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The complainant claimed there is no payment for overtime hours in case workers cannot fulfil the production quota (50% of the target volume). When workers work 3 regular overtime hours and their production exceeds 50% of the target volume, they are able to receive 9.2 RMB per hour as an overtime premium. However, when workers work 3 regular overtime hours but cannot meet the quota, they do not receive overtime premium payment. As they are paid by monthly wage instead of piece wage, when they do not meet the quota, they are not paid for these 3 working hours. Moreover, the worker complained sometimes there are overtime hours on Saturday and Sunday, yet, they are paid 100% of their regular wage instead of 200% as required by law.
On 2 April, another worker from the factory called FWF to inform the entire workforce went on a strike on the 1st of April. The main reasons for workers going on a strike were:
1. The factory uses both a piece wage and hourly wage system. The worker complained that the factory deducts wage when their piece wage shows low production quota. If their piece wage will be less than 1000 RMB, the factory deducts 400 RMB from their piece wage and pays this on top of the basic minimum wage. If their piece wage is less than 400 RMB because of law production quota, the factory withholds the piece wage and only pays workers the basic monthly wage. Workers requested the management to give an explanation to this policy, but felt they were not informed.
2. The plaintiff complained in case of peak season, they work 3 additional overtime hours from Monday to Friday; however, if they are not able to meet the production quota, they are not paid at all for the overtime hour’s work.
3. According to the worker, there are 2 days off every week. But in case of tight delivery, they will be requested to do overtime hours on Saturdays or Sundays; in that case there are no overtime premiums for the weekend overtime hours. They are only paid 100% of their normal wage for the weekend overtime hours instead of 200% as legally required.
FWF informed the four affiliates about the case. Through coordinated efforts, the affiliates contacted the supplier and asked for a reply. Factory management stated they followed the law for paying workers’ overtime hours and do not deduct wages due to poor performance. Management stated they have an incentive programme in place for workers’ motivation.
FWF analysed the most recent audit that took place at this supplier in November 2013. The finding that was related to the complaint was: On the 25th of Aug 2013 (Sunday), workers work 11 overtime hours, however, the overtime premium for 3 of the 11 hours are paid 150% of the local minimum wage, which is less than the legal requirement of 200%.
Factory management did not provide any further evidence to support their statement of compliance with local law regarding workers’ overtime hours and workers’ wages. Factory management committed to explaining the factory incentive policy to workers.
In addition, in the process of establishing the admissibility of the complaint, it became clear the main factory used at least 4 other branch factories, all under the same management. Another complaint was filed in September from a worker at one of the branch factories. The main factory denied they had a business relationship with the other factories. To get clarity on the situation, FWF initiated an investigation through worker interviews.
The investigation through worker interviews concluded the following:
Products are shipped through the different branch factories for different parts of the production.
The investigation through offsite worker interviews concluded workers did work in weekends without receiving the correct overtime premium (200%). Workers confirmed they are not paid the overtime working hours if they do not reach the quota.
Workers also indicated a strike took place. Both complaints indicate the wage structure is unclear and factory policies are not well communicated. Going on a strike is a sign that workers felt there were no other efficient communication channels to express their grievances.
Working hours vary between 10 and 11 hours per day in weekdays with occasional overtime in weekends. This leads to excessive overtime hours. In peak seasons workers do not receive one day off every 7 days.
Payment of overtime hours should not be based on production quota but on the law: 150% for weekdays and 200% in weekends, based on the piece rate or monthly wage of workers.
FWF Affiliates are expected to monitor the branch factories and verify if their production is partly subcontracted. FWF recommends scheduling an audit at all production sites.
A training as part of FWF’s Workplace Education Programme would support the factory in improving efficient communication between workers and management and setting up a payment structure in cooperation with workers.
An audit to verify improvements took place on 7 and 8 January 2015 and was able to verify a number of issues:
- Workers work 3 hours overtime Monday to Friday. The audit team did not find any weekend overtime hours from wage records of the previous 3 months. This was also corroborated from worker interviews;
- Factory follows local law by paying the weekly overtime hours 150% of local minimum wage;
- Factory uses an hourly rate system plus an incentive bonus (KPI system). If workers do not reach their KPI they will not receive the incentive bonus, but they are still paid their hourly rate according to local law.
- Factory has an in-house policy indicating if workers’ to not reach their Key Performance Indicator (KPI), they are restricted to do regular working hours. Hence, those workers are not allowed to work overtime hours and miss out on the additional payment;
- The payment and bonus calculation remains unclear to workers;
- A training as part of FWF’s Workplace Education Programme took place on 9 January 2015.
FWF complaints handler in China has been unable to get back in touch with the complainant.
The complaint has been resolved.