2018-10-30 Conclusion of the investigation

1. No discrimination: Based on the interview with management and interview with workers the political discrimination was not concluded as a reason for payment of wages below the legal minimum wage. From the document inspection, it was not concluded that wages in September are lower than the wages paid in August (average wage paid in September is higher than the average wage paid in August).
Conclusion: The existence of political discrimination is not concluded based on the available findings.
2. Living wage: From the documenting inspection, interviews with workers and interviews with management it was clear evidence that in the factory some of the wages are paid below the legal minimum wage. As for months of September 2018, 29 workers or 14% out of total workers in the factory received wage below legally prescribed minimum wage. In the month of August, 37 or 19% of all workers received wage below the legally prescribed minimum wage. And in the month of July 26, or 13% of all workers are not paid with legal minimum prescribed wages.
Conclusion: Factory is violating the labour relation law and FWF labour standards in terms of payment of legal minimum wage.
3. Reasonable working hours: During the inspection of the documents it was considered that workers work every Saturday which is 8 hours overtime per week. The overtime working hours are not recorded in the workers’ payslips and not paid appropriately.
Conclusion: Factory is violating the labour relation law and FWF labour standards in terms of not correctly paying overtime working hours.
Recommended remediation solutions for the confirmed findings:
• Factory needs immediately to start with payment of legal minimum wage in line with the legal requirements. The factory is not allowed to make any deductions of the wages if the worker who works the regular number of hours did not achieve the piece rate norm. This way of wage calculation in Macedonia is forbidden since May 2018.
• Overtime working hours (working in Saturdays) need to be recorded and paid accordingly, with a premium rate of 135% any time when they occur. Overtime hours during the national holiday need to be paid with a premium rate of 150%.
• The worker's representative council is not functional and need to be revitalised. The manager needs to enable an environment for the workers to select new workers representative and to start setting the communication and grievance system.

2018-12-19 Remediation

During the remediation period, another complaint was received by the workers from the same factory, and it is closely related to one of the recommendations for remediation, concluded in the investigation report from October 2019: "The worker's representative council is not functional and need to be revitalised. The manager needs to enable an environment for the workers to select new workers representative and to start setting the communication and grievance system".

The claim of the complainant was against factory management, claiming that factory management has approached toward organising workers representative elections within the factory, but the nominated person was proposed directly by the management and the workers were imposed to vote for the nominated candidate. In this regard, the freedom of association is jeopardised and eventually it is not the right way in approaching toward the improvement of the social dialogue in the factory.
This information was shared with the FWF member brand on 19.12.2019 and it was immediately followed through with the factory. Factory informed that there was no election in the years 2017 and 2018 for a worker representative. Factory confirmed that actually there is no worker representation in place in the factory. The feedback from the factory and FWF member brand was that it might be that the workers do not know what a worker representative is and what she/he is supposed to do.

FWF member brand proposed to continue with an investigation on this claim and in order to follow up on the initial complaint to organise an investigation visit in February. The investigation visit is agreed with FWF and scheduled for 28 February 2019.

2019-02-28 Investigation

The investigation included a field visit where the complaint was inspected through:
a) Offsite interviews with the workers (23-24 February)
b) Interview with Management regarding the complaint (28 February)
c) Document inspection of wage lists and supporting documents related to the wages (28 February)
d) On-site workers interviews with worker representatives (28 February)

2019-02-28 Conclusion of the investigation

The investigation showed that the second complaint (submitted in December), claiming that management organised workers elections nominating workers representative by himself, is not admissible, as there were no signs of any kind on workers representative’s election activities in the last 3 months.

The investigation revealed that actual workers representatives are not voted/ elected by the workers, but they are replacements of the previous representatives (since more than a year ago) and are nominated by the management;
The actual workers' representatives who are not voted/ selected by the workers have signed the decision for payment of lower than legally prescribed amount for K-15 (legally prescribed addition/bonus for holiday) for 2018, without consulting the workers.

2019-02-28 Remediation

Recommended remediation steps for the identified investigation findings:
1. Management should enable an environment for the workers to organise themselves and to elect new workers representatives;
2. Workers representative have not enough capacity and understanding how to organise and conduct elections, and still, have not clear understanding of whether they want to establish a trade union or workers representative body. To support them in their intentions to be organised, support by FWF country team can be provided.
3. Management together with FWF member needs to consider the options on how to compensate the rest of the money to the workers for K-15 (legally prescribed addition/bonus for holiday) for 2018. If this amount is not paid retroactively to the workers the factory is violating the legal requirements because they have not valid documents to support the decision for not paying.
4. The progress on the situation in the factory should be monitored by FWF brand and action plans on monitoring need to be reported.
5. FWF will closely monitor the changes in the situation and has scheduled the verification audit for the first half of 2019.

2019-06-01 Remediation

After the investigation visit in February 2019, during the month of April-June, FWF supported the remediation process related to the conclusions under number 1 and 2 (points stated above). FWF member brand and the factory management also showed effort in approaching to remediation for these two points and the brand closely monitored the ongoing processes.
Recommendation N1:
Based on the report’s recommendations the factory management agreed and enabled an environment for the workers to organise a survey among them to assess the interest in workers organising in a defined form of organisation. The survey among the workers was conducted on 1 June at the factory premises.
Recommendation N2:
FWF local team (Complaint Handler and the Regional Coordinator) supported the workers in conducting the survey. On 1 June, a meeting with the factory manager was held and the process of election and voting lists previously prepared from FWF was presented to the factory management. It was clearly explained that FWF is not going to organise workers but only facilitate the process and acting as observers. The process of election was agreed to be done by the workers and the production premises while the workers do the production was selected as the best place and way for voting. Conclusions of the voting process and meeting
- The process of the election has not been interfered by the manager, the management enabled the free environment to conduct the survey;
- The survey showed that almost all workers (93%) want to be organised in working council/or body; also, the survey showed that 80% of the workers want to be part of the Trade Union.
- Based on the nominated workers in the survey, the worker's representatives need to be defined (not all of the nominated workers are interested to be workers representatives).
- The worker's representatives’ participation in meetings with the manager and brigadiers is highly recommended, as the three sources are well familiar with the production process and can discuss in order to meet the ways of improvement of the production process considering the worker's needs and demands.
- The workers do not have KNOW HOW basic skills to found either workers council or how to approach trade union, therefore it is recommended to train them for the basic skills (how to have meetings, what do they have to do at the meeting, what to do if the workers have demands, what to do at the meetings with the manager and brigadiers, how to identify needs and find solutions, to whom to refer in case if they decide to organise trade union etc.). WEP training for the worker's representatives is recommended to be initiated by the FWF member brand and the factory.

2019-06-28 Verification

The full verification audit took place on 28 and 29 June 2019 to verify the progress of the recommended steps proposed in the February investigation report. The conclusion from the verification are:

1. Management enabled an environment for the workers to organise themselves and to elect new workers representatives.
NEW STATUS: REMEDIATED and IMPROVED

2. Worker representatives do not have enough capacity and understanding how to organise and conduct elections, and still, do not have a clear understanding of whether they want to establish a trade union or a worker representative body. To support them in their intentions to be organised, support by the Fair Wear country team can be provided.
NEW STATUS: PARTLY REMEDIATED: It is considered that the basis for having an operational working representative body is grounded but additional training and capacity is needed for the selected worker representatives. We strongly recommend Fair Wear brand and Factory management to work on resolving some of the issues together.

3. Management, together with the Fair Wear member, needs to consider the options of how to compensate the rest of the money to the workers for K-15 (legally prescribed addition/bonus for holiday) for 2018. If this amount is not paid retroactively to the workers the factory is violating the legal requirements because they do not have valid documents to support the decision for not paying the bonuses.
NEW STATUS: NOT REMEDIATED and NOT IMPROVED. The prices that are paid by the brand can only cover the cost for legal minimum wages, and they are not considered as profitable for the factory. They are barely enough to pay the salaries and running costs of the factory. Any other costs (sometimes and legal requirements such as payment of OT premium) cannot be covered with the actual prices as compensation of the workers. For example, the prices do not allow the factory to pay the legally prescribed addition/bonus for holiday for 2018 in full as prescribed by the law.

4. The progress of the situation in the factory should be monitored by the Fair Wear brand and action plans on monitoring need to be reported.
NEW STATUS: PARTLY REMEDIATED
• With reference to the initial complaint on payment of wages below the legal minimum wage, positive progress was observed. From the documents inspected, it became clear that all workers received wages above the legal minimum wage, except the workers that were absent without reason (which is line with the law).
• With reference to the Overtime work, there is no progress. This is the most critical finding. The OT is recorded in the electronic records of the worker's attendance sheet but does not correspond with the number of hours that are presented in the payslip. Although the number of OT hours are in the legally prescribed framework and are not excessive, they are not paid with the premium rate in line with the law. The factory must improve its record-keeping when it comes to regular working hours and overtime hours. Calculating the number of OT for the entire year leads to the finding than the factory is in breach of the Labour law with the cumulative number of the allowed OT working hours on an annual base.

5. Fair Wear will closely monitor the changes in the situation and have scheduled the verification audit for the first half of 2019.
Based on the verification audit findings, Fair Wear expects the member brand to continue working on resolving the issues related to the recommendations 3 and 4, and agree on specific remediation steps/ draft the work plan on how, together with the factory, they can overcome these issues.