Jack Wolfskin, Schoffel Sportbekleidung GmbH, ODLO International AG, Complaint 401

CONCERNING LABOUR STANDARDS
Payment of a living wage
STATUS
Resolved
DATE
2018-05-10

The complainant reached out to Vietnam's complaints handler regarding the overtime hours and the way these are paid. The normal working time at this factory is from 7:30 to 11:30 and from 12:30 to 16:30, and overtime hours from 16:30 to 19:30. According to the complainant, workers work overtime until 19:30 but the overtime is only counted until 17:30 or 18:30. Furthermore, the complainant stated that workers are required to continue working during lunchtime. The complainant's overtime hours in April 2018 were around 35 ~ 40 hours but he/she was only paid for 18 hours. He/she further said that workers are required to sign two sets of the overtime registration sheet, one sheet with overtime from 16:30 to 17:30/18:30 and another sheet with overtime from 16:30 to 19:30. The complainant said that workers have presented the problem to factory manager, who replied that they have to work as such because they do not reach their production targets. According to the complainant, this problem has occurred throughout the past several months. Another call with a similar complaint was received on the 2 June 2018.

Overview of the complaint investigation

2018-05-22 Investigation

The Fair Wear members forwarded the complaint to their supplier and received a reply within one week. Factory management confirmed that due to production incentive bonuses, employees stay additional hours. Lunch time is also used to reach more production output. As a few employees complained about not being able to sleep during lunch time, management implemented a policy of turning off the lights during lunch time. Management sent overtime sheets of the last five months, which were reviewed by Fair Wear's complaints handler.

2018-06-28 Investigation

28 June:
- Phoned the 2 complainants but no answer.
- Talked to a former complainant of 2017, (s)he said that there is no any improvement so far. Workers have to work during lunch time. Overtime is until to 6:30 pm and many workers must work until 7:30PM or late without time recording in case they do not reach the target. (s)He also share that some workers have mentioned this poblem to auditors from the recent audit by a client, after that the factory has done an investigation to find out who shared that problem. Therefore, workers are afraid to talk to auditors or clients.

8 July:
The complaints handler called the former complainant and 9 other workers. Totally 4 sewing workers and 6 workers from QC, Cutting, Packing.
- 3/4 sewing workers said that there was no improvement so far. They must working during lunch time and OT without time recording to reach production target. Most or sewing workers have to work during lunch time. In case they do not reach the daily target, they have to swipe their time card at 5:30pm or 6:00pm or 6:30 pm which are depend on the target. Then they have to continue working to reach the target without time recoding and no pay. They cannot reach the target because the target is so high. They heard that some workers sent the complaint to trade union but no feedback after that.
- 6/6 workers who worked at other department said that theynever work during lunch time and all OT work is recorded. 3/6 workers said that they heard that workers at sewing dept have to work during lunch time and work OT without recording because they are paid by piece.

2018-08-28 Investigation

On 31 July 2018, offsite interviews were conducted outside the factory with 7 workers who are working in different departments or lines.
On 28 August, Fair Wear’s local team conducted an on-site investigation. The factory was open to share documents needed. The complainant had already quit more than two months before the investigation in August 2018.
The complaints handlers interviewed the Management team (including HR Manager, a new Director of the factory and other compliance staff) and 5 workers and a worker representative. Time-records and payment were checked from 1 June to 31 July, payroll and bonuses were reviewed of sewing production lines 3 and 5.

Findings and conclusions:
1. Lunchtime working
No lunchtime working recorded in June and July 2018. In March, the Trade Union had a monthly meeting with worker representatives and got complaint about lunchtime working for meeting production target or fixing the defect garments. The factory has decided to turn off all the lights and shut off machine power during the break time. The decision was made on 12 March 2018 and announced to all workers. Since then, workers can take rest/nap after lunch without being affected by the noise from working machines/workers. Factory security staff daily goes around the production workshops to ensure power is shut off and no worker is working during lunch break.

Interviewed workers confirmed that the light was turned off during lunchtime, however the power of each machine/equipment in sewing lines was cut off by workers themselves. Therefore, some workers who wish to get productivity bonus can still work during lunchtime.

2. Overtime working
From the documents inspection, workers have to work excessive overtime, some have to work over 4 hours overtime/day in July 2018. Interviewing the factory management, the complaints handler was informed that >50% of their workforce have to work >300 hours overtime /year in 2017.

Working time records are sent to workers for reviewing and confirming at the end of each month before calculating wages. Workers are aware of how their incentive bonus is calculated.

Sometimes, working time is not recorded properly due to malfunction of the card readers or workers forgot to record. Line leaders are requested to double check the time recording daily, with workers, to ensure not missing any case. Besides, card recording report and attendance sheets are generated by HR staff weekly and checked by line leaders. If workers found any errors in term of working hours, when receiving monthly payroll as well as salary, they would approach HR department to have it checked and fixed. Reimbursement is done in the month after.

The workers interviewed stated they have to work overtime from 40 - 45 hours per month. In July 2018, some workers worked until 21:00 or 22:00 (4.5 - 5.5 hours of overtime per day). Workers who are working in the sewing lines have more overtime work than other departments (cutting, QC, packing, etc.) Some interviewed workers said that if they forgot to record working time by card, they will lose the payment for overtime working.

3. Two sets of overtime-registration sheets
Workers are requested to sign two sets of overtime-registration sheets one day in advance, one for working from 16:30 to 18:25 and the other for working from 18:25 afterward. This practice is applied from March 2018. Factory management explained that they wanted to see the productivity trend after 18:25 then calculating and comparing the benefits and costs in these overtime hours.

Based on the overtime hours registered for every single production line, the factory shut off the power 20 minutes after the working time ended to ensure no extra work.

From the documents inspection, Fair Wear’s complaints handlers concluded that the incentive bonuses had been calculated, recorded and paid accurately. Overtime was paid at premium rate.

Workers received two separate payrolls as well as two separate payments by bank transfer.

Additional workers interviewed in August confirmed that they signed two sets of overtime-registration and they were paid fully for overtime-working with two bank transfers. The workers were informed of changes in the registration and payment, however, they were not consulted before that.

4. Daily production norm/target
Factory management explained that they had productivity issues. Workers could have both overtime premium and target incentives in a working day. This was considered as a motivation for workers to work harder to reach higher productivity.

Interviewed workers said that the daily target was set quite high for new workers and even workers who worked for more than 5 years cannot get the target and bonus every month. Some of interviewed workers still stay for 15 - 20 minutes extra after the working time as in their registration to get more products done, which would not be counted in the overtime payment.

2018-10-11 Remediation

Recommendations for further remediation:

1. Factory management must continue to ensure power is shut down during lunchtime and after work to make sure workers do not to work extra hours without payment.
3. If the factory is trying to measure overtime separately for productivity, incentive or other reasons, they should communicate well and properly with the workforce so they understand the system.
4. In cooperation with Fair Wear brands, factory is requested to set up an action plan to reduce excessive overtime in upcoming peak seasons. In consultation with planning/purchasing departments as well as workers, a solution must be found for the high production targets that pressure workers.
5. It is suggested to conduct a Workplace Education Programme session to raise awareness of labour rights and as a first step for dialogue between workers and management on the issue of working hours and effective communication internally.

2019-02-15 Remediation

Members and factory continued discussions on CAP. Updates in February are the following:

1. Factory management cannot shut down the power but turns the lights off during the one-hour lunch break. As requested by the members; an announcement was made to workers that there is an hour break at lunchtime and workers shouldn't work during that time. But the factory explained that it happens that some workers prepare their work before starting again after the break, thus it difficult not making any noise and monitor each worker's activity during the break (they are free to do what they want).

2. Overtime was discussed between members and factory and discussion in terms of production planning, factory capacities and quantities will take place in separate conversations (due to competitive law). The factory mentioned that late order placement from Odlo in 2018 created more overtime. Factory said they refused orders from other customers in order to make sure OT remains reasonable during peak seasons.

3. The factory said that they have only one set for overtime registration since 1 September 2018. The factory also says that they make all payments in one transfer and not separate (as mentioned in the investigation)

4. Factory explained to members that production targets are planned depending on workers' skills, and these are not too high.

5. Members have asked the factory when a training could be done.

2019-05-22 Verification

An audit took place on 22 May. The factory had one set of overtime registration only.
Some workers still worked during lunchtime and did overtime to reach the targets. They felt that the targets were too high to reach. For overtime during lunchtime and breaks workers were not paid (new finding).
Overtime exceeded the legal limit, workers sometime worked more than 85 hours/month.

2019-09-19 Remediation

The members and the factory need to continue working on audit CAP and remediation of overtime: unpaid overtime work, and overtime work above the legal limit.

2019-11-08 Remediation

A WEP took place in November 2019 at the factory. Both sourcing members worked with the supplier on the Corrective Action Plan of the previous audit, including issues related to overtime.

2020-03-10 Remediation

On 10 March, the members still sourcing at the factory received several documents and feedback from the factory regarding overtime registration, and attendance records, showing that workers need to fill in a form which needs to be approved by the board of Directors on the day before working overtime. Power is cut during lunch break to avoid workers from working during that time.

2020-03-24 Verification

The complaints handler called 5 workers working at the cutting, sewing, and quality checking departments.
All of them confirmed that they do not work at the lunch break or before/after working time.
• Lunch break: they do not see any workers work at lunch break. The lights are turned off during lunchtime.
• Overtime: Overtime is not too much at the moment. They have to register the overtime registration sheet a day before the overtime work. And when working overtime, they have to sign again to confirm the overtime hours. The workers said that the overtime is voluntary. The power is turned off after the working time finishes about 15 minutes, therefore the workers could not stay at work.

2020-03-24 Evaluation of the complaint

Workers are satisfied with the working conditions at the factory but worried about the corona virus and how that will affect their jobs.

2020-03-25 Resolved

This case is resolved.