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A supplier of Jack Wolfskin had to significantly reduce the workforce in recent years, due to the fact that an another important customer with high leverage had left the factory. Jack Wolfskin remained sourcing from this factory while the workforce was reduced. There have already been 3-4 rounds of lay-offs. On 14 February 2019, factory management announced a last round of lay-offs consisting of 400 workers. Management offered severance pay to workers who sent in a resignation letter. The factory informed the workers through a circular memo that contained a severance scheme.
The complainant does not understand the reason behind the reduction of the workers and there is no formal notice from management. But she heard from other workers that the factory did not receive any orders and that the factory is downsizing.
The factory opened another factory in Central Java, where the legal minimum wage is significantly lower (IDR 4.2 million vs 1.8 million).
According to the complainant, the amount of compensation money offered by the company is less than before. The complainant also stated that she heard that workers will be given the opportunity to resign in April, before the month of Ramadan and Eid.
In February 2019, the company delayed the payment of salary (the company pays the salary twice a month, on the 7th and 22nd every month). The salary that was meant to be paid on the 7th was not paid until the 10th. The factory also gave the workers a week off from 30 January to 5 February 2019. When the workers returned to work, some of them submitted their resignation letter to the management. The complainant considered these two actions by the company as intimidation to force the workers to resign. Before the delay, in a meeting with HR, the HR staff said that "don’t be surprised if you find no money in your bank account".
In the severance scheme circular memo, the salary used as a base for the severance calculation is lower than the legal minimum wage in Karawang. The legal minimum wage in Karawang for 2019 is IDR 4,234,010.27 while the factory uses IDR 3,920,000 as a basis for the calculation of the severance pay.
The severance scheme circular memo does not mention or include the reward-for-years-of-service pay and compensation pay for rights or entitlements that the dismissed worker has not utilised. The complainant complained that the factory only starts calculating the years of service when they got promoted to a permanent worker and does not include the time that they were on a fixed-term contract.
The complainant said there is a union in the factory but the union has not done anything.
The complainant would like to see that:
- The mass dismissal would be prevented and stopped;
- That factory management fully informs the workers and takes away any uncertainty;
- That the workers are compensated with the highest amount possible, at least more than the normative right to get maximum benefits.
Jack Wolfskin received a response back from factory management which claimed:
- Management has no plan to close its factory and will continue running even though on a smaller scale.
- That due to a reduction of production volume, the factory calls upon workers to voluntarily resign or go for early retirement. The factory has not developed a social plan.
- Based on the Collective Bargaining Agreement (CBA) workers that resign can obtain amounts between 0 - 3 months salary compensation.
- The factory pays the Legal Minimum Wage of Rp.3,920,000, approved per letter of the West Java Governor.
- In February, due to bank issues, wage payments were delayed for three days. The issues have been resolved.
- Workers were asked to take the 4th of February off. 3 and 4 February fell in the weekend, while the 5th was a public holiday.
The trade union informed FWF that:
- The CBA was renewed and is valid from 20 October 2018 to 19 October 2020.
- The union confirmed that it was agreed upon with the union that 2 days were calculated as day off for holiday and the other 2 days were taken from annual leave.
- The union explained that they were informed about the "resignation program". Although the union understands the situation of the company due to a lack of orders, the union was not involved in setting the amount of compensation for the workers.
- The trade union is worried about communication to workers. Management offers to take early retirement. The workers might think that the factory is going to close and without clear information, fear could grow among the workers whether the company would pay the severance pay or not.
When workers resign, they are entitled to the due legal minimum wage of 4.2 million IDR. The factory should ensure that workers are paid this compensation.
FWF required the brand to ensure:
- That the factory follows the CBA requirements as long as they are higher than the legal requirements.
- That resigning workers receive full compensation and benefits, including the legal minimum wage and delayed payment of the legal minimum wage.
- That the factory includes the trade union in decision-making on topics that directly affect workers.
FWF recommended the brand:
- To collect proof and verify that the workers are paid in accordance with the CBA.
- To enroll the factory in the WEP Communication training to improve communication between management and workers.
- To ensure that the factory creates a (social) plan to guide the downsizing of the factory.
- To pro-actively explain the situation and consequences to the workers. The workers should have the ability to consult responsible person(s) on questions they have.
- To provide training to management and the trade union on how to involve trade unions in decision-making that affects workers.
- To discuss order placement by Jack Wolfskin in relation to the downsizing of the factory.
The complainant resigned from the company per 5 July 2019 by participating in the “Resignation Program.” Along with her, there were 36 workers who resigned from the company target of 80 workers. She estimated the total number of workers is now about 300 people in 7 production lines.
She received compensation. She raised her concerns with regards to the gap between the legal minimum wage and the factual wage she received. The legal minimum wage for Karawang is IDR 4.234.010 per month. Because the company has been allowed to postpone the payment of the legal minimum wage, the company only pays IDR IDR 3,920,000 per month. There is a gap of IDR 314,010 per month.
According to the Constitutional Court Decision No.72/PUU-XIII/2015, the postponement does not remove the obligation of the company to pay the outstanding wages that means the company should pay the gap of the legal minimum wage and the postponed wage to their workers. Since she has been working for 6 months in 2019, she wants the company to pay the gap for 6 months that is IDR 314,010 x 6 = IDR 1,884,060. She heard from her colleagues that the company is going to pay the gap in September 2019.
The complainant resigned from the company. FWF recommend factory management to keep informing workers/union about the financial situation of the factory.