Hydrowear B.V., Schijvens Confectiefabriek Hilvarenbeek B.V., Complaint 392

Freedom of association and the right to collective bargaining Payment of a living wage Legally binding employment relationship

Workers, under the leadership of their union, submitted a charter of demands to factory management in January 2018 and asked for negotiations.

According to the complainant three dates for a meeting between the trade union and the factory's management were fixed; but each time at the day of meeting management shifted the date. Upon being threatened about a possible strike, the management planned a meeting on 28th April with the union representatives. The meeting did not take place. The management again invited the representatives on the 30th of April. When the workers came to report for duty on Monday the 30th April, they found that the management has put a notice on the gate that due to shortage of raw materials or orders the factory was closed. The security guard did not allow them to enter the factory.

The workers believe that there was no problem of raw materials or orders, the management closed the factory because workers raised demands.
Workers and their union raised a complaint at the labour department against this closure. The Deputy Labour Commissioner fixed a meeting for conciliation on 10th May, but the factory's management did not attend. The labour department has given another date for conciliation, but there is no response yet from the factory.

The demands that were presented to management in January 2018 included the following issues:
a) Wage increment: In 2016 basic wages were 240 INR, and in 2017 after increment it became 280 INR, but increment was not done in 2018. After repeated demands from workers the company increased their daily wage rate by 7 INR. The Union demands a proper wage increment.
b) Paid leave (EL and CL) should be provided to workers.
c) Bonus must be at the rate provided in law.
d) Skilled workers are currently paid wages at unskilled rate; they should be paid the rate for skilled workers.
e) Some other matters related to law compliance.

Now the workers / union representatives want the management to re-open the factory (even if their demands are not met, since they have been jobless for a month), but the management had given a condition – that owing to small business percentage, only two production lines shall be operational– only lines 3 & 5 (the factory had 6 production lines at the time of closure) shall be operational.
These workers are worried of their fate with the factory. They have been asked to come to factory location tomorrow – 1st June.
The complainants added that the management has taken back a few workers (management favorites, not part of the union) and hired few extra workers and shifted partial production in other units.

Findings and conclusions

Two complaints by a worker and union members respectively, came in 15 days gap in the month of May 2018 stating that the union wanted to discuss their charter of demand with the management but the management didn't give them a meeting despite fixing several dates. On 30th April the management closed down the factory citing insufficient raw material as a reason. After a gap of one month management met the union and management agreed to take back all workers by 6th June. FWF investigation showed that all workers- contract and permanent were taken back to work before or by 6th June. The period of one month where workers were without livelihood management state that they are not obliged to pay workers because:
a) they were all contract workers and,
b) they had given prior notice (from 23rd April onwards- every alternate days) to the workers.
It was clear from the FWF legal expert that the factory is not obliged to pay as according to the Industrial dispute Act the management should pay to all permanent workers who are laid off. Since these were contract workers the management is therefore not obliged to pay.
Specific complaint of workers to be taken back to work has been addressed and the factory management is absolved from the obligation to pay workers for one month that they were laid off therefor this complaint can be considered as resolved.

Overview of the complaint investigation

2018-05-22 Investigation

FWF shared the complaint with Hydrowear and asked them to discuss it with the factory. The factory provided a statement about their version of events, which differed considerably from the one given by the complainant.
FWF reviewed the statement and called the complainant to cross-check details.

2018-05-30 Investigation

FWF received calls from two other workers on 30th May which corroborate the version by the initial complainant. One of these workers called again on June 1 with additional updates. These details were reviewed by FWF as well.

2018-06-04 Conclusion of the investigation

FWF is at this point unable to conclude which circumstances led to the factory to close temporarily.

Management states that they were open for negotiations with the unions, but since the current agreement between the contractual worker and the contractor had not still completed the one year tenure (which expires on 9th June 2018), management claims that the president of the Union asked to hold the negotiation with the contractor and the worker Union after 15th of April 2018.
The complainants stated that the contractor was changed three years back. They are not aware of any agreements that would expire in June 2018. In mid-November (two weeks before the FWF audit) workers were given a card from factory but it mentioned only the contractor's name. No expiry date was mentioned on it.

A meeting was agreed for 28th April. Management denies postponing any meeting.

According to management, after 15th April 2018 workers intentionally slowed down the production. Several notices were posted on the notice board on a daily basis , requesting the contractual workers to improve productivity. The copy of such notices were also given to Development Commissioner, and Assistant Labour commissioner.
Complainants claim that the workers were asked by management shortly before 15th April to stop working on their current tasks and focus only on the final stages of production. As production is done in lines, this focus only on the last stage did break the line. To catch up to previous production output did then take 5-6 days to be made.
In the light of recent events workers feel that management deliberately created this situation to build a case against the workers.

Seeing no improvement or cooperation from the workers, the production manager had a meeting with the contractual Union members around 22nd/23rd April 2018; the working President of the Union along with the contractor had made a request to the contractual workers to expedite production; he had categorically explained to the workers on the consequences of their slow production; however the situation did not improve.
Complainants denied that such a meeting took place.

Under such circumstances management gave a notice to the development commissioner with a copy to deputy labour commissioner and assistant labour commissioner regarding temporary suspension of work from 2nd May 2018.
Workers are not aware of such a notice.

Management stated that the arrears amount from January 2018 to April 2018 has been paid to the workers along with the April salary.
Workers claim that arrears of Rs 7/day was paid for 2 months, and not for 4 months.

On June 1, one complainant called with an update saying that the factory started working again, but workers of the Union have been barred from entering the factory. Management argues that there is not enough production orders to accommodate all workers.

2018-06-04 Investigation

Since it not possible to clarify the situation without further on-site investigation, FWF will visit the factory as soon as possible to interview management and workers on and off-site and review documents. Considering the urgency of the situation and the severity of the allegations, this investigation should not be delayed by management. FWF also proposes to facilitate a meeting between factory management and the Union to resolve the situation.

2018-09-25 Remediation

Fair Wear country representative in India had a meeting with the factory management on 25th August in Kolkata. The Director of the factory, compliance manager and the brand's contact person from this factory were present in this meeting. The management detailed the entire episode from their standpoint and could also furnish documents supporting their claims.
Answer to the three questions from Fair Wear were given:
• All 208 workers working through a contractor were out of work for one whole month- May
• When the work was resumed in June all of these workers joined back within a gap of 2-3 days
• The meeting between the Union and factory management to discuss the charter of demand will be called upon (no fixed date yet) by the Member of Parliament and president of the Union. During their last talk (s)he had appealed to the Union members to join work first and only then the demands will be discussed. The ball is actually in Union’s court to call upon the meeting (subject to availability of the union President of course).

According to the management, for the one month period that workers were out of job, the management is not obliged to pay for it because a) they were all contract workers and, b) factory had given prior notice (from 23rd April onwards- every alternate days) to the workers.
According to the lawyer the factory is not obliged to pay as according to the Industrial dispute Act the management should pay to all permanent workers who are laid off. Since these were contract workers the management is therefore not obliged to pay.

All labour laws apply to SEZs, though the institutional structure for its implementation has been altered under the SEZ Act but to say that since the given factory is located in SEZ, the Contract Labour Act is not applicable to them, is incorrect. Since the provision to sub-section (1) of section 49 of the Special Economic Zone Act, 2005 says that the Central Government cannot modify the application of any central law relating to labour in the Special Economic Zones we would request the factory to provide fair wear with specific legal provision based on which they are claiming this special status (Labour is a Concurrent subject under the Indian Constitution, meaning that both the Centre and States can make law on it. Since the Centre has not exempted the application, they need to provide any State level amendment if there is any).

For a better worker-management relationship a training on communication touching upon social dialogue is recommended for this factory.

2018-09-25 Verification

During a call from FWF to the workers; it was verified that all workers have been taken back for work and none of them were paid for the period they were out of job.

2018-09-28 Evaluation of the complaint

While the factory is legally not obliged to pay it's contract workers for the time they were laid off it is difficult to say that Contract Labour Act does not apply to this factory because it is situated in an SEZ.

2018-09-28 Resolved

Specific complaint of worker of being taken back to work is addressed and the obligation of factory to pay the worker for the time out of job is absolved hence this complaint can be considered as resolved.
However, to ensure that such a situation does not arise in future factory should actively engage with workers to address /discuss their issues.