Jack Wolfskin, Complaint 460

CONCERNING LABOUR STANDARDS
There is no discrimination in employment Payment of a living wage Safe and healthy working conditions Legally binding employment relationship
STATUS
Resolved
DATE
2018-06-07

A worker from the factory complained about the following: the factory does not pay the required legal minimum wage. The wage is set at IDR 3.520.000, while it should be IDR 3,919.000. The complainant also raised issues with regards to health insurance. The company changed systems, which resulted in the fact that not all employees could access health insurance or receive sufficient cover. The complainant provided an example of another worker who was pregnant and had to pay the hospital expenses herself.

Findings and conclusions

On 7 June 2018, the FWF's complaints handler in Indonesia received a complaint from a worker who claimed that the legal minimum wage and all social security dues were not paid. FWF declared this complaint admissible and informed Jack Wolfskin, the FWF member sourcing at this factory. Jack Wolfskin reached out to factory management as a FWF audit was already planned. The audit confirmed the issues raised. The factory then took appropriate action by raising the wages to the level of the legal minimum wage and ensured that all social security payments were done. This was verified through documents inspection. FWF’s complaints handler contacted the complainant, who confirmed that s/he had received all remaining funds. The complainant was satisfied with the outcome. This complaint is resolved.

Overview of the complaint investigation

2018-07-25 Investigation

According to factory management wages were negotiated with the trade union. On 3 July 2018, it was decided that the factory would pay a legal minimum wage of IDR 3,919,291.19.

About health insurance, factory management claimed that payments to Badan Penyelenggara Jaminan Sosial (BPJS, the national health insurance system) were blocked by BPJS' system. Therefore, they decided to use a third party health insurer. They were working with BPJS to sort the issues out. Also, workers were said to be dismissed due to a bad financial situation.

2018-08-27 Investigation

On 27-28 August 2018, FWF conducted an audit at the factory.

2018-08-27 Conclusion of the investigation

The audit team concluded the following:

Workers have received the 2018 legal minimum wage IDR 3,919,292 (227.43 euros) per month since July 2018.

The factory paid the balance of the 2018 minimum wages, including overtime premiums, for the period of 1 January-30 June on 12 July 2018 (50% of total) and the rest 50% of the amount was paid on 20 July 2018.

The factory received an approval to postpone the 2017 minimum wage from the Governor of West Java No: 561/Kep.101-Yanbangsos/2017 issued on 20 January 2017, and allowed the factory to pay IDR 3,360,000 /month until December 2017. The factory then paid the balance of the 2017 minimum wages including overtime premium for the period of 1 January-31 December 2017 on 27 December 2017 (40% of total) and the rest 60% of the amount was paid on 27 February 2018.

Concerning health insurance, the audit team found that: all employees are registered to receive social insurance (work accident, pension plan, life insurance), and the pension guarantee programme.

The factory is unable to enroll all workers into the governmental BPJS health care insurance. The BPJS authority rejected the payment because the factory used the basic wage of IDR 3,520,000/month instead of the legal minimum wage of IDR 3,919,292/month to calculate the contribution of healthcare insurance in January 2018. As a result, the workers' healthcare insurance is not provided by BPJS. The factory uses a private healthcare service provider to substitute BPJS. However, the healthcare coverage from the private provider is lower than BPJS. This is not in compliance with local law that states employers are obligated to register all employees to the BPJS healthcare insurance.

2018-10-11 Remediation

FWF requires Jack Wolfskin to ensure that all workers are enrolled in the BPJS health care system. The member brand should monitor whether the factory has enrolled all workers in the BPJS system with retrospective effect.
FWF recommends the member brand to perform a root cause analyses and take the current financial situation of the factory into account, especially since the factory lost its biggest client, resulting in a loss of 4000 jobs.

2018-11-08 Verification

The part of the wages that were due have been paid. This has been checked through documents inspection.

The factory provided a letter from BPJS that the open instalments have been paid and that all social security payments have been paid and covered.

In one specific case, a pregnant worker had claimed that she was not covered by the private social security system because the workers' contribution to the social security office was not paid. FWF verified this with the worker after a couple of months. The factory had reimbursed her for all the costs she paid for the doctor.

2018-11-08 Resolved

The complainant was satisfied with the outcome of the complaint. The complaint is resolved.