J.Lindeberg, Jack Wolfskin, VAUDE Sport GmbH & Co. KG, Complaint 57

CONCERNING LABOUR STANDARDS
Employment is freely chosen Payment of a living wage
STATUS
Resolved
DATE
2013-12-02

On 2 December 2013, the complainant claimed that she had been subject to unfair treatment. After working at the same department for 7 years, the plaintiff was relocated to a different position. As a result, the plaintiff made the decision to resign from the factory. The plaintiff wishes to receive severance pay as she feels she was forced to resign.
On 4 December 30, FWF’s complaint handler received another complaint from a different worker of the same factory. The plaintiff claimed the factory decreased her wage to 2000 RMB/month from 2800 RMB/month on 20 Nov 2013. However, she found out her salary of Oct 2013 has already been decreased to 2000 RMB. She believes this is unfair, as she was informed of the pay cuts only on 20 Nov 2013.

Findings and conclusions

On 28 October FWF’s complaints handler in China received a complaint related to the FWF’s Code of Labour Practices standard ‘payment of a living wage’.

The plaintiff complained about the low piece price at the factory and indicated that workers are not aware of the piece price until the pay date thus cannot negociate. Jack Wolfskin coordinated a shared response to the factory and asked for a reply. The factory showed willingness to improve and was open to suggestions. It is difficult to make judgment on whether the piece price is fair or unfair. Most important is an open dialogue between workers and the management on setting a piece price. The piece price shall be announced before workers proceed with a new item. FWF affiliates are expected to facilitate a meeting between workers and management to find a solution satisfying both parties.

Overview of the complaint investigation

2013-12-02 Investigation

FWF informed Jack Wolfskin, Vaude and J.Lindeberg about the case. Jack Wolfskin and Vaude immediately contacted the supplier and asked for a reply. Factory management stated they indeed reposition workers as it is their responsibility to assign workers to tasks that are most suitable for that worker.
FWF’s complaints handler researched the legal basis for severance pay after a worker resigns. It is a complicated manner, since legally, if a worker resigns, the employer is not obliged to pay severance. According to the plaintiff, her resignation was not her own choice. If the company terminates the contract, severance pay is one month for each number of working years + 1. In this case, the severance pay would be 8 months (7 +1).
If wage is 3000 RMB per month, then it is 24,000 RMB.
Jack Wolfskin and Vaude suggested meeting during ISPO in January 2014 to discuss the matter and further investigate the issue. According to management, they had a meeting with the worker in November 2013 to explain why she was move to a different department. The plaintiff did not request a severance payment with the management. This was raised only by the complaint filed through FWF.
Regarding the second complaint about decrease of wage, the management indicated the wage payments have changed in the entire paper pattern section. From a piece rate system, they now use fixed salary system. The basic salary is increased to 2000RMB.
According to the management, the average yearly wages are now more stable for the workers. With the piece rate system wage was 2800RMB during peak season. In addition to the basic salary, the factory now also provides quality bonus; a decision made in November which was not clearly communicated to workers. Management agreed workers need to be better informed about their wage structure.
Management showed willingness to improve and is open to suggestions. During the meeting, the FWF affiliates suggested setting up a working group at the factory with workers and management to deal with the complaints. The factory recently took part in FWF's Workplace Education Programme. In this context, it can be expected that the open dialogue between workers and management will be strengthened.

2014-01-14 Conclusion of the investigation

Given that the plaintiff resigned from the factory, there is no legal basis to argue for a severance pay. FWF’s complaints handler informed the worker about her rights and explained how to defend her rights in the future.
The second complaint indicates the factory can improve its dialogue with workers.
Bonus payments are not required by law. The factory is free to use the bonus payments as an incentive for workers to return to work after CNY.

2014-01-14 Remediation

Regarding the first complaint, see above. Given that the plaintiff resigned from the factory, there is no legal basis to argue for a severance pay. FWF’s complaints handler informed the worker about her rights and explained how to defend her rights in the future.
Regarding the second complaint; the supplier is requested to clearly explain the wage structure to the plaintiff.
A follow up training as part of FWF’s Workplace Education Programme would support the factory in improving efficient communication between workers and management and to set up effective worker representation.
As of January 2014, J.Lindeberg is no longer an affiliate of FWF.

2014-03-09 Verification

On 9 March, FWF’s complaints handler spoke to the worker of the second complaint again. The worker confirmed the wage structure was explained to her and it is now clear.
She feels she has no choice but has to accept the new wage system. Until now, they cannot make a comparison between the old and new system as the wage of the most recent month after the wage restructure has not been released.
The worker also confirmed the factory compensated the wage gap of 800 RMB to her, as the new system is supposed to go into effect after it was introduced (previously her fixed wage is 2800 in Oct, but before the new system come into effect, she wage of Oct 2013 was decreased to 2000RMB.

2014-03-09 Evaluation of the complaint

Both workers were thankful for FWFs cooperation. The worker of the second complaint indicated she was happy that FWF and the affiliates were able to help her get the due wage gap of October.

2014-03-09 Resolved

This complaint is resolved.