HAVEP, Complaint 519

CONCERNING LABOUR STANDARDS
Reasonable hours of work
STATUS
Closed
DATE
2018-08-08

At the beginning of 2018, the Helsinki Committee received a complaint from a worker who had recently resigned from a factory supplying HAVEP. The worker lodged a complaint and processed it to the local focal point/ legal adviser of the Helsinki Committee and informed that while he/she was working at the factory, workers worked overtime (every Saturday), but the overtime was not paid. The Helsinski Committee informed the Labour Inspectorate and submitted a request for investigation. This was followed by the Labour Inspectorate with an extraordinary inspection in July and it was concluded that the accusations were valid. The Helsinki Committee was not aware for how long the workers had not been paid for overtime. The existing problem related to payment of overtime was confirmed by another worker who still worked at the factory. The Labour Inspectorate issued a penalty to the factory owner and the owner had the responsibility to pay the penalty.

This complaint case was published by local media in Macedonia. FWF decided to take the complaint case up as a formal complaint case, as it directly related to the FWF's Code of Labour Practices (CoLP) and a factory supplying a FWF member brand.

On 18 September 2018, FWF organised a meeting with the Netherlands Helsinki Committee with the objective to confirm the applicability of the complaint and identify the remediation steps needed. The representative of the Helsinki Committee stated that the issue of non-payment of overtime hours was still present at the factory, as they had checked once more with the same worker after the factory visit by the inspector. Based on this meeting, FWF decided to start the investigation process.

Findings and conclusions

This complaint case on HAVEP supplier was published in the local media in North Macedonia. The case reported the claim on overtime work (every Saturday) without payment in line with the legal requirements. FWF decided to take the complaint case up as a formal complaint case, as it directly related to the FWF's Code of Labour Practices (CoLP) and it is concerning the factory supplying an FWF member brand.

On 18 September 2018, FWF organized a meeting with the organization who reported on this case in the media and considered this complaint as admissible. FWF informed the member sourcing at this factory and decided to start the investigation process.

HAVEP reached out to factory management, who confirmed that they have undergone a local labour inspection and that they have already approached toward remediation of this situation.

The field investigation by FWF took place on 3 November 2018 and confirmed that the factory has approached in adjusting the policy for working hours due to the previous noncompliances. Official working hours in the factory are from Monday to Saturday from 07:00-14:00, or a total of 42 working hours per week. The new policy that was enclosed for verification stipulated that OT will be compensated as free hours/ or days off depending on the number of OT accumulated per worker. This decision is in line with article 124 of the Labour Law. Although the policy was published on the information board, it was not clearly communicated to workers and did not specify by when the compensatory days should be used.
According to the legal requirements, the regular working week is 40 hours. Every hour above this is considered as overtime. Conclusions of the investigation showed that overtime working hours in the factory are reduced from 8 to 2 overtime working hours per week for the month of October 2018. Although the overtime working hours are decreased, when they occur (2 hours every Saturday) they were not recorded in the payslips and it was not clear how they are paid. In this regard, FWF recommended redrafting and alignment of the policy in line with legal requirements (regular working hours cannot be over 40 hours per week). The policy on compensation for working hours is required to specify by when the compensatory days should be used; this needs to be clearly administrated, communicated and explained to workers as soon as the policy is effective; The factory administration needs to design a system and follow up on how the use of OT will be communicated in writing to the workers and in the related wage documents (e.g. payslips).
Based on the investigated findings FWF required from factory management to start reporting the number of exact working hours per month in the payslips as handed out to workers;

HAVEP informed that recommended actions were undertaken on 13 March 2019 and that the factory redrafted its policy on working hours as per 28 January 2019. The official working hours are now 07:00-15:00 from Monday to Friday. This means that there is no more ‘regular’ work on Saturdays and If workers work on Saturday (exceptional cases) this is registered as overtime and paid.

FWF conducted a verification audit on 20-21 September. The audit report showed that the complaint is addressed but not fully resolved. The presence of OT in the month of August 2019 was identified, which accumulated overtime of 7-8 hours per week on average (for week 1, week 2 and week 4). This leads to the accumulation of more OT than the OT prescribed in the internal decision. The total number of OT are still within legally allowed OT per week, but not paid in that line. Overtime hours are stipulated in the payslips, but unfortunately, they are not paid in August, neither compensated. OT records for compensation days per worker are registered in the factory administration unit as management has given the rights to workers to use the overtime for taking a day off in line with the new policy for the reorganization of the working hours. Until the day of the audit, there were no cases where the workers were compensated with free days. Due to the current financial situation of the factory, management postpones the payment of overtime until the end of the year.
Conclusions:
The initial claim on not paid OT in 2018 in line with the legal requirements was partially re-solved as the factory management paid retroactively the bonus wage in line with the legal requirements in several installments. The verification audit confirmed progress on improving internal procedures for overtime working hours, but still, it is not well implemented in practice in 2019. The audit showed that more than 50% of the workers work more than 7 hours of OT per week for the month of August 2019. The management claimed that OT hours will be regulated in line with the internal regulations for compensation of OT until the end of the year.
It is highly required from the brand to closely monitor how the compensation days will be used by the workers and whether the OT policy has been implemented and recognized by the workers. Trade Union representatives should take a more active role in communicating the implementation of OT policy.

Overview of the complaint investigation

2018-11-03 Investigation

The visit of the factory was organised by FWF on 3 November 2018.
The objectives of the visit were:
- To investigate whether the payment of the overtime hours was respected and improved in the last three months (after official non-compliance was found in the factory by the National Labour Inspectorate)
The investigation included a field visit where the complaint was inspected through:
a) Interview with Management regarding the actual complaint;
b) Document inspection/wage lists and supporting documents related to the wages
c) On-site interviews with the factory's trade union
Prior to the visit, the local representative of HAVEP was contacted by FWF's complaints handler and the visit to the factory was announced.

2018-11-05 Conclusion of the investigation

The change in the number of working hours for the last two months is confirmed by the documents and workers representative. The policy on working hours was enclosed to confirm. Official working hours in the factory are from Monday to Saturday from 07:00-14:00, or a total of 42 working hours per week. According to the legal requirements, the regular working week is 40 hours. Every hour above this is considered as overtime.
Overtime working hours in the factory are reduced from 8 to 2 overtime working hours per week. Although the overtime working hours are decreased, when they occur (2 hours every Saturday) they are not recorded in the payslips and it is not clear how they are paid. In this regard, the factory has adopted a new policy for the reorganisation of the working hours for the workers, prescribing that overtime hours per week (2 OT per week) will be compensated in one day off per month. The policy was enclosed for consideration and it is in line with article 124 of the Labour Law. Although the policy was published on the information board, it was not clearly communicated to workers and did not specify by when the compensatory days should be used.

Recommended remediation steps for the confirmed findings:
• The policy on working hours needs to be redrafted and aligned with the legal requirements (regular working hours cannot be over 40 hours per week);
• The factory needs to start reporting on the number of exact working hours per month in the payslips as handed out to workers;
• The policy on compensation for working hours needs to specify by when the compensatory days should be used; this needs to be clearly communicated and explained to workers as soon as the policy is effective;
• Overtime working hours need to be clearly administrated: when they occur and when they are used as compensatory hours. The factory administration needs to design a system and follow up on how the use of OT will be communicated in writing to the workers and in the related wage documents (e.g. payslips)

2019-03-13 Remediation

The investigation report was shared with the FWF member brand who followed up on remediation. The recommended actions were undertaken on 13 March 2019. HAVEP provided the following status update:
- The factory redrafted its policy on working hours as per 28 January 2019. The official working hours are now 07:00-15:00 from Monday to Friday. This means that there is no more ‘regular’ work on Saturdays.
- If workers work on Saturday (exceptional cases) this is registered as overtime and paid.
- The factory changed its salary administration software.
- The exact working hours per month are reported on payslips (evidence is available and checked by HAVEP)
- Overtime hours are administrated and paid (evidence is available and checked by HAVEP)
Supporting documents were sent to HAVEP and the situation will be verified by FWF during the verification audit scheduled for May 2019.

2019-09-20 Verification

Full verification audit was conducted on 20-21 September 2019 with objective to verify the progress of implementation of remediation steps from complaint #519 (for reasonable working hours). The verification audit included at the same time investigation on the newly received complaints #775 and was used as a field investigation visit as well.
Based on the document inspection, workers and management interviews, as well as visual inspection audit report included the following findings on complaint #519:
The latest decision by the management of the factory working hours is 07:00-14:00 Monday to Saturday, and the last Saturday of the month is non-working. The factory has adopted a new policy for the reorganization of the working hours for the workers, prescribing that overtime hours per week (2 OT per week) will be compensated until the end of the year 2019. The workers have two breaks, one of 20 minutes for breakfast and one of 10 minutes.
The documents showed that despite a new decision for working hours workers in the month of August worked 3 out of 4 Saturdays for 8 hours per day, including 8 hours per day Mond-Friday. This accumulates overtime of 7-8 hours per week on average (for week 1, week 2 and week 4). This leads to the accumulation of more OT than the OT prescribed in the internal decision. The total number of OT are still within legally allowed OT per week, but not paid in that line. For example, on average the sewing departments reached 18,5 hours overtime.
Overtime hours are stipulated in the payslips, but unfortunately, they are not paid in August, nither compensated. OT records for compensation days per worker are registered in the factory administration unit. The workers are aware of their overtime hours which is summarized for 2019. Management has given the rights to workers to use the overtime for taking a day off in line with the new policy for the reorganization of the working hours. Until the day of the audit, there were no cases where the workers were compensated with free days. Due to the current financial situation of the factory, management postpones the payment of overtime until the end of the year.
The workers confirmed the finding from the documents, and they also claimed that they often stay until 15.00 in the last three months, although the decision for working hours is from 7.00 until 14.00. According to workers, they still work on Saturdays. The workers are aware that they can compensate overtime hours with a day off, but it is not clear for them when their day off is registered as a holiday day or as compensation day of the overtime hours. Also, some of the workers claimed that the workers cannot reach the piece rate without working overtime.
Recommendation:
The factory needs to decrease the overtime working hours in line with the decision for working hours 7 hours per day, Monday to Saturday. All overtime should be recorded in line with the internal decision and in accordance with the law. They should be properly registered in the payslips.
The management needs to start being transparent in recording and communicating the OT and try to decrease trends if increasing the number of OT. If any OT occurs, it needs to be paid or compensated in days off in line with the internal procedure

2019-10-03 Evaluation of the complaint

Upon complaint from the workers about not payment of the OT at the labour inspection for the year 2018, the management paid the bonus wage as compensation for OT hours retroactively in several installments.

2019-10-08 Closed

The initial claim on not paid OT in 2018 in line with the legal requirements was re-solved as the factory management paid the bonus wage in line with the legal requirements in several installments. The verification audit confirmed progress on improving internal procedures for overtime working hours, but still, it is not well implemented in practice in 2019. The audit showed that more than 50% of the workers work more than 7 hours of OT per week for the month of August. The management claimed that OT hours will be regulated in line with the internal regulations for compensation of OT until the end of the year.
It is highly required from the brand to closely monitor how the compensation days will be used by the workers and whether the OT policy has been implemented and recognized by the workers.