Haglofs AB, Mammut Sports Group AG, Complaint 365

Payment of a living wage Legally binding employment relationship

A worker called to complain that the wage of January 2018 has not been paid to workers so far (21 March 2018), the due day should be 28 February 2018 per legal requirements.This means a delay of 21 days already, as according to the complainant, factory agreed to make the payment on the 1 March 2018, but so far the wage has not been paid out. According to the complainant, the reason factory management gave for the delayed wage payment was the delay of payments from the factory's clients.

Findings and conclusions

On 21 March 2018 FWF’s complaints handler in China received a complaint from a worker, who claimed that wages were delayed. FWF declared this complaint admissible and informed Haglofs and Mammut, the FWF members sourcing at this factory. Mammut has, however, stopped sourcing at this factory. Therefore, Haglofs reached out to factory management, who confirmed the late payment of salaries, pointing out that buyers negotiated to keep prices stable while their labour and material costs have increased. The factory responded that they will start paying out the wages in time. FWF called the complainant various times to check upon the payment of his/her salaries, and it was confirmed that outstanding salaries were received and subsequent salaries paid out on time, which left the complainant satisfied. Haglofs was able to show evidence of an upfront payment of fabrics and a price increase of 4% on a style of jackets, from 2016 to 2017. This should be able to cover increased labour and material costs.

Overview of the complaint investigation

2018-05-03 Investigation

The factory responded to the member's question for feedback about the claims made by the complainant. Management confirmed the late payment of salaries. They further stated that February's salary has been paid out on 3 May. The factory expects the March salary to be paid out on 15 May. The factory points out that its buyers (including FWF members) want to keep prices on the same level, while labour and material costs have increased and that they feel squeezed between low purchasing prices and FWF requirements. FWF's members should be able to demonstrate that their pricing allows for increased labour and material costs.

Factory management further claims that previous problems of overtime have been successfully reduced.

The complaint handler will check whether the 3 May payment has indeed been received, and will also check on the planned payment of 15 May. She will also ask the complainant about the current overtime situation.

2018-05-09 Investigation

The complainant informed the FWF complaint handler on 8 May that workers indeed received the wage of February on 3 May. They were informed by management that the March wage would be paid out very soon as well.
The complainant also confirmed that since workers have been back from Chinese New Year, excessive overtime hours have been reduced. Workers now mostly work until 19.00. It remains to be monitored whether this reduction of overtime is related to the improved production planning of the factory, or due to low season.

The FWF complaint handler will reach out to the complainant around 16 May, to check whether the March wage has indeed been paid.
FWF requests the members to show that their pricing is sufficient to allow for increased labour and material costs.

2018-05-28 Resolved

The FWF complaint handler was informed by the complainant that the March wage has been received on 11 May.

To investigate the claim of the factory that the purchasing prices squeeze the factory, FWF members are requested to show that their pricing is sufficient to allow for increased labour and material costs. As Mammut has gradually stopped production with the factory - partly due to the continuous CSR problems - this leaves only Haglofs to demonstrate their prices cover increased labour and material costs. Whether the member has taken sufficient steps to analyse their pricing related to increased labour and material costs, will be avaluated during the 2019 brand performance check.

2018-06-12 Resolved

During a meeting between Haglofs and FWF, Haglofs were able to demonstrate the actions they have taken in response to this complaint. Haglofs changed production from RMG to CMT and started to pay upfront for fabrics, which releases cash flow to the factory. Haglofs was able to show evidence of a price increase of 4% on a style of jackets, from 2016 to 2017.