Nudie Jeans Co., Complaint 215

CONCERNING LABOUR STANDARDS
Legally binding employment relationship
STATUS
Closed
DATE
2017-03-15

The complainant claimed that (s)he along with approx. 55 other workers was informed verbally by factory management on 10th February 2017 that there will be a break in employment and that workers may report back on 4-5 March 2017. No written notice was given.
The workers accepted this as similar lay-offs had happened in past years for 15 days to one month and lay-off wages (half rate) were paid. For short breaks of 3-7 days, no lay-off wages were paid in the past.

On 2-3 March 2017, the management approached the workers through co-workers (who were on duty) residing near to their place and asked them to send and submit their leave book (EL-CL diary) to the management. The workers complied because they assumed that management needed it for general updating.

The next day, the complainant called the HR representative to check about the estimated date of re-joining. (S)he was then told that his/her work is no longer needed, but not written confirmation was given. Other workers confirmed the same to him/her and apparently none of the other 55 workers was asked to re-join so far.

Since then, neither the HR representatives nor the contractor has been answering his/her phone calls. Workers also tried to visit the factory, but were denied entry at the factory gate.

So far, worker have neither received lay-off wages nor were they approach for full and final payment (which would be due in case of termination).

Overview of the complaint investigation

2017-03-31 Investigation

FWF informed Nudie Jeans about the case on 15th March 2017.
Complaints from several other workers related to dismissals/termination without following legal procedures were received throughout the last year from the same factory and are partly still under investigation.
FWF decided to conduct an off-site investigation. Between 26th and 28th of March 2017, nine workers of the factory were interviewed (three personal and six telephonic interviews) by FWF’s worker interviewer.
FWF has shared these findings with Nudie Jeans on 31st March and is currently waiting for feedback from the supplier.

2017-03-31 Conclusion of the investigation

State labour law requires the following points in case of dismissal/termination:
1. Workers may be laid off for a limited period if they receive wages at a 50% rate.
2. Workers cannot be dismissed unless there was misconduct. A procedure (including a so-called domestic inquiry) needs to be followed to determine misconduct.
3. Workers may be terminated from their services/be retrenched, but for this factory management needs to follow certain steps:
- Take permission from the relevant government before retrenchment as the strength of workforce is more than 300 workers
- Give three months of notice or pay wages for three months
- Pay retrenchment compensation: 15 days’ average pay for every completed year of continuous service or an amount equivalent to his three months’ average pay, whichever is more
- Pay earned leave, bonus and gratuity if applicable

During FWF’s investigation, the following points were found (no statement from management has been received yet):
• All workers interviewed confirmed that management collectively informed 52 workers on 9-10th February that they were given a break from 10th February, but it was not clear whether and when they will be hired again. During the announcement they were asked to make a call to the HR manager to check when they can come to join their work. There was no written communication from the management or the contractor to this effect.
• After 25th February, the management (conveyed message through current workers) asked the workers to submit their EL-CL diary, and after that the workers started contacting HR and contractor to get information about their joining date.
• Workers confirmed that only one month wages as notice pay and payment for EL is offered in full and final payment. However, the workers are not formally informed about this as well.
• However, the point of contention is the date from which these workers would be considered retrenched since no formal communication was sent to workers: 10th Feb 2017, when workers were informed for a break and therefore it may be considered layoff; 25th Feb or later when workers called up HR and they were informed about the end of their contract or the date when they receive their full and final payment.
• All communication to the workers, so far, have been either orally (HR, contractor) or through present workers.
• Additionally, workers informed that the company is hiring more piece rate workers. Apparently it is a common knowledge among workers that the management is trying to restructure the workforce in terms of reducing the number of regular workers (engaged through contractor on minimum wage) and filling up higher proportion of workforce through piece rate migrant workers.
• Some workers informed (including some workers who are still working in the company but were not willing to be formally interviewed) that the management has prepared another list of 35 workers including 5 supervisors to be thrown out soon. No one knows who will be thrown out and there is a general environment of fear among regular workers.

Based on the information collected so far FWF concludes that legal procedures were not followed in the retrenchment from service and workers did not receive all legally required payments. The full extent of due payments cannot be determined without further investigation.

2017-03-31 Conclusion of the investigation

Based on the investigation it was confirmed that legal procedures were not followed in the retrenchment from service and workers did not receive all legally required payments. The full extent of due payments cannot be determined without further investigation.

2017-03-31 Investigation

Management denied further investigation or mediation by FWF.

FWF concludes that workers are owed at least two more months of notice pay. Whether additional payments are requirement (such as retrenchment compensation, leave days etc.) can only be determined based on further investigation.

2017-06-16 Investigation

Management provided a statement regarding this case on 16th June 2017.

2017-07-03 Conclusion of the investigation

The factory confirmed that 55 workers employed with a contractory of the factory were terminated on 10th February, but denied that management promised further employment after a break. No documents were provided to support this. Management also confirmed that one month notice pay had been provided.

Management shared that their standing order includes a clause that only one month of notice pay is required, while the Industrial Disputes Act, Madhya Pradesh (amended 2015) states three months. As the government has approved their standing order, they consider it valid. The government approval of the standing order has not been shared with Nudie Jeans. FWF consulted an Indian legal expert on the case who concluded that the requirement of three months notice pay applies in this case as legal provisions have effect even if the standing order states otherwise (Industrial Dispute Act 1947, section 25J).

Management denied further investigation or mediation by FWF.

FWF concludes that workers are owed at least two more months of notice pay. Whether additional payments are requirement (such as retrenchment compensation, leave days etc.) can only be determined based on further investigation.

2017-07-03 Remediation

All workers must receive at least two month of additional notice pay. The factory should allow proper investigation to determine which other payments are required.

If workers are terminated, legal procedures must be followed which includes providing a written termination letter.

2018-01-02 Closed

The factory did not agree to follow the remediation recommendation. Nudie Jeans was considering ending their business relationship with this supplier.