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Two complaints were filed independently on 9 and 13 May; since they were similar in nature, FWF decided to combine their report. The complainants claimed the following:
1. That while the minimum wage had been revised country-wide in April 2017, and the audit team had informed workers and management about a salary increased, workers still received the original amount, Rs. 6 500 per month.
2. Also, that while the Provident Fund (PF) was deducted from their salary, it was not credited into the PF account. When local (Tamil) workers leave the job, the factory makes a cash payment of the PF, whereas North Indian workers get it from the PF department. Workers to believe that the factory was not making the required employer contributions to the PF since, for example, a worker who had been with the factory for six years would only get Rs. 9 000 as PF contribution upon leaving.
3. Further, PF settlement can take as long as 8 months. Other factories get settlements within 2-3 monts. Local workers would receive payment after 6 months, while migrant workers would wait up to 10 months to receive the amount. When enquiries were made, the PF office said hey hadn't received the correct paperwork.
4. Workers noticed wage disparities between the wages received by Tamil workers (around Rs.7 000), and those paid to North Indian workers for the same kind of job (around Rs. 9 000).
5. When both complainants raised the issue with the HR manager, they were told they could leave if they were unhappy with the working conditions.
6. Finally, one of the complainants attended a personal event from Saturday to Monday. When the complainant returned to work, the factory deducted three days of leave, and said the worker was not eligible for Casual Leave. The complainant had not made use of Casual Leave throughout the year.
FWF informed the brand sourcing at that factory, Sandqvist, about the case. The brand requested feedback from the supplier who stated that the allegations were incorrect. FWF decided to conduct an investigation on 8 and 9 June 2017. Nine workers (both Tamil and North Indian) were interviewed outside the factory; four Tamil workers were interviewed on-site. In addition, FWF interviewed factory management and reviewed relevant documents.
Based on the investigation, FWF gathered the following findings:
1. The salary of the workers was indeed not revised in April 2017. However, none of the workers is being paid below minimum wage. Factory management argued that they revised the salary in September 2016, after a FWF audit, and paid a little more than the previous year’s minimum wage. According to them the next revision will only be done in September 2017; this was communicated to the workers during the last increment. On this matter, the factory complied with legal requirements.
2. An incident in which a manager had paid out the PF in cash had indeed taken place a few years before. Also, management did not fully understand PF requirements. However, the factory complies with all regulations, and PF is settled directly through the PF department, and in the form of a cheque. This was confirmed by documents and worker interviews. Nevertheless, employer contributions had been calculated incorrectly by an external consultant; management had been unaware, and agreed to corrections.
3. Regarding the time it takes to settle PF payments, FWF found that delays can occur. The factory transfers PF papers to consultant who then deals with the PF department. Occasional delays are caused by the department or because required identity cards are not submitted on time according to management. The factory does however not have systems in place to monitor how fast settlements are processed by the consultant. From the investigation, it could not be concluded whether delays were related to the factory, the consultant or the PF department.
4. FWF reviewed three cases of equivalent pay with similar experience from North India and South India and found that the payment is based on the skill and responsibility of the workers. Factory management conducts an annual assessment of workers based on their skill, operations they can handle, regularity and dependability at work. FWF checked the assessment sheet and found the supplier’s method of assessment satisfactory. During the assessment workers are told about the areas where they need to improve and move up in salary. Since the assessment sheets are not shared with other workers and there is very little interaction between North and South workers (language issue and limited interaction between men and women) there is a feeling of discrimination. Nevertheless, no wage discrimination could be confirmed based on document review. FWF does however confirm a lack of communication which may lead to a perceived discrimination.
5. Management stated that the HR has been advised to be patient with workers and take up all grievances from workers. The investigation team further reiterated this aspect of HR’s behaviour towards workers. FWF cannot conclude the reaction of HR for the particular complaint cases, but confirms that there is a possibility of miscommunication.
6. The factory has a policy in place how so that workers can make use of Casual Leave; however, according to this policy, if a worker has not applied for leave but is absent from work for more three days then factory management will refuse to grant casual leave, although this will be added to the next month’s casual leave. Document inspection and worker interviews confirmed that the policy is implemented in the factory and workers are aware about it. So in this case the factory was legally compliant.
FWF found that many points of the complaints were not grounded. Nevertheless a number of remediation points could be identified:
- FWF recommends the factory to maintain a register of all outgoing PF papers and the processing time from consultant’s end and from PF office.
- FWF requires the factory to calculate and pay the employer’s PF contribution according to legal requirements.
- FWF recommends the factory to further train and counsel HR management to improve internal communication.
- FWF recommends the factory to improve internal communication regarding skill assessment and salary grades to ensure workers do not feel discriminated against
FWF will verify the implementation of the remediation points in the next FWF audit.
FWF called the complainants and they were of the opinion that things are still the same except for the PF settlement, which they hear that it is swifter now.