Haglofs AB, Outdoor & Sports Company Ltd., Complaint 869

Legally binding employment relationship

On 8 April 2020, three workers working at Sewing and Quality check (QC) department called the Fair Wear helpline to complain, claiming that they were dismissed unlawfully. According to the workers, at about 4:45 PM on 7 April 2020, the management factory verbally informed approximately 40 workers that their contracts will be terminated from 8 April 2020 because downsizing due to the COVID-19 outbreak. According to the complainant, the workers were then required to sign a termination form but they did not agree. On 8 April 2020, these workers came back to the factory to meet the management but they could not reach the management. They are worried about their remaining salary and severance payments.

Overview of the complaint investigation

2020-04-08 Investigation

OSC's brand Mountain Equipment contacted the factory on 8 April.

According to the factory; the dismissals were due to the financial situation of the factory caused by the cancellation and postponed delivery of orders. The factory stated that their customers cancelled 25% of orders and postponed the delivery of 22% of orders over 3 months.

The factory explains that the contracts were terminated legally but earlier than the original plan: "for this batch of dismissed workers, our original plan was that the contracts would not be renewed after their expiration, but with the continuous cancellations and postponement of orders, we had to dismiss them 1-2 months in advance. All the termination of contracts are in line with the Vietnamese law".

The factory confirmed that they will make sure the dismissed workers' remaining salary and severance payments will be given in their normal salary date, 15th of each month.

2020-04-15 Investigation

On 15 April 2020, the factory provided documents, including:
• The contract termination decision of the three first complainants.
• The payroll of the workers who resigned from the factory. The payroll includes the payment for working hours in April and 1 month of basic salary.
• An announcement dated 1 April 2020 to inform that the factory will terminate the labour contracts of some workers who will be paid the salary for days without notice, unused annual leave, and other allowances (if any).

The Complaint Handler called the six complainants, all of them confirmed that they received the salary for working hours in April and a month of basic salary as the payroll documents showed. They have not received the social insurance books or the contract termination decision yet.

The workers expects the factory to pay them at least 2 months of basic salary due to unlawful termination. They cannot find new jobs in these times.

According to Article 38.1 of the Labour Code, the factory can unilaterally terminate labour contracts and must notify the employee at least 30 or 45 days in advance. In this case, the factory did not notify the workers 30 days in advance but paid one month of basic salary for the un-notified days. As the COVID-19 pandemic has been recognised by the Vietnamese government as a situation of "Force majeure", the factory is in compliance with labour laws.

However, the factory should have submitted a Labour utilisation plan to the local Management Authority before deciding to layoff workers.

2020-04-25 New issue

On 25 and 26 April 2020, three other workers called to complain about the same issue, bringing the total number of complainants to nine for this case. All of the complainants confirmed that they received the salary for working hours in April and a month of basic salary. They have not received their social insurance books and the contract termination decision yet. All of them said to disagree with the compensation because the factory continues to hire new workers and they are unable to find a new job during these troubling times due to Covid-19. Otherwise, they are not eligible for unemployment benefits.

2020-05-11 Investigation

To gain clarity on the situation in the region, the complaints handler reached out to the stakeholder VGCL of Thanh Mien District of Hai Duong Province. VGCL said that there were some workers who work at the factory that met with VGCL to complain about the factory terminating their labour contracts unlawfully.

According to the VGCL representative, the factory might not follow the legal procedures strictly but the factory has compensated a month of basic salary to these workers which is better than other factories.

2020-06-15 Investigation

On 4 June 2020, Fair Wear and Haglofs had a call to follow-up on the complaint. Fair Wear suggested to conduct an on-site investigation as well as off-site interviews of workers in order to gain more clarity on the dismissal of the group of workers.

Regarding the 9 complainants; they have received one month salary compensation, but were expecting 2 months. If the reason for the dismissals are truly linked to the COVID-19 crisis then one month is enough, but the factory should provide proof of that.

Three of the complainants are not able to apply for unemployment benefits since the termination decision documents issued by factory management were not accepted by the insurance office, which is a new issue.

The factory agreed to an on-site investigation by the Fair Wear team, which will take place on 6 July 2020.