Maier Sports GmbH & Co KG, Complaint 416

CONCERNING LABOUR STANDARDS
Payment of a living wage
STATUS
Remediation
DATE
2018-06-07

1) On 7 June 2018, one sewing worker previously working at the factory filed a complaint to Fair Wear claiming that the factory deducted from his/her wage the piece rate subsidy for the first three months (March to May 2018). This worker started employment in March 2018 and according to the verbal agreement with the factory, he/she would receive a 50%, 40% and 30% of the piece rate respectively for March, April and May 2018. This subsidy would enable the complainant to earn a decent income while getting familiar with the work.
In the beginning of May 2018, the complainant concluded that he/she did not fit the job, and resigned on 29 May 2018. The factory informed the complainant that they would deduct the piece rate subsidies of the first three months, which in total amounted to about 3000 RMB from the wages of May 2018. The remaining wages of May 2018 would be paid to the complainant by bank transfer on 20 June 2018. The complainant's former colleagues informed him/her that the factory posted a new announcement in the workshop, stating that new workers who stayed with the factory less than a year, would receive the piece rate subsidy of the first three months deducted. The complainant thought it was unfair to deduct this subsidy, as the verbal agreement when he/she was hired was that he/she would receive this subsidy.

2) On 8 June 2018, another former worker filed a similar complaint. This sewing worker previously serving at the factory claimed that the factory deducted his/her piece rate subsidy for the first two months (April to May 2018) from his/her wage. This worker started employment on 9 April 2018 and according to the verbal agreement with the factory, he/she would receive 40% and 30% of the piece rate subsidy respectively for April and May 2018. In the beginning of May, the complainant concluded he/she did not fit the job, and therefore resigned and left the factory on 27 May 2018. The factory informed him/her that they would deduct the piece rate subsidy of the first two months from his/her wage of May 2018. The wage was planned to be paid out on 20 June 2018.
This complainant was informed by previous colleagues that a new announcement was posted in the workshop stating that new workers who stayed with the factory less than a year, would not receive the piece rate subsidy of the first three months. The complainant thought it was unfair to deduct this subsidy as this was agreed upon when he/she was hired and hoped Fair Wear could help.

Overview of the complaint investigation

2018-06-20 Investigation

FWF requested Maier Sports to follow-up on this complaint. Maier Sports has forwarded the complaint to the factory on 21 June.

2018-08-10 Investigation

Maier Sports communicated the point of view of the factory:
At the beginning of 2018, the management of factory thought about how to improve the quality of the work supplied by their employees. The aim was to improve the understanding of quality in order to increase product quality and meet customer requirements. After careful consideration, the factory decided to give employees the opportunity to become more familiar with the sewing processes. The employees were slowly brought to the new quality standard and the sewing speed. To ensure that employees did not lose their salaries during this period and earn a decent wage, management and employees have agreed to subsidise salaries during this three-month transitional period.
All employees - existing and new employees - were informed that the quality of production had to improve. In order to make the changes in the production acceptable to all employees and to enable the execution, the following rule has been agreed.
• All employees in the sewing department (existing and new once) receive a supplement to their salary of:
» 50% in March,
» 40% in April
» 30% in May

In June, the basic salary would be paid again, without surcharge.
It was agreed that this subsidised payment (cash benefit) would be reclaimed if the employee leaves the company before the expiration of one year (12 months).
The aim of the additional salary payment is to train the employees better and additional a longer-term commitment of the employee to the company.
This agreement was verbally communicated to the employees in March. Factory not put this agreement in writing and has yet to hang as an information sheet “subsidise payment cash benefits” to the information board in the sewing department, this is unfortunately only the end of April (30.04.2018).
At the beginning of the year, an external supervisor at the factory introduced himself with the promise to bring more seamstresses when hired. The supervisor started working with 10-13 people at the factory in mid-end of March, they opened up a new sewing group (line 3).
Since the new agreement on the payment of cash was active in March, this also applied to the new employees. Therefore, the new employees received a 50% premium on their salary earned in March.
The factory has given employment contracts to the new employees, with the request to return them signed. However, the employees did not sign the contracts and did not return them. They did not want to sign a contract. Some of these employees resigned from the employment relationship (without contract) during the probationary (3 month according to contract) period without advance notice or notice of determination.
As agreed upon, the factory deducted the (March, April, May) from the May salary, as it was agreed that these subsidised payment should be paid back if the company affiliation is less than 12 months. All employees who left had to sign on the salary overview list (all paid salaries).
The factory had big problems with production planning due to the behaviour of these employees, the consequences were delays in delivery and for the other employee’s some overtime in order to overcome the missing capacity.
Three people from this group are still working for the factory.

2018-08-30 Remediation

After a phone call on 29 August with Maier Sports, FWF has suggested the following remediation. FWF would appreciate if Maier Sports could talk again with the factory and agree on a remediation for the issue of not announcing the policy clearly at the beginning and not following the PRC Contract Law. From the law's perspective, if the policy was not announced at the very beginning in written form, the factory cannot deduct the subsidies of the previous months from workers' wage of May. Without appropriate reason, factory shall not withhold part of the employees' wages or postpone the wage payment.
This would mean the factory would pay back
Subsidy of March 2018 1028.5 RMB
Subsidy of April 2018 1478.8 RMB
Subsidy of May 2018 858.6 RMB (which was directly deducted, including the subsidies of the 2 previous months)
So a total of 3365.9 to pay back to the complainant
FWF understands that there are discrepancies in the information received from both sides, but since the fact is that they failed to announce the policy to deduct the subsidies at the beginning, we think they should at least reach a compromise.

This complaint is complex, in the sense that the wages were a verbal commitment from the factory. In addition, the factory didn’t provide a contract to the workers. Nevertheless, the factory agreed that they have “failed to fix this agreement in writing and to hang as an information sheet “subsidize payment cash benefits” to the information board in the sewing, this is unfortunately only the end of April (30.04.2018).”
According to the complainant's statements, they were informed of the subsidy policy of 30, 40 and 50% extra for the first 3 months, but they were not verbally or in written informed factory is able to deduct the subsidies if they fail to work 12 months at the factory; and the information sheet was not hanged the end of April, but it was in early June 2018 when factory realised it was not lawful or risky without announcing the policy very clearly at the very beginning.

FWF provided Maier sports with the PRC Labour Contract Law which process is not followed: Labour Contract Law of PRC:
Article 4 (1) An employing unit shall establish and improve its internal labour rules and regulations, so as to ensure that the labourers enjoy their labour rights and perform their labour obligations. (2) When an employing unit formulates, revises or decides on rules and regulations, or material matters, that have a direct bearing on the immediate interests of its employees, such as those concerning compensation, working hours, rest, leave, working safety and health, insurance and welfare, employee training, work disciplines or work quota management(劳动定额管理), it shall consult with the trade union or employee representatives on a basis of equality after the discussion by the employee representative congress or all the employees and the bringing up of a proposal and comments as the case may be. (3) If, during the implementation of an employing unit's rules or regulations or decision on a crucial matter, the trade union or an employee is of the opinion that the above mentioned is inappropriate, it or he is entitled to communicate such opinion to the employing unit, and the rules, regulations or decision shall be improved by making amendments through consultation. (4) Rules and regulations, and decisions on material matters that have a direct bearing on(直接涉 及)the immediate interests(切身利益) of the labourers shall be made public or be communicated to the labourers by the employing unit."

2018-09-10 Remediation

Maier Sports suggested the following
1. A WEP training should be conducted as soon as possible at the company.
2. FWF audit should be conducted in the company. They were questioning whether it would be best to conduct the audit before the WEP training or at the end of the year after the WEP training has been conducted.

With these two immediate measures, Maier Sports hoped:
- To provide the company with the necessary tools to rule out such complaints in the future.
- Improve communication from management to employees.
- be able to support the employees in the company with their rights and obligations in relation to an employment relationship.

The company takes the complaints as an opportunity to improve internal communication and train all workers in the company. Maier Sports hoped that FWF sees this as a way to achieve more for all employees. This is what the company has to offer.

2018-09-12 Remediation

FWF suggest to deal with this problem to ask the factory as a compromise to pay back at least the first two months, since they “failed to fix this agreement in writing and to hang as an information sheet “subsidize payment cash benefits” to the information board in the sewing, this is unfortunately only the end of April (30.04.2018).”
Subsidy of March 2018 1028.5 RMB
Subsidy of April 2018 1478.8 RMB
So a total of 2,507.3 RMB to pay back to the complainant. Please note that this does not solve the case, but FWF hopes to be able to close this complaint.

After that, a WEP training should be planned, which is indeed a good idea.

2018-09-25 Verification

Maier Sports mentioned that they had given the documentation regarding the complaint to one of their senior manager to discuss with the factory this point when visiting China

2018-09-26 Investigation

FWF reached out to the complainant to see if he would be willing to meet the management of the factory to solve this issue. He/she said he/she was only willing if there was some sort of solution/compensation, since he/she currently works in a different area and has to travel far and is losing income to attend this possible meeting.

FWF requested if the senior manager of Maier Sports could request to set-up a meeting with management and complainant (with our country representative as an objective observer). It was requested that the factory has to guarantee in advance to do their utmost best to find a solution, if they are willing to meet the complainant.

2019-01-11 Remediation

FWF spoke with the factory to try to remediate. Unfortunately no solution could be found.
There are 2 violations for this case according to the PRC labour law.

1. No labour contract was signed at the time of hire between workers and factory, in this case, the employees are able to request factory to pay them twice of his/her wages.
Requirement: In accordance with Article 10 of the Law of the People's Republic of China on Employment Contract, in establishing employment relationship, a written employment contract shall be concluded. Where no written employment contract is concluded at the time of establishment of an employment relationship, a written employment contract shall be concluded within one month beginning from the date on which the employee starts to work. Where the employment contract is concluded before the date on which the employee starts to work, the employment relationship shall be established on the date on which the employee starts to work.
Article 82 If an Employer concludes a written employment contract with a Employee more than one month but less than one year after the date on which it started using him, it shall each month pay to the Employee twice his wage.

2. Regarding the piece rate subsidies of the first 3 months, Fair Wear suggests to deal with this problem to ask the factory as a compromise to pay back at least the first two months, since they “failed to fix this agreement in writing and to hang as an information sheet “subsidise payment cash benefits” to the information board in the sewing, this is unfortunately only the end of April (30.04.2018).”
Subsidy of March 2018 1028.5 RMB
Subsidy of April 2018 1478.8 RMB
So a total of 2,507.3 RMB to pay back to the complainant.

Please note that this does not resolve the case but would mean that it can be closed.